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HomeMy WebLinkAboutLegislative Review - ACA30/AB3105 and SCA21/SB1774 - Local Gvrnmnt Finance5-10 CITY OF PALM DESERT COMMUNITY SERVICES DEPARTMENT STAFF REPORT REQUEST: REQUEST FOR CONSIDERATION OF LEGISLATIVE REVIEW COMMITTEE ACTION ON ACA30/AB3105 (STEINBERG & CAMPBELL) AND SCA21/SB1774 (TORLAKSON & JOHNSON) AT ITS MEETING OF APRIL 27, 2004. DATE: May 13, 2004 CONTENTS: ACA30/AB3105 AND SCA21/SB1774 LANGUAGE Recommendation: By Minute Motion, concur with the action taken by the Legislative Review Committee at its meeting of April 27, 2004, and direct staff to prepare a letter of opposition for the Mayor's signature with regard to ACA30/AB3105 (Steinberg & Campbell) and SCA21/SB1774 (Torlakson & Johnson) relative to Local Government Finance. Executive Summary: Passage of this Assembly and Senate Constitutional Amendments and attendant legislative action, which is known as the Hertzberg Initiative, would make substantial changes to the California Constitution with regard to allocations of various types of funding. Background: Passage of these Assembly and Senate Constitutional Amendments and attendant legislation would make significant changes to the manner in which cities receive funded allocations, particularly with regard to the redistribution of sales tax in lieu of ad valorem property taxes. ACA30/AB3105 and SCA21/SB1774 Local Government Finance May 13, 2004 Page 2 Because the City of Palm Desert opposes any bill which removes its sales tax base in any fashion, which would conversely affect the manner in which it conducts its day-to-day business, the Legislative Review Committee recommends that the City Council oppose ACA30/AB3105 and SCA21/SB1774 and direct staff to prepare a letter stating that position to appropriate legislators for the Mayor's signature. PATRICIA SCULLY SENIOR MANAGEMENT ANALYST SHEILA R. GILL AN ASSISTANT CITY MAN PAUL GIBSON DIRECTOR OF FINANCE/ CITY TREASURER CARLOS L. O' J' GA CITY MANAG ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 1 of 10 BILL NUMBER: ACA 30 INTRODUCED BILL TEXT INTRODUCED BY Assembly Members Steinberg and Campbell APRIL 1, 2004 Assembly Constitutional Amendment No. 30--A resolution to propose to the people of the State of California an amendment to the Constitution of the State by amending and repealing Section 15 of, and by adding Section 16 to, Article XI thereof, by amending Section 24 of, and adding Section 37 to, Article XIII thereof, by amending Section 1 of Article XIII A thereof, by amending Section 6 of Article XIII B thereof, and by amending Section 8 of Article XVI thereof, relating to local government finance. LEGISLATIVE COUNSEL'S DIGEST ACA 30, as introduced, Steinberg. Local government finance: Local Government Property Tax Protection Act of 2004. (1) The Sales and Use Tax Law imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. The Vehicle License Fee (VLF) Law establishes, in lieu of any ad valorem property tax upon vehicles, an annual license fee for any vehicle subject to registration in this state in the amount of 2% of the market value of that vehicle, as specified, but offsets this amount by 67.5% for vehicle license fees with a final due date on or after July 1, 2001. The California Constitution requires that certain revenues derived under the Vehicle License Fee Law be allocated to cities and counties. This measure would repeal this constitutional allocation requirement on July 1, 2005. This measure would also establish in the treasury of each county a School Assistance Fund for Education (SAFE) to receive revenues derived from specified state sales and use tax rates and certain revenues derived under the VLF Law, as specified by of the 2003-04 Regular Session. This measure would require that all moneys in'a county SAFE be allocated to cities, counties, cities and counties, and school entities in a county in the manner prescribed by of the 2003-04 Regular Session. This measure would also specify that an act of the Legislature or the Governor may not reduce the amount of moneys that are required to be appropriated to county SAFEs, unless that act or another act continuously appropriates to county SAFEs an amount of money equal to the reduction. (2) The California Constitution prohibits the Legislature from imposing taxes for local purposes. This measure would establish an exception to this prohibition for the taxes imposed by specified statutes. (3) The California Constitution authorizes the Legislature to exempt certain personal and real property from ad valorem property taxation and to classify personal property for differential property taxation. The California Constitution also requires a county to collect ad valorem property tax revenues derived in that county and further requires that these revenues be allocated to districts in the county according to law. This measure would prohibit the Legislature from 'altering, as http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca_30_bill_2004040 1 _introduced .html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 2 of 10 specified, the apportionment of these revenues to local agencies, as defined. This measure also would prohibit the Legislature from requiring these local entities to remit any portion of these revenues that are apportioned to these entities to the state, a fund created by state law, or another local government without the consent of the entity that is required to remit this revenue. This measure also would prohibit the Legislature from exempting or classifying property, for purposes of ad valorem property taxation, in a manner that reduces the amount of revenue derived from property taxation unless the Legislature continuously appropriates an equal amount of revenue to local agencies to reimburse these entities for any revenue losses resulting from the exemption or classification. (4) The Bradley -Burns Uniform Local Sales and Use Tax Law (Bradley -Burns Law) authorizes cities, counties, and cities and counties to impose a local sales and use taxes at specified rates. Existing law authorizes these entities to impose various other local taxes. This bill would prohibit the Legislature from establishing exemptions to the taxes imposed under the Bradley -Burns Law unless the Legislature continuously appropriates an equal amount of revenue to cities, counties, and cities and counties to reimburse these entities for revenue losses resulting from the exemption. This measure also would prohibit the Legislature from restricting the authority of these entities to impose taxes under that law and from changing the manner in which revenues derived under that law are distributed. With respect to the revenues derived from all other locally imposed taxes, this measure also would prohibit the Legislature from appropriating, reallocating, redistributing, reducing, reapportioning, suspending, or delaying the receipt of revenues by a local government imposing these taxes. (5) Under the California Constitution, whenever the Legislature or a state agency mandates a new program or higher level of service on any local government, the state is required to provide a subvention of funds to reimburse the local government, with specified exceptions. Existing statutory law establishes a procedure for local government agencies to file claims for reimbursement of these costs with the Commission on State Mandates. This measure also would provide that, for purposes of these provisions, the Legislature or any state agency mandates a new program or higher level of service only when it establishes a new mandated program, otherwise requires the provision of services not previously required, increases the frequency or duration of required services, increases the number of persons eligible to receive required services, or transfers complete or partial financial responsibility for a program from the state to local government. This measure would, for the initial fiscal year in which a local government incurs costs for which reimbursement is required, require the state to subvene funds to reimburse those costs on or before the end of the fiscal year in which the mandate becomes operative, or, if the requirement to provide a subvention is contested, on or before the end of the fiscal year in which the Commission on State Mandates, any successor to the commission, or a court that a subvention is required. It would require the Legislature to appropriate sufficient funds to provide this subvention in the annual Budget Act or other statute. It would, for reimbursable costs that are incurred in each fiscal year subsequent to the initial fiscal year, require the state to provide the subvention annually, and the Legislature to appropriate sufficient funds to provide this annual subvention in the Budget Act for each subsequent fiscal year. This measure also would, if the Legislature does not appropriate http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca 30_bill_2004040l_introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 3 of 10 sufficient funds to provide the subvention required for the initial fiscal year or any subsequent fiscal year, allow a local government to elect to continue to perform the mandate and receive reimbursement thereafter, or to suspend performance of the mandate until the state provides the required subvention. It would, however, prohibit a local government from suspending a mandate that requires the local government to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employment. (6) The California Constitution requires that, from all state revenues, there first be set apart the funds to be applied by the state for support of the public school system and public institutions of higher education. These provisions require that the funds to be applied for the support of school districts and community college districts not be less than the greater of amounts calculated under 3 different tests: (a) as a percentage of General Fund revenues appropriated for school districts and community college districts for the 1986-87 fiscal year, (b) as the amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes and allocated local proceeds of taxes is not less than the total amount from other sources in the prior year adjusted for changes in enrollment and cost of living, operative when the percentage growth in personal income is less than or equal to the percentage growth in General Fund revenues, or (c) as the amount calculated pursuant to (b), but adjusted for changes in enrollment and the change in per capita General Fund revenues, operative when the percentage growth in personal income is greater than the percentage growth in General Fund revenues. This measure would, for purposes of these provisions, classify the revenues derived from specified tax rates that are required to be appropriated to county SAFEs pursuant to this measure as "local proceeds of taxes" rather than "General Fund revenues." (7) This measure would provide that it shall be submitted to the voters only if of the 2003-04 Regular Session is chaptered. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State -mandated local program: no. Resolved by the Assembly, the Senate concurring, That the Legislature of the State of California at its 2003-04 Regular Session commencing on the second day of December 2002, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows: First --That this measure shall be known and may be cited as the Local Government Property Tax Protection Act of 2004. Second --That the people of the State of California find and declare all of the following: (a) People have the most power to control government at the local level. This is the essence of home rule. (b) Local government is far more efficient and responsible than state government in the use of tax revenues. (c) Police protection, fire protection, local community services, and schools must have an adequate, reliable, and guaranteed source of funding. http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca 30 bill_20040401_introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 4 of 10 (d) Historically, local property tax revenues were used to pay for local community services. These local tax revenues have been taken by the state government, leaving local governments with a very small share of local property tax revenue, only 16 percent on average. (e) Allowing local communities to keep more of their local property tax revenues will safeguard funds for police and fire protection and other vital services. (f) Making property tax revenues the principal source of local government revenues will require new residents in a community to pay their fair share of police, fire, parks, health care and other municipal services by contributing their property taxes to the city and county where they live. (g) The Legislature has approved laws that divert, use, or delay the payment of local tax revenues to local governments, which laws threaten funding for public safety, public health, parks, libraries, street maintenance, housing, and economic development. This practice must end. (h) The state government must reimburse local governments when it mandates any new program or higher level of service, and when it reallocates of redistributes to a state -created fund revenues that were previously allocated to local governments. Third --That Section 15of Article XI thereof is amended to read: SEC. 15. (a) All revenues from taxes imposed pursuant to the Vehicle License Fee Law, or its successor, other than fees on trailer coaches and mobilehomes, over and above the costs of collection and any refunds authorized by law, shall be allocated to counties and cities according to statute. (b) This section shall apply applies to those taxes imposed pursuant to that law on and after July 1 following the approval of this section by the'voters. (c) This section is repealed on July 1, 2005. Fourth --That Section 16 is added to Article XI thereof, to read: SEC. 16. (a) (1) A School Assistance Fund for Education is hereby created in the treasury of each county and city and county to receive those revenues specified in Section 30024 of the Government Code or any successor to that section. (2) Each county auditor shall allocate money in the county School Assistance Fund for Education only for the purposes specified in, and only in the manner specified in, Chapter 6.3 (commencing with Section 30020) of Division 3 of Title 3 of the Government Code and Sections 97.68 and 97.70 of the Revenue and Taxation Code, as added by of the 2003-04 Regular Session. (b) An act of the Legislature or the Governor may not reduce the amount of money that is required to be deposited in each county's School Assistance Fund for Education unless that act or another act continuously appropriatesto that fund an amount of money equal to the amount of money that is not deposited in that fund as a result of that act. Fifth --That Section 24 of Article XIII thereof is amended to read: SEC. 24. Ths (a) (1) Except for the taxes imposed by Sections 6051.7, 6051.9, 6201.7, 6201.9, and 10752 of the Revenue and Taxation Code, or any successor to any of those sections, the Legislature may not impose taxes for local purposes but may authorize local governments to impose them. M n y (2) Money appropriated from state funds to a local government for its local purposes may be used as provided by law. http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca 30 bill_20040401 introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 5 of 10 M n y (3) Money subvened to a local government under Section 25 may be used for state or local purposes. (b) The Legislature may not do any of the following: (1) With respect to the Bradley -Burns Uniform Local Sales and Use Tax Law set forth in Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code, as that law read on July 1, 2005: (A) Restrict the authority of a city, county, or city and county to impose a rate under that law. (B) Change the method of distributing revenue derived under that law. (C) Establish an exemption to the taxes imposed under that law without continuously appropriating money to a city, county, or city and county to reimburse that city, county, or city and county, during any period in which the exemption is operative, for any revenue loss resulting from that exemption. (2) With respect to revenue derived from any local tax, including, but not limited to, a business license tax, a transient occupancy tax, and a utility user tax, that is imposed by a local agency, appropriate, reallocate, redistribute, reduce, reapportion, suspend, or delay the receipt by the imposing local agency of revenue derived from that tax. Sixth --That Section 37 is added to Article XIII thereof, to read: SEC. 37. The Legislature may amend Chapter 6.3 (commencing with Section 30020) of Division 3 of Title 3 of the Government Code and Sections 97.68, 97.69, 97.70, 6051.7, 6051.9, 6201.7, 6201.9, and 11007 of the Revenue and Taxation Code, as added by of the 2003-04 Regular Session, and the amendments made to Sections 7202, 7203, and 7203.1 of the Revenue and Taxation Code by of the 2003-04 Regular Session, only if both of the following conditions are met: (a) The amendment is contained in a statute that is approved by a rollcall vote entered in the journal, two-thirds of the entire membership of each house concurring. (b) The amendment furthers the purpose. of the measure adding this section to this Constitution, which is to provide an adequate, reliable, an guaranteed source of funding to local agencies to finance public safety, public health, parks, libraries, street maintenance, housing, economic development, and other vital community services. Seventh --That Section 1 of Article XIII A thereof is amended to read: SECTION 1 (a) The maximum amount of any ad valorem tax on real property shall may not exceed On 1 percent (1c) of the full cash value of such the property. The 1 percent (1%) tax — c shall be collected by the counties and apportioned acc rding t law to the ictricts jurisdictions within the counties in the manner specified in subdivision (b) (b) (1) For the 2005-06 fiscal year and each fiscal year thereafter, the county auditor shall apportion the tax revenue collected by a county under subdivision (a), or statutorily equivalent revenue for purposes of an advance of revenues required by Chapter 6.3 (commencing with Section 30020) of Division 3 of Title 3 of the Government Code, in accordance with the following: (A) With respect to a local agency, in the proportion prescribed http://info.sen.ca.gov/pub/bill/asm/ab 0001-0050/aca 30 bill 20040401 introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 6of10 by Chapter 6.3 (commencing with Section 30020) of Division 3 of Title 3 of the Government Code and Sections 97.68 and 97.70 of the Revenue and Taxation Code, as added by of the 2003-04 Regular Session. (B) With respect to other jurisdictions in the county, in the proportion otherwise prescribed by statute. (2) This subdivision does not prohibit the Legislature from increasing the share of the property tax revenue collected by a county under this subdivision that is apportioned to a local agency. (c) With respect to the local property tax revenue that is collected by a county under subdivision (a), the Legislature may not do any of the following: (1) On or before June 30, 2005, apportion this revenue in a manner that reduces, suspends, or delays the receipt by a local agency of the proportionate share of this revenue that would have been apportioned to that local agency under the statutes in effect on January 1, 2004. (2) Require a local agency to remit any portion of this revenue that is apportioned to that agency in any fiscal year to any of the following: (A) The State. (B) A fund created by state law, regardless of whether the fund is in the State Treasury or the treasury of a local government. (C) Another local government without the consent of the local agency that is required to remit these revenues. (3) For purposes of ad valorem property taxation, establish an exemption or classification of property that reduces the amount of revenue derived from this taxation without continuously appropriating money to a local agency to reimburse that local agency, during any period in which the exemption or classification is operative, for any revenue loss resulting from that exemption or classification. (d) For purposes of subdivisions (b) and (c) , both of the following apply: (1) "Local agency" means a city, a county, a city and county, and a special district. (2) "Special district" means an agency of the State, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited geographic boundaries, but not including a school district, a county office of education, or a community college district. (e) The rate limitation provided for in subdivision (a) shall does not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on any of the following: (1) Indebtedness approved by the voters prior to July 1, 1978. (2) Bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition. (3) Bonded indebtedness incurred by a school district, community college district, or county office of education for the construction, reconstruction, rehabilitation, or replacement of school facilities, including the furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities, approved by 55 percent. of the voters of the district or county, as appropriate, voting on the proposition on or after the effective date of the measure adding this paragraph. This paragraph shall apply only if the proposition approved by the voters and resulting in the bonded indebtedness includes all of the following accountability requirements: http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca 30 bill 20040401 introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 7 of 10 (A) A requirement that the proceeds from the sale of the bonds be used only for the purposes specified in Article XIII A, Section 1(b) (3), and not for any other purpose, including teacher and administrator salaries and other school operating expenses. (B) A list of the specific school facilities projects to be funded and certification that the school district board, community college board, or county office of education has evaluated safety, class size reduction, and information technology needs in developing that list. (C) A requirement that the school district board, community college board, or county office of education conduct an annual, independent performance audit to ensure that the funds have been expended only on the specific projects listed. (D) A requirement that the school district board, community college board, or county office of education conduct an annual, independent financial audit of the proceeds from the sale of the bonds until all of those proceeds have been expended for the school facilities projects. (^) (f) Notwithstanding any other provisions of law or of this Constitution, school districts, community college districts, and county offices of education may levy a 55 percent vote ad valorem tax pursuant to paragraph (3) of subdivision .-(b)- (e) Eighth --That Section 6 of Article XIII B thereof is amended to read: SEC. 6. (a) Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State shall provide a subvention of funds to reimburse such the local government for the costs of s".rh the program or increased level of service, except that the Legislature may, but need not, provide such subvention of funds for the following mandates: (a) (1) Legislative mandates requested by the local agency affected —;— (b) (2) Legislation defining a new crime or changing an existing definition of a crime --;—ems- . (c) (3) Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975. (b) (1) For the initial fiscal year in which a local government incurs costs for which reimbursement is required by subdivision (a), the State shall subvene funds to reimburse those costs on or before the last day of the fiscal year in which the mandate becomes operative, or, if the requirement to provide a subvention is contested, on or before the last day of the fiscal year in which the Commission on State Mandates, any successor to the commission, or a court makes a final determination that a subvention is required. The Legislature shall appropriate sufficient funds to provide this subvention in the annual Budget Act or other statute. (2) For costs for which reimbursement is required that are incurred in each fiscal year subsequent to the initial fiscal year, a local government seeking reimbursement shall submit an annual claim, and the State shall provide an annual subvention of funds. The Legislature shall appropriate sufficient funds to provide this annual subvention in the Budget Act for that subsequent fiscal year. http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca_30 bill 20040401 introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 8 of 10 (c) (1) If, for any claim for reimbursement for which the Commission on State Mandates, any successor to the commission, or a court has made a final determination that a subvention of funds is required, the Legislature has not appropriated funds sufficient for full reimbursement of costs incurred in the initial fiscal year as required by paragraph (1) of subdivision (b), or for costs incurred in any subsequent fiscal year as required by paragraph (2) of subdivision (b), then the affected local government may do either of the following: (A) Continue to perform the mandate, in which case the local government shall be reimbursed for its costs to perform the mandate through a subsequent appropriation and subvention of funds. (B) (i) Except as prohibited by clause (ii), suspend performance of the mandate until, pursuant to an appropriation of sufficient funds, the State provides the subvention required by this section. A local government shall be reimbursed for its costs for any portion of the fiscal year during which it performs the mandate. (ii) A requirement to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree, or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employment and that constitutes a mandate subject to this section, may not be suspended by a local government pursuant to this subdivision. (d) For purposes of this section, the Legislature or a state agency mandates a new program or higher level of service only when it establishes a new program, otherwise requires the provision of services not previously required, increases the mandated frequency or duration of required services, increases the number of persons eligible to receive required services, or transfers complete or partial financial responsibility for a program from the state to local government. Ninth --That Section 8 of Article XVI thereof is amended to read: SEC. 8. (a) From all state revenues there shall first be set apart the moneys to be applied by the State for support of the public school system and public institutions of higher education. (b) Commencing with the 1990-91 fiscal year, the moneys to be applied by the State for the support of school districts and community college districts shall be not less than the greater of the following applicable amounts: (1) The amount which, as a percentage of General Fund revenues which may be appropriated pursuant to Article XIII B, equals the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in fiscal year 1986-87. (2) The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes shall n t b is not less than the total amount from these sources in the prior fiscal year, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIII B. This paragraph shall be is operative only in a fiscal year in which the percentage growth in California per capita personal income is less than or equal to the percentage growth in per capita General Fund revenues plus ne half one-half of —ono 1 percent. http://info.sen.ca.gov/pub/bill/asm/ab_0001-0050/aca_3 0_bill_20040401_introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 9 of 10 (3) (A) The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes rha-'-1 equal the total amount from these sources in the prior fiscal year, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in per capita General Fund revenues. (B) In addition, There shall be added to the amount computed pursuant to subparagraph (A) an amount equal to one-half of --- 1 percent times the prior year total allocations to school districts and community colleges from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment. (C) This paragraph (3) shall bo is operative only in a fiscal year in which the percentage growth in California per capita personal income in a fiscal year is greater than the percentage growth in per capita General Fund revenues plus n half one-half of -e 8 1 percent. (c) In any fiscal year, if the amount computed pursuant to paragraph (1) of subdivision (b) exceeds the amount computed pursuant to paragraph (2) of subdivision (b) by a difference that exceeds .-= io 1 and one-half percent of General Fund revenues, the amount in excess of one and one-half percent of General Fund revenues shall not be considered allocations to school districts and community colleges for purposes of computing the amount of state aid pursuant to paragraph (2) or -3 (3) of subdivision (b) in the subsequent fiscal year. (d) In any fiscal year in which school districts and community college districts are allocated funding pursuant to paragraph (3) of subdivision (b) or pursuant to subdivision (h), they shall be entitled to a maintenance factor, equal to the difference between (1) the amount of General Fund moneys which would have been appropriated pursuant to paragraph (2) of subdivision (b) if that paragraph had been operative or the amount of General Fund moneys which would have been appropriated pursuant to subdivision (b) had subdivision (b) not been suspended, and (2) the amount of General Fund moneys actually appropriated to school districts and community college districts in that fiscal year. (e) The maintenance factor for school districts and community college districts determined pursuant to subdivision (d) shall be adjusted annually for changes in enrollment, and adjusted for the change in the cost of living pursuant toparagraph (1) of subdivision (e) of Section 8 of Article XIII B, until it has been allocated in full. The maintenance factor shall be allocated in a manner determined by the Legislature in each fiscal year in which the percentage growth in per capita General Fund revenues exceeds the percentage growth in California per capita personal income. The maintenance_ factor shall be reduced each year by the amount allocated by the Legislature in that fiscal year. The minimum maintenance factor amount to be allocated in a fiscal year shall be equal to the productproceeds of taxes and one-half. of General Fund revenues from of the difference between the percentage growth in per capita General Fund revenues from proceeds of taxes and in California per capita personal income, not to exceed the total dollar amount of the maintenance factor. (f) For purposes of this section, "changes in enrollment" shall be http://info.sen.ca.gov/pub/bill/asm/ab 0001-0050/aca 30 bill 20040401 introduced.html 4/3/2004 ACA 30 Assembly Constitutional Amendment - INTRODUCED Page 10 of 10 measured by the percentage change in average daily attendance However, in any fiscal year, there shall be no adjustment for decreases in enrollment between the prior fiscal year and the current fiscal year unless there have been decreases in enrollment between the second prior fiscal year and the prior fiscal year and between the third prior fiscal year and the second prior fiscal year. (g) Notwithstanding any other provision of law, for purposes of this section and Section 41202 of the Education Code, or any successor to that statute, the revenues derived from the tax rate imposed by Sections 6051.7, 6051.9, 6201.7, 6201.9, and 10752 of the Revenue and Taxation Code that are required by of the 2003-04 Regular Session to be appropriated to a county School Assistance Fund for Education are "local proceeds of taxes" and not "General Fund revenues." (h) Subparagraph (B) of paragraph (3) of subdivision (b) may be suspended for one year only when made part of or included within any bill enacted pursuant to Section 12 of Article IV. All other provisions of subdivision (b) may be suspended for one year by the enactment of an urgency statute pursuant to Section 8 of Article IV, provided that the urgency statute may not be made part of or included within any bill enacted pursuant to Section 12 of Article IV. Tenth --That the Legislature shall pass all laws necessary to carry out the provisions of this measure. Eleventh --That this measure shall be liberally construed to effectuate its purpose of providing an adequate, reliable, and guaranteed source of funding to local agencies to finance public safety, public health, parks, libraries, street maintenance, housing, economic development, and other vital community services. Twelfth --That the provisions of this measure are severable. If any provision of this measure or application of the provisions of this measure is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application. Thirteenth --That this measure shall be submitted to the voters only if of the 2003-04 Regular Session is chaptered and, in that event, shall, if approved by the voters, become operative on the date upon which that bill is chaptered or the effective date of this measure, whichever is later. http://info.sen.ca.gov/pub/bill/asm/ab 0001-0050/aca_30 bill_20040401_introduced.html 4/3/2004 SB 1774 Senate Bill - AMENDED Page 1 of 22 BILL NUMBER: SB 1774 AMENDED BILL TEXT AMENDED IN SENATE APRIL 1, 2004 INTRODUCED BY Cormittoci on L sal Cov rnm nt (Sonatorr T rlakson ('hair), Ackerman, H llingsw rth, Machado, Perata, Soto) Senators Johnson and Torlakson (Principal coauthor: Senator Margett) FEBRUARY 20, 2004 relating t 1 cal ag ncy re rganisati n An act to amend Section 29530 of, to add Chapter 6.3 (commencing with Section 30020) to Division 3 of Title 3_of, and to repeal Section 30023 of, the Government Code, to amend Sections 7202 and 7203 of, to amend and repeal Section 7203.1 of, to amend, add, and repeal Section 97.68 of, to add Sections 6051.7, 6051.9, 6201.7, 6201.9, and 11007 to, to add and repeal Sections 97.69 and 97.70 of, the Revenue and Taxation Code, relating to local government finance, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 1774, as amended, Johnson L cal agoncy ro rganiaati n: cph r s f influ nc Local government finance (1) A proposed amendment to the California Constitution, of the 2003-04 Regular Session, would, among other things, establish a School Assistance Fund for Education (SAFE) in the treasury of each county to receive specified revenues. This bill would implement this proposed constitutional amendment. This bill would create a State School Assistance Fund for Education in the State Treasury that would consist of 2 accounts a SAFE Sales and Use Tax Revenue Account and a SAFE Vehicle License Fee Law Account, which accounts would respectively receive specified state sales and use tax revenues and vehicle license fee revenues. This bill would make an appropriation by continuously appropriating moneys in these accounts to county SAFES. This bill would require that moneys in a county SAFE be allocated for various purposes, including making advances to cities, counties, and'cities.and counties against these entities' annual ad valorem property tax allocations and making allocations to school entities in a county, as specified. (2) Existing property tax law requires the county auditor, for each fiscal year, to allocate property tax revenue to local jurisdictions in accordance with specified formulas and procedures, and generally requires that each jurisdiction be allocated an amount equal to the total of the amount of revenue allocated to that jurisdiction in the prior fiscal year, subject to certain modifications, and that jurisdiction's portion of the annual tax increment, as defined. Existing property tax law. also reduces the amounts of ad valorem property tax revenue that would otherwise be annually allocated to the county, cities, and special districts pursuant to these general allocation requirements by requiring, for �,,+,.• i�;,, moo„ ,, .,,i„„�.n,;i���o.,��i. 11 1 1 Qnni..t, 1 11A nnnn nnni +r..,1 n i2l')nnn SB 1774 Senate Bill - AMENDED Page 2 of 22 purposes of determining property tax revenue allocations in each county for the 1992-93 and 1993-94 fiscal years, that the amounts of property tax revenue deemed allocated in the prior fiscal year to the county, cities, and special districts be reduced in accordance with certain formulas. It requires that the revenues not allocated to the county, cities, and special districts as a result of these reductions be transferred to the Educational Revenue Augmentation Fund (ERAF) in that county for allocation to school districts, community college districts, and the county office of education. This bill would, for purposes of determining property tax revenue allocation amounts for the 2005-06 fiscal year, deem the amount of ad valorem property tax revenue allocated to each city, county, and city and county for the 2004-05 fiscal year to be the revenue protection amount (RPA). The bill would define the RPA as an amount generally equal to the amount of property tax revenue allocated to the entity for the 2004-05 fiscal year, the amount of specified vehicle license fee revenues allocated to the entity for that fiscal year, the amount of local sales and use tax revenue that would have been allocated to the entity for that fiscal year under a specified rate, and the 2005-06 ERAF factor, as defined. This bill also would, for the 2006-07 fiscal year, increase the amount of property tax revenue deemedallocated to a city, county, or city and county for the 2005-06 fiscal year by the 2006-07 ERAF factor, as defined. This bill also would, for a specified period, authorize a city, county, or city and county to request that its property tax allocation be increased by the new development adjustment amount, as defined. This bill also would, for the 2005-06 fiscal year and each fiscal year thereafter, require that each special district receive no less than the portion of property tax revenues that was allocated to that district for the 2003-04 fiscal year, as specified. By imposing new duties upon local tax officials in the annual allocation of these revenues, this bill would impose a state -mandated local program. (3) The Sales and Use Tax Law imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. Beginning on July 1, 2004, and continuing until a specified date after the Director of Finance makes a specified notification to the State Board of Equalization, that law imposes an additional state sales and use tax at the rate of 0.25%. This bill would, on and after July 1, 2005, impose an additional state sales and use tax at the rate of 0.25% that would be deposited in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education. This bill also would, on and after the specified date after the Director of Finance makes the specified notification to the State Board of Equalization, impose an additional state sales and use tax at the rate of 0.25 % that would be deposited in that same account. (4) The Bradley -Burns Uniform Local Sales and Use Tax Law (Bradley -Burns Law) authorizes a county to impose a local sales and use tax at a rate of 1.25%, and similarly authorizes a city, located within a county imposing such a tax rate, to impose a local sales tax rate of 1% that is credited against the county rate. Beginning on July 1, 2004, existing law reduces by 0.25% the rate that may be imposed by a county or a city under the Bradley -Burns Law, but increases that rate by 0.25% on a specified date after the Director of Finance makes a specified notification to the State Board of Equalization. Existing law requires the county auditor to decrease, during the period that this Bradley -Burns Law rate decrease is operative, the httn•//infn.Rem ca.unv/nnh/hill/sen/sh 1751-1 ROO/sh 1774 hill 20040401 amended sen.html 4/R/2004 SB 1774 Senate Bill - AMENDED Page 3 of 22 amount of ad valorem property tax revenue allocated to a county's Educational Revenue Augmentation Fund by the countywide adjustment amount, as defined, and requires the auditor to instead allocate this amount to the Sales and Use Tax Compensation Fund in the county. Existing law requires, during this same period, the county auditor to allocate moneys from the Sales and Use Tax Compensation Fund to cities and counties to reimburse these entities for any Bradley -Burns Law revenue losses resulting from the decreased rate that may be imposed under that law during this period. This bill would, on and after July 1, 2005, reduce by an additional 0.,25% the rate that may be imposed by a county or a city under the Bradley -Burns Law. This bill also would repeal the provisions that increase this rate after the director's notification and thereby indefinitely reduce the rate that a city or a county may impose under the Bradley -Burns Law by 0.5%. This bill also would make conforming changes to related provisions. This bill also would, on July 1, 2005, repeal the provisions relating to Sales and Use Tax Compensation Funds, but would require that a city or a county be fully reimbursed with property tax revenues from an Educational Revenue Augmentation Fund for any Bradley -Burns Law revenue losses in the 2004-05 fiscal year that were not reimbursed under these provisions. This bill also would require the auditor to transfer property tax revenues from a. city or a county to an Educational Revenue Augmentation Fund if that city or county received an amount in excess of the amount required to fully reimburse the entity for those Bradley -Burns Law revenue losses. (5) The Vehicle License Fee (VLF) Law establishes, in lieu of any ad valorem property tax upon vehicles, an annual license fee for any vehicle subject to registration in this state in the amount of 2% of the market value of that vehicle, as specified, but offsets this amount by 67.5% for vehicle license fees with a final due date on or after July 1, 2001. Existing law allocates revenues_ derived under the VLF Law among counties and cities and also requires that General Fund moneys be transferred as specified, to cities and counties to compensate for reduced revenues resulting from VLF offsets. Existing law requires counties to utilize certain VLF Law revenues for local health and welfare programs. This bill would require, on and after July 1, 2005, that specified vehicle license fees and General Fund revenues be deposited in the SAFE Vehicle License Fee Law Account for allocation to county SAFEs, as provided. This bill also would exclude from this requirement those VLF Law proceeds that are utilized by counties and cities for local health and welfare programs. (6) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates that do not exceed $1,000,000 statewide and other procedures for claims whose statewide costs exceed $1,000,000. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. (7) This bill would take effect immediately as an urgency statute. (8) This SCA is general ele Existing bill would provide approved by voters ction. 1-.w rog4ir c th 1 that it shall become operative only if at the November 2, 2004, statewide cal ag ncy f rmati n c mmicci n, among httr, //infn QPn nrnur/.mbll-;11/ePn/e1+ 17,1 _1 Rllfl/ch 177d hill ' Afldtldf1 amended CPn html 4/10004 SB 1774 Senate Bill - AMENDED Page 4 of 22 pr c dur c. Thic bill w uld pr hit tine comic ssi a frem amtad4ng sphero&—ai= influonc moro froquontly tkan 4 timtt during aky calendar yoar, as spocifi d. Vote: maj rity 2/3 Appropriation: —na-- yes Fiscal committee: no yes . State -mandated local program: —kt— yes THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTI N 1. S cti n 56425.1 is aeidad t tho C vernm nt SECTION 1. Section 29530 of the Government Code is amended to read: 29530. (a) If the board of supervisors so agrees by contract with the State Board of Equalization, the board of supervisors shall establish a local transportation fund in the county treasury and shall deposit in the fund all revenues transmitted to the county by the State Board of Equalization under Section 7204 of the Revenue and Taxation Code, which that are derived from that portion of the taxes imposed by the county at a rate in excess of 1 percent, and on and after July 1, 2004, until and on and before June 30, 2005, at a rate in excess of three-quarters of 1 percent, and on and after July 1, 2005, at a rate in excess of one-half of 1 percent, pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of that code, less an allocation of the cost of the services of the State Board of Equalization in administering the sales and use tax ordinance related to the rate in excess of 1 percent, and on and after July 1, 2004, until the rate m dificati ns in swladivisiak Ea) of Socti n 7203 1 f tho Fly, and on and before June 30, 2005, to the rate in excess of three-quarters of 1 percent, and on and after July 1, 2005, to the rate in excess of one-half of 1 percent, and of the Director of Transportation and the Controller in administering the responsibilities assigned to him or her in Chapter 4 (commencing with Section 99200) of Part 11 of Division 10 of the Public Utilities Code. (b) Any interest or other income earned by investment or otherwise of the local transportation fund shall accrue to and be a part of the fund. SEC. 2. Chapter 6.3 (commencing with Section 30020) is added to Division 3 of Title 3 of the Government Code, to read: CHAPTER 6.3. SCHOOL ASSISTANCE FUNDS FOR EDUCATION (SAFES) 30020. (a) The State School Assistance Fund for Education (SAFE)is hereby created in the State Treasury. (b) In the fund created by subdivision (a), there is hereby created: (1) A SAFE Sales and Use Tax Revenue Account to receive those revenues specified in Sections 6051.7, 6051.9, 6201.7, and 6201.9 of the Revenue and Taxation Code. httn•//infn sen ca any/nub/hill/sen/Rh 1751 _1 Rnn/sh 1774 hill 7OO4O4(11 amended sen html 4/1/2004 SB 1774 Senate Bill - AMENDED Page 5 of 22 (2) A SAFE Vehicle License Fee Law Account to receive those revenues specified by Section 11007. (c) Notwithstanding Section 13340, moneys in the State School Assistance'Fund for Education are continuously appropriated, without regard to fiscal years, in accordance with the following: (1) (A) With respect to those revenues deposited in the SAFE Sales and Use Revenue Account, to the Controller for allocation to the School Assistance Fund for Education in each county and city and county in an amount that is equal to the amount of revenue, less refunds, derived in that county or city and county from the taxes imposed by Sections 6051.7, 6051.9, 6201.7, and 6201.9 of the Revenue and Taxation Code. The State Board of Equalization shall notify the Controller of the amount that is required to be allocated each county School Assistance Fund for Education on or before the 26th day of each month. (B) With respect to those revenues deposited in the SAFE Vehicle License Fee Law Account, to the Controller for allocation to the School Assistance Fund for Education in each county and city and county. The moneys in the account shall be allocated to the School Assistance Fund for Education in each county and city and county in the proportion that the population of each county or city and county bears to the total population of all the counties and cities and counties of the state. (2) On or before the 27th day of each month, the Controller shall allocate to each county School Assistance Fund for Education the amounts deposited and remaining unexpended and unresolved in the State School Assistance Fund for Education as of the 15th day of each month. (d) The county auditor shall allocate moneys deposited in each county's School Assistance Fund for Education in the manner prescribed by this chapter and Sections 97.68 and 97.70 of the Revenue and Taxation Code. 30021. For purposes of Sections 2558, 42238, 84750, and 84751 of the Education Code and subdivision (n) of Section 95 of the Revenue and Taxation Code, the revenues that are allocated to school districts, county offices of education, and community college districts from a county School Assistance Fund for Education are deemed to be ad valorem property tax revenues. 30022. (a) On or before July 15, 2005, and on or before each July 15 thereafter, the county auditor shall estimate the annual property tax advance amount for the county or city and county and each city in the county. (b) (1) On or before July 31, 2005, and on or before the last day of each month thereafter, the auditor shall allocate from the county School Assistance Fund for Education to the county or city and county, and to each city in the county, an amount equal to one -twelfth of that entity's annual property tax advance amount. (2) If there is not enough money in a county School Assistance Fund for Education to make the allocations when required by paragraph (1), the auditor shall reduce the total amount required by that paragraph to be allocated to all entities in the county to`the amount of money that is in that fund on the last day of the month. The amount allocated to each entity shall be reduced by an amount equal to the proportion that the amount required to be allocated to each entity in the county bears to the total amount that is required to be allocated to all entities in the county. (c) (1) On or before January 30, 2006, and on or before each June 29 and January 30 thereafter, the auditor shall reduce the total amount of ad valorem property tax revenue that would otherwise be allocated to each city, county, and city and county for that portion httrr//infn cen ea anv/nub/hill/cen/ch 1751-1 Rflfl/ch 1774 hill 7f04O4(11 amendexl cen html 4/1/7f1(14 SB 1774 Senate Bill - AMENDED Page 6 of 22 of the fiscal year by an amount equal to the amounts allocated under subdivision (b) to each of these entities in the immediately preceding six months. (2) If the amount of ad valorem property tax revenue that would otherwise be allocated to a city, county, or city and county for that portion of the fiscal year is less than the amount allocated to that entity under subdivision (b) in the immediately preceding six months, both of the following apply: (A) The auditor may not allocate ad valorem property tax revenue to that entity for that portion of the fiscal year. That amount of ad valorem property tax revenue that is not allocated to a city, county, or city and county as a result of paragraph (1) shall instead be deposited in the county School Assistance Fund for Education. (B) If a city, county, or city and county is not allocated any ad valorem property tax revenue for a portion of a fiscal year as a result of the application of subparagraph (B) of paragraph (1), and the amount allocated to that entity under this subdivision for the immediately preceding six months exceeds the amount of ad valorem property tax revenue that would have been allocated to that entity in the absence of that subparagraph, the auditor shall reduce by the same increment the amount that is required to be allocated to that entity under subdivision (b) for each of the next six months so as to make a total reduction that is equal to the difference between the following amounts: (i) The amount that was allocated to that entity for the immediately preceding six months. (ii) The amount of ad valorem property tax revenue that would have been allocated to that entity for that portion of the fiscal year if subparagraph (B) of paragraph (1) of subdivision (c) did not apply. (d) For purposes of this section, the "annual property tax advance amount" for a city, county, or city and county, means, for each fiscal year, an amount equal to the product of the following: (1) 0.9. (2) The difference between the following two amounts: (A) The estimated total amount of ad valorem property tax revenue that is required to be allocated to that entity for the fiscal year in which the estimate is made. (B) The estimated total amount of ad valorem property tax revenue that would have been required to be allocated to that entity for the fiscal year in which the estimate is made under the statutes in effect on January 1, 2004. (e) For the 2006-07 fiscal year and each fiscal year thereafter, property tax allocations made pursuant to Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of the Revenue and Taxation Code, or any successor to that chapter, may not reflect, for a preceding fiscal year, any portion of any property tax revenue allocation required by this section. 30023. (a) For the 2005-06 fiscal year, the auditor shall allocate from. the county School Assistance Fund for Education to each qualified excess tax school entity in the county or city and county the Excess School Tax Entity (ETSE) reimbursement amount. (b) For each of the 2006-07 to the 2014-15 fiscal years, inclusive, the auditor shall allocate from the county School Assistance Fund for Education to each qualified excess tax school entity in the county or city and county the adjusted ETSE reimbursement amount. (c) For purposes of this section, all of the following apply: (1) (A) "ETSE reimbursement amount" means, with respect to each qualified excess tax school entity, an amount equal to the httn•//info spn anv/nnh/hill/ePn/ch 1751 _1 Rfl(1/ch 1774 hill 711114414111 amended cen html 4/1/7f)f14 SB 1774 Senate Bill - AMENDED Page 7 of 22 difference, if any, between the following two amounts: (i) The estimated amount of ad valorem property tax revenue that would have been allocated to that entity for the 2005-06 fiscal year under the statutes in effect on November 1, 2004. (ii) The estimated amount of ad valorem property tax revenue that will be allocated to that entity for the 2005-06 fiscal year under the act that added this section. (B) The auditor shall make the estimates described in paragraph (1) on or before August 1, 2005. (2) "Adjusted ETSE reimbursement amount" means an amount equal to the ETSE reimbursement amount for a qualified excess tax school entity multiplied by the following amount for each applicable fiscal year: (A) For the 2006-07 fiscal year: 0.9. (B) For the 2007-08 fiscal year: 0.8. (C) For the 2008-09 fiscal year: 0.7. (D) For the 2009-10 fiscal year: 0.6. (E) For the 2010-11 fiscal year: 0.5. (F) For the 2011-12 fiscal year: 0.4. (G) For the 2012-13 fiscal year: 0.3. (H) For the 2013-14 fiscal year: 0.2. (I) For the 2014-15 fiscal year: 0.1. (3) "Qualified excess tax school entity" means a school district or a county office of education that is an excess tax school entity, as defined in subdivision (n) of Section 95 of the Revenue and Taxation Code, for which the amount described in clause (i) of subparagraph (A) of paragraph (1) exceeds the amount described in clause (ii) of that same subparagraph. (d) For the 2006-07 fiscal year and each fiscal year thereafter, property tax revenue allocations made pursuant to Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of the Revenue and Taxation Code, or any successor to that chapter, may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year. (e) This section is repealed on July 1, 2015. 30024. (a) After making the allocations required by Sections 30022, 30023, and Sections 97.68 and 97.70 of the Revenue and Taxation Code, the auditor shall allocate any moneys remaining in a county School Assistance Fund for Education according to this section. (b) (1) On or before August 20, 2005, and on or before each February 20 and August 20 thereafter, the county auditor shall allocate the remaining moneys in a county School Assistance Fund for Education to school districts and county offices of education, in total, and to community college districts, in total, in the same proportion that property tax revenues were distributed to school districts and county offices of education, in total, and community college districts, in total, during the 2004-05 fiscal year. (2) The county auditor shall, based on information provided by the county superintendent of schools pursuant to this paragraph, allocate that proportion of the revenue in the county School Assistance Fund for Education to be allocated to school districts and county offices of education only to those school districts and county offices of education within the county that are not excess tax school entities, as defined in subdivision (n) of Section 95 of the Revenue and Taxation Code. The county superintendent of schools shall determine the amount to be allocated to each school district in inverse proportion to the amounts of property tax revenue per average daily attendance in each school district. For each county office of education, the allocation shall be made based on the hf+rn•//infn can /oan/oh 17C1 _1 911(/oh 177A hs11 ')nnanan1 omanrlar1 oar. h+,,,l All f' fl la SB 1774 Senate Bill - AMENDED Page 8 of 22 historical split of base property tax revenue between the county office of education and school districts within the county. In no event may any additional money be allocated from the county School Assistance Fund for Education to a school district or county office of education upon that district or county office of education becoming an excess tax school entity. If, after determining the amount to be allocated to each school district and county office of education, the county superintendent of schools determines there are still additional funds to be allocated, the county superintendent of schools shall determine the remainder to be allocated in inverse proportion to the amounts of property tax revenue, excluding Educational Revenue Augmentation Fund moneys, per average daily attendance in each remaining school district, and on the basis of the historical split described above for each county office of education that is not an excess tax school entity, until all funds that would not result in a school district or county office of education becoming an excess tax school entity are allocated. The county superintendent of schools may determine the amounts to be allocated between each school district and county office of education to ensure that all funds that would not result in a school district or county office of education becoming an excess tax school entity are allocated. (3) The county auditor shall, based on information provided by the Chancellor of the California Community Colleges pursuant to this paragraph, allocate that proportion of the revenue in .the School Assistance Fund for Education to be allocated to community college districts only to those community college districts within the county that are not excess tax school entities, as defined in subdivision (n) of Section 95 of the Revenue and Taxation Code. The chancellor shall determine the amount to be allocated to each community college district in inverse proportion to the amounts of property tax revenue per funded full-time equivalent student in each community college district. In no event may any additional money be allocated from the county School Assistance Fund for Education to a community college district upon that district becoming an excess tax school entity. (4) (A) If, after making the allocation required pursuant to paragraph (2), the auditor determines that there are still additional funds to be allocated, the auditor shall allocate those excess funds pursuant to paragraph (3). If, after making the allocation pursuant to paragraph (3), the auditor determines that there are still additional funds to be allocated, the auditor shall allocate those excess funds pursuant to paragraph (2). If, after determining the amount to be allocated to each community college district, the Chancellor of the California Community Colleges determines that there are still additional funds to be allocated, the Chancellor of the California Community Colleges shall determine the remainder to be allocated to each community college district in inverse proportion to the amounts of property tax revenue, excluding Educational Revenue Augmentation Fund moneys, per funded full-time equivalent student in each remaining community college district that is not an excess tax school entity until all funds that would not result in a community college district becoming an excess tax school entity are allocated. (B) If, after making the allocations pursuant to paragraphs (2) and (3) and subparagraph (A), the auditor determines that there are still additional funds to be allocated, the auditor shall allocate those excess funds to the county superintendent of schools. Funds allocated pursuant to this paragraph shall be counted as property tax revenues for special education programs in augmentation of the amount calculated pursuant to Section 2572 of the Education Code, to 1'1G1 1 Qnn/ct, 1?'IA 7nnn(IA Al omanrlca,l cot-. l,tml APZ/)nnA SB 1774 Senate Bill - AMENDED Page 9 of 22 the extent that those property tax revenues offset state aid for county offices of education and school districts within the county pursuant to subdivision (c) of Section 56836.08 of the Education Code. SEC. 3. Section 97.68 of the Revenue and Taxation Code is amended to read: 97.68. Notwithstanding any other provision of law,. in allocating ad valorem property tax revenue allocations for each fiscal year during the fiscal adjustment period, all of the following apply: (a) (1) The total amount of ad valorem property tax revenue otherwise required to be allocated to a county's Educational Revenue Augmentation Fund shall be reduced by the countywide adjustment amount. (2) The countywide adjustment amount shall be deposited in a Sales and Use Tax Compensation Fund that shall be established in the treasury of each county. (b) For purposes of this section, the following definitions apply: (1) "Fiscal adjustment period" means the period beginning with the 2004-05 fiscal year and continuing through the fiscal year in which the Director of Finance notifies the State Board of Equalization pursuant to subdivision (b) of Section 99006 of the Government Code. (2) "Countywide adjustment amount" means the combined total revenue loss of the county and each city in the county that is annually estimated by the Director of Finance, based on the taxable sales in that county in the prior fiscal year as determined by the State Board of Equalization and reported to the director on or before August 15 of each fiscal year during the fiscal adjustment period, to result for each of those fiscal years from the 0.25 percent reduction in local sales and use rate tax authority applied by Section 7203.1. (c) For each fiscal year during the fiscal adjustment period, moneys in the Sales and Use Tax Compensation Fund shall be allocated among the county and the cities in the county, and those allocations shall be subsequently adjusted, as follows: (1) The Director of Finance shall, on or before September 1 of each fiscal year during the fiscal adjustment period, notify each county auditor of that portion of the countywide adjustment amount for that fiscal year that is attributable to the county and to each city within that county. (2) The county auditor shall allocate revenues in the Sales and Use Tax Compensation Fund among the county and cities in the county in the amounts described in paragraph (1). The auditor shall allocate one-half of the amount described in paragraph (1) in each January during the fiscal adjustment period and shall allocate the balance of that amount in each May during the fiscal adjustment period. (3) After the end of each fiscal year during the fiscal adjustment period, other than a fiscal year subject to subdivision (d), the Director of Finance shall, based on the actual taxable sales for the prior fiscal year, recalculate each amount estimated under paragraph (1) and notify the county auditor of the recalculated amount. (4) If the amount recalculated under paragraph (3) for the county or any city in the county is greater than the amount allocated to that local agency under paragraph (2), the county auditor shall, in the fiscal year next following the fiscal year for which the allocation was made, transfer an amount of ad valorem property tax revenue equal to this difference from the Sales and Use Tax Compensation Fund to that local agency. httn•//info can ca anti/nnh/hill/can/ch 1751 _1 RM/ch 1774 hill 71.11.14.114111 amenrlPrl can html 4/l/7nn4 SB 1774 Senate Bill - AMENDED Page 10 of 22 (5) If the amount recalculated under paragraph (3) for the county or any city in the county is less than the amount allocated to that local agency under paragraph (2), the county auditor shall, in the fiscal year next following the fiscal year for which the allocation was made, reduce the total amount of ad valorem property tax revenue otherwise allocated to that city or county from the Sales and Use Tax Compensation Fund by an amount equal to this difference and instead allocate this difference to the county Educational Revenue Augmentation Fund. (6) If there is an insufficient amount of moneys in a county's Sales and Use Tax Compensation Fund to make the transfers required by paragraph (4), the county auditor shall transfer from the county Educational Revenue Augmentation Fund an amount sufficient to make the full amount of these transfers. (d) (1) If Section 7203.1 ceases to be operative during any calendar quarter that is not the calendar quarter in which the fiscal year begins, the excess amount, as defined in paragraph (2), of the county and each city in the county shall be reallocated from each of those local agencies to the Educational Revenue Augmentation Fund. (2) For purposes of this subdivision, "excess amount" means the product of both of the following: (A) The total amount of ad valorem property tax revenue allocated to that local agency pursuant to paragraph (2) of subdivision (c). (B) That percentage of the fiscal year in which Section 7203.1 is not operative. (e) For the 2005-06 fiscal year and each fiscal year thereafter, the amounts determined under subdivision (a) of Section 96.1, or any successor to that provision, may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year. (f) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. The allocation made pursuant to subdivisions (a) and (c) shall be adjusted to comply with this paragraph. (2) Require an increased ad valorem property tax revenue allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (g) Existing tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies shall be deemed to be temporarily modified to account for the reduced sales and use tax revenues, resulting from the temporary reduction in the local sales and use tax rate, with those reduced revenues to be replaced in kind by property tax revenue from a Sales and Use Tax Compensation Fund or an Educational Revenue Augmentation Fund, on a temporary basis, as provided by this section. (h) This section is repealed on July 1, 2005. SEC. 4. Section 97.68 is added to the Revenue and Taxation Code, to read: 97.68. Notwithstanding any other provision of law: (a) In allocating ad valorem property tax revenue for the 2005-06 fiscal year, each county auditor shall deem the total amount of ad b+tM //infn ern ra rrnv/rmh/hill/enn/eh 1 751 _1 2nn/eh 177d hill nnanan1 amr nrlPr1 ePn html dI hfln4 SB 1774 Senate Bill - AMENDED Page 11 of 22 valorem property tax revenue allocated to each city, county, and city and county for the 2004-05 fiscal year to be the revenue protection amount for that city, county, or city and county. (b) In allocating ad valorem property tax revenue for the 2006-07 fiscal year, each county auditor shall increase the amount of ad valorem property tax revenue deemed allocated to each city, county, and city and county for the 2005-06 fiscal year by an amount equal to the 2006-07 ERAF factor for that city, county, or city and county. (c) For the 2005-06 fiscal year and each fiscal year thereafter, the auditor shall allocate to each special district no less than that share of ad valorem property tax revenues that were allocated to that district for the 20.03-04 fiscal year. (d) The county auditor shall make the allocations required by subdivisions (a), (b), and (c) in accordance with the following: (1) The auditor shall first reduce the total amount of ad valorem property tax revenue that is otherwise required to be allocated to the county Educational Revenue Augmentation Fund by an amount necessary to complete the allocations required by subdivisions (a), (b) , and (c) . (2) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to'be allocated to a county Educational Revenue Augmentation Fund for the auditor to make the allocation reduction required by paragraph (1), the auditor shall additionally reduce the total the amount of ad valorem property tax revenue that is otherwise required to be allocated to all school districts and community college districts by an amount necessary to complete the allocations required by subdivisions (a), (b), and (c). The amount of the reduction for each school district and community college district in the county shall be an amount equal to the proportion that the enrollment of the school district or community college district bears to the total enrollment of all school districts and community college districts in a county. (3) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to be allocated to school districts and community college districts in a county to complete the allocations required by subdivisions (a), (b), and (c), the auditor shall additionally allocate to each local agency an amount of revenue from the county School Assistance Fund for Education to complete the allocations required by subdivisions (a) , (b), and (c) . (e) For purposes of this section, all of the following apply: (1) The "revenue protection amount" means, with respect to a city, county, or city and county, the sum of the following four amounts (A) The actual amount of ad valorem property tax revenue allocated to that entity for the 2004-05 fiscal year, excluding any amount allocated to that entity under former Section 97.68 for that fiscal . year. (B) (i) The total amount of revenue that would have been transmitted to that entity under the Bradley -Burns Uniform Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2) for the 2004-05 fiscal year, as adjusted under Section 29530 of the Government Code, if the total tax rate imposed under that part was: (I) In the case of a county or city and county, three-quarters of 1 percent. (II) In the case of a city, one-half of 1 percent. (ii) On or before July 15, 2005, the State Board of Equalization shall determine the amount described in clause (i) for each city, county, and city and county and shall notify the auditor of each county of the amounts determined with respect to the county and httn•//infra ccn r.a aw/rnih/hill/ePn/ch 1751-1 Rflfl/ch 1774 hill )f10404f11 amended cen html 4R/1(104 SB 1774 Senate Bill - AMENDED Page 12 of 22 cities in the county. (C) The difference between the following two amounts: (i) The total amount that would have been appropriated to that entity for the 2004-05 fiscal year under the Vehicle License Fee Law (Part 5 (commencing with Section 10701) of Division 2), as that law read on January 1, 2004, if Section 10754 was not operative. (ii) The total amount of vehicle license fee revenue that was appropriated to that entity for the 2004-05 fiscal year from the Local Revenue Fund under Chapter 6 (commencing with Section 17600) of Part 5 of Division 9 of the Welfare and Institutions Code. (D) The 2005-06 ERAF factor. (2) The "2005-06 ERAF factor" means, with respect to a city, county, or city and county, an amount equal to the product of the following: (A) 0.5. (B) The difference between the following two amounts: (i) The amount of ad valorem property tax revenue that would have been allocated to that entity for the 2004-05 fiscal year under the statutes in effect on January 1, 2004, excluding any amount allocated to that entity under former Section 97.68 for that fiscal year. (ii) The actual amount of ad valorem property tax revenue allocated to that entity for the 2004-05 fiscal year, excluding any amount allocated to that entity under former Section 97.68 for that fiscal year. (3) The "2006-07 ERAF factor" means, with respect to a city, county, or city and county, the sum of the following: (A) The amount of the 2005-06 ERAF factor. (B) The difference between the following two amounts: (i) The additional amount of ad valorem property tax revenue that would have been allocated to that entity for the 2005-06 fiscal year, if an amount equal to the 2005-06 ERAF factor for that entity was allocated to that entity for the 2004-05 fiscal year. (ii) The amount of the 2005-06 ERAF factor. (f) For the 2006-07 fiscal year and each fiscal year thereafter, ad valorem property tax revenue allocations made pursuant to this chapter shall fully reflect the allocation adjustments required by this section for a preceding fiscal year. (g) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. Any excess, additional, or remaining funds in an Educational Revenue Augmentation Fund shall be allocated to cities, counties, and cities and counties, and special districts in the manner prescribed by those provisions as they read on January 1, 2004. (2) Require an increased ad valorem property tax revenue allocation or increased tax -increment allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (4) Alter the duties of a city, county, or city and county with respect to the programs and services that are financed with revenues that are required by the Vehicle License Fee Law revenues to be deposited in the Local Revenue Fund created by Section 17600 of the Welfare and Institutions Code. httri•//infra can ra crnv/rnih/hil1/can/ch 17S1-15211(1/ch 177d hill 'nndndn1 anianelarl can html 4/1/')11114 SB 1774 Senate Bill - AMENDED Page 13 of 22 (h) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues and the reduction in vehicle license fee revenues resulting from Section 7203.1 and the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. (i) Indebtedness agreements, entered into by a city, county, or city and county prior to the operative date of this section, that promised to provide any Vehicle License Fee Law revenues of a city, county, or city and county as the consideration or collateral for those agreements are deemed modified to account for the reduction in vehicle license fee revenues that are allocated to these entities as a result of the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. SEC. 5. -Section 97.69 is added to the Revenue and Taxation Code, to read: 97.69. (a) On or before August 1, 2005, the Director of Finance shall, in consultation with the State Board of Equalization, determine whether or not the amount allocated to each city, county, and city and county under former Section 97.68 of the Revenue and Taxation Code, as that statute read on June 30, 2005, fully reimbursed each of these entities for its actual local sales and use tax revenue losses during the 2004-05 fiscal year resulting from the one -quarter of 1 percent sales and use tax rate authority suspension applied for that fiscal year by Section 7203.1. The Director of Finance shall, on or before August 15, 2005, notify each county auditor of the amounts determined under this subdivision for the county or city and county, and each city in the county. (b) (1) If it is determined that a city, county, or city and county was not allocated, under former Section 97.68 of the Revenue and Taxation Code," as that statute read on June 30, 2005, an amount to complete the full reimbursement for the revenue loss described in subdivision (a), the auditor shall, on or before June 30, 2006, increase the total amount of ad valorem property tax revenue allocated to that entity for the 2005-06 fiscal year by the amount necessary to fully reimburse that entity for this loss. (2) On or before June 30, 2006, the auditor shall reduce the total amount of ad valorem property tax revenue allocated to the county Educational Revenue Augmentation Fund for the 2005-06 fiscal year by an amount equal to the total amount of ad valorem property tax revenue required by paragraph (1) to be allocated, as applicable, to a city, county, or city and county. (c) (1) If it is determined that a city, county, or city and county was allocated, under former Section 97.68 of the Revenue and Taxation Code, as that statute read on June 30, 2005, an amount in excess of the amount necessary to fully reimburse that entity for the revenue loss described in subdivision (a), the auditor shall, on or before June 30, 2006, reduce the total amount of ad valorem property tax revenue allocated to that entity for the 2005-06 fiscal year by an amount equal to the overpayment. (2) On or before June 30, 2006, the auditor shall increase the total amount of ad valorem property tax revenue allocated to the county Educational Revenue Augmentation Fund for the 2005-06 fiscal year by an amount equal to the total amount of ad valorem property tax revenue that is not allocated to a city, county or city and county as a result of paragraph (1). (d) For the 2006-07 fiscal year and each fiscal year thereafter, httn-//infn RPM es vnv/nuh/hi11/cen/ch 1751-1ROO/ch 1774 hill 9.0040401 amended gen.html 4/-4/9004 SB 1774 Senate Bill - AMENDED Page 14 of 22 ad valorem property tax revenue allocations made pursuant to this chapter may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year. (e) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (9) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. Any excess, additional, or remaining funds in an Educational Revenue Augmentation Fund shall be allocated to cities, counties, and cities and counties, and special districts in the manner prescribed by those provisions as they read on January 1, 2004. (2) Require an increased ad valorem property tax revenue allocation or increased tax -increment allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (f) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from Section 7203.1 and the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. (g) This section is repealed on July 1, 2006. SEC. 6. Section 97.70 is added to the Revenue and Taxation Code, to read: 97.70 (a) (1) On and after January 1, 2005, and on or before December 31, 2007, each city, county, or city and county may request that the total amount of ad valorem property that is otherwise required to be allocated to that entity for the fiscal year in which the request is made be increased by the new development adjustment amount. A city, county, or city and county may make only one request under this paragraph. (2) If a request is made under paragraph (1), the auditor shall, for the fiscal year in which the request is made, increase the total amount of ad valorem property that is otherwise required to be allocated to that entity for that fiscal year by the new development adjustment amount. (b) For each fiscal year for which an allocation is required to be made under subdivision (a), the county auditor shall make these allocations in accordance with the following: (1) The auditor shall first reduce the total amount of ad valorem property tax revenue that is otherwise required to be allocated to the county Educational Revenue Augmentation Fund by an amount equal to the countywide new development adjustment amount. (2) If, for the relevant fiscal year, there is not enough ad valorem property tax, revenue that is otherwise required to be allocated to a county Educational Revenue Augmentation Fund for the auditor to make the allocation reduction required by paragraph (1), the auditor shall additionally reduce the total the amount of ad valorem property tax revenue that is otherwise required to be allocated to all school districts and community college districts by an amount necessary to complete the allocations required by subdivision (a). The amount of the reduction for each school httn•//infra cPn ra anv/rnih/hill/cen/ch 1751-1 Rf)fl/ch 1774 hill 7f10404f11 amended sen.html 4/1/2OO4 SB 1774 Senate Bill - AMENDED Page 15 of 22 district and community college district in the county shall be an amount equal to the proportion that the enrollment of the school district or community college district bears to the total enrollment of all school districts and community college districts in a county. (3) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to be allocated to school districts and community college districts in a county to complete the allocations required by subdivision (a), the auditor shall additionally allocate to, as applicable, the county, city and county, and each city in the county an amount of revenue from the county School Assistance Fund for Education to complete the allocations required by subdivision (a). (c) For purposes of this section, all of the following apply: (1) (A) The "new development adjustment amount" means, with respect to a city, county, or city and county, an amount equal to the estimated amount of sales and use tax revenue that would be' collected from a retailer, subject to tax under the Bradley -Burns Uniform Local Sales and Use Tax Law, or any successor to that law, that makes sales of tangible personal property from a qualified parcel, in the first full fiscal year in which that retailer makes those sales from that parcel, and transmitted to the city, county, or city and county if the total rate imposed under that law for that fiscal year was one-half of 1 percent and Section 29530 of the Government Code did not apply. (B) "Countywide new development adjustment amount" means the total amount determined under subparagraph (A) for an applicable fiscal year for, as applicable, a city and county, or a county and the cities in that county. ((.7) The State Board of Equalization shall determine the amounts specified in subparagraphs (A) and (B) for each entity that makes a request under subdivision (a) and shall, on or before the end of the fiscal year for which an allocation is required under that subdivision, notify the chief financial officer of each requesting entity of the amount determined for that entity and the auditor of each county of the amounts determined with respect to these entities in a county. (2) "Qualified parcel" means a parcel of real property that was committed, pursuant to a development plan or redevelopment agreement with a city, county, or city and county the application for which was accepted as complete by that city, county, or city and county on or before January 1, 2005, to be put to use for making retail sales of tangible personal property on or after January 1, 2005. (d) For the 2006-07 fiscal year and each fiscal year thereafter, ad valorem property tax revenue allocations made pursuant to this chapter shall fully reflect the allocation adjustments required by this' section for a preceding fiscal year. (e) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. Any excess, additional, or remaining funds in an Educational Revenue Augmentation Fund shall be allocated to cities, counties, and cities and counties in the manner prescribed by those provisions as they read on January 1, 2004. (2) Require an increased ad valorem property tax revenue httn•//infn ce.n na anv/rnib/hill/cen/ch 1751-1 R00/sh 1774 hill 20040401 amended sen.html 4/3/2004 SB 1774 Senate Bill - AMENDED Page 16 of 22 allocation or increased tax -increment allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (f) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from Section 7203.1 and the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. (g) This section is repealed on July 1, 2008. SEC. 7. Section 6051.7 is added to the Revenue and Taxation Code, to read: 6051.7. (a) (1) In addition to the other taxes imposed by this part, for the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of one -quarter of 1 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the gross receipts derived from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on July 1, 2005. SEC. 8. Section 6051.9 is added to the Revenue and Taxation Code, to read: 6051.9. (a) (1) In addition to the other taxes imposed by this part, for the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of one -quarter of 1 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the gross receipts derived from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to httn://info.sen.ca..ov/nuh/bill/sen/sh 1751-1 ROn/sh 1774 hill 20040401 amended sen.html 4/3/2004 SB 1774 Senate Bill - AMENDED Page 17 of 22 subdivision (b) of Section 99006 of the Government Code. SEC. 9. Section 6201.7 is added to the Revenue and Taxation Code, to read: 6201.7. (a) (1) In ' addition to the other taxes imposed by this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer at the rate of one -quarter of 1 percent of the sales price of the property. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the storage, use, or other consumption in this state of tangible personal property, other than fuel or petroleum products, by operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the. United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on July 1, 2005. SEC. 10. Section 6201.9 is added to the Revenue and Taxation Code, to read: 6201.9. (a) (1) In addition to the other taxes imposed by this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer at the rate of one -quarter of 1 percent of the sales price of the property. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the storage, use, or other consumption in this state of tangible personal property, other than fuel or petroleum products, by operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code. SEC. 11. Section 7202 of the Revenue and Taxation Code is amended to read: 7202. The sales tax portion of any sales and use tax ordinance adopted under this part shall be imposed for the privilege of selling tangible personal property at retail, and shall include provisions in substance as follows: (a) A provision imposing a tax for the privilege of selling tangible personal property at retail upon every retailer in the county at the'rate of 11/4 percent , and on and after July 1, 2005, at the rate of three-quarters of 1 percent, of the gross receipts of the retailer from the sale of all tangible personal property sold by that person at retail in the county. (b) Provisions identical to those contained in Part 1 (commencing httn-//infn cen ca unv/nnh/hill/cen/ch 1751-1 R00/sh 1774 hill 20040401 amended sen.html 4/3/2004 SB 1774 Senate Bill - AMENDED Page 18 of 22 with Section 6001), insofar as they relate to sales taxes, except that the name of the county as the taxing agency shall be substituted for that of the state and that an additional seller's permit shall not be required if one has been or is issued to the seller under Section 6067. (c) A provision that all amendments subsequent to the effective date of the enactment of Part 1 (commencing with Section 6001) relating to sales tax and not inconsistent with this part, shall automatically become a part of the sales tax ordinance of the county. (d) A provision that the county shall contract prior to the effective date of the county sales and use tax ordinances with the State Board of Equalization to perform all functions incident to the administration or operation of the sales and use tax ordinance of the county. Any such contract shall contain a provision that the county agrees to comply with the provisions of Article 11 (commencing with Section 29530) of Chapter 2 of Division 3 of Title 3 of the Government Code. (e) A provision that the ordinance may be made inoperative not less than 60 days, but not earlier than the first day.of the calendar quarter, following the county's lack of compliance with Article 11 (commencing with Section 29530) of Chapter 2 of Division 3 of Title 3 of the Government Code or following an increase by any city within the county of the rate of its sales oruse tax above the rate in effect at the time the county ordinance was enacted. (f) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California upon a retailer or consumer. (g) A provision that there is exempted from the sales tax 80 percent, and on and after July 1, 2004, until tho rato and on and before June 30, 2005 , 75 percent, and on and after July 1, 2005, 67 percent of the gross receipts from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (h) A provision that any person subject to a sales and use tax under the county ordinance shall be entitled to credit against the payment of taxes due under that ordinance the amount of sales and use tax due to any city in the county; provided that the city sales and use tax is levied under an ordinance including provisions in substance as follows: (1) A provision imposing a tax for the privilege of selling tangible personal property at retail upon every retailer in the city at the rate of 1 percent or less , and on and after July 1, 2005, at a rate of one-half of 1 percent or less, of the gross receipts of the retailer from the sale of all tangible personal property sold by that person at retail in the city and a use tax of 1 percent or less , and on and after July 1, 2005, at a rate of one-half of 1 percent or less, of purchase price upon the storage, use or other consumption of tangible personal property purchased from a retailer for storage, use or consumption in the city. (2) Provisions identical to those contained in Part 1 (commencing with Section 6001), insofar as they relate to sales and use taxes, except that the name of the city as the taxing agency shall be substituted for that of the state (but the name of the city shall not httD://info.sen.ca.eov/nub/bill/sen/sh 1751-1 X00/sh 1774 hill 20040401 amended cen html 4/1/9004 SB 1774 Senate Bill - AMENDED Page 19 of 22 be substituted for the word "state" in the phrase "retailer engaged in business in this state" in Section 6203 nor in the definition of that phrase in Section 6203) and that an additional seller's permit shall not be required if one has been or is issued to the seller under Section 6067. (3) A provision that all amendments subsequent to the effective date of the enactment of Part 1 (commencing with Section 6001) relating to sales and use tax and not inconsistent with this part, shall automatically become a part of the sales and use tax ordinance of the city. (4) A provision that the city shall contract prior to the effective date of the city sales and use tax ordinance with the State Board of Equalization to perform all functions incident to the administration or operation of the sales and use tax ordinance of the city which shall continue in effect so long as the county within which the city is located has an operative sales and use tax ordinance enacted pursuant to this part. (5) A provision that the storage, use or other consumption of tangible personal property, the gross receipts from the sale of which has been subject to sales tax under a sales and use tax ordinance enacted in accordance with this part by any city and county, county, or city in this state, shall be exempt from the tax due under this ordinance. (6) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California upon a retailer or consumer. (7) A provision that there are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of aircraft to be used or consumed principally outside the city in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (8) A provision that, in addition to the exemptions provided in Sections 6366 and 6366.1, the storage, use, or other consumption of tangible personal property purchased by operators of aircraft and used or consumed by the operators directly and exclusively in the use. of the aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this state, the United States, or any foreign government is exempt from the use tax. (i) On and after July 1, 2005, both of the following apply: (1) The tax rate imposed under an ordinance described in this section is deemed reduced by one-half of 1 percent. (2) (A) If the authority of a city, county, or city and county to impose a tax rate under this part is increased to authorize a rate that exceeds the rate so imposed by that entity on July 1, 2005, but does not exceed the rate so imposed by the entity on January 1, 20b4, the tax rate imposed by the entity under an ordinance described in this section is deemed to be the increased rate, which may not include an increase in excess of one-half of 1 percent. (B) Subparagraph (A) is a self-executing provision that operates without regard to any decision or act on the part of any local government. A tax rate deemed increased under subparagraph (A) is not subject to voter approval under either statute or Article XIII C of the California Constitution. (3) If a city, county, or city and county is later authorized to impose a rate under this part that exceeds the rate so imposed by that entity on July 1, 2005, and the rate subsequently imposed by that entity exceeds the rate that the entity imposed on January 1, htto://info.sen.ca.rnv/nuh/hill/sen/qh 1751-1 Rnn/ch 1774 hill 7ffdfdf 1 aYY1PYIrlArlOc.r, t,+„ t A i1 iinnA SB 1774 Senate Bill - AMENDED Page 20 of 22 2004, the entity shall comply with any applicable voter -approval requirements set forth in the California Constitution and in statute. (j) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from former Section 7203.1 and the act that added this subdivision. These agreements are modified in that these reduced revenues are, in kind and. in lieu thereof, replaced with ad valorem property tax revenue. SEC. 12. Section 7203 of the Revenue and Taxation Code is amended to read: 7203. (a) The use tax portion of any sales and use tax ordinance adopted under this part shall impose a complementary tax upon the storage, use or other consumption in the county of tangible personal property purchased from any retailer for storage, use or other consumption in the county. That tax shall be at the rate of 11/4 percent , and on and after July 1, 2005, three-quarters of 1 percent, of the sales price of the property whose storage, use or other consumption is subject to the tax and shall include: (a) (1) Provisions identical to the provisions contained in Part 1 (commencing with Section 6001), other than Section 6201 insofar as those provisions relate to the use tax, except that the name of the county as the taxing agency enacting the ordinance shall be substituted for that of the state (but the name of the county shall not be substitutedfor the word "state" in the phrase "retailer engaged in business in this state" in Section 6203 nor in the definition of that phrase in Section 6203). (b) (2) A provision that all amendments subsequent to the date of such ordinance to the provisions of the Revenue and Taxation Code relating to the use tax and not inconsistent with this part shall automatically become a part of the ordinance. (c) (3) A provision that the storage, use or other consumption of tangible personal property, the gross receipts from the sale of which has been subject to sales tax under a sales and use tax ordinance enacted in accordance with this part by any city and county, county, or city in this state, shall be exempt from the tax due under this ordinance. (d) (4) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California upon a retailer or consumer. ( ) (5) A provision that, in addition to the exemptions provided in Sections 6366 and 6366.1, the storage, use, or other consumption of tangible personal property, other than fuel or petroleum products, purchased by operators of aircraft and used or consumed by the operators directly and exclusively in the use of the aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this state, the United States or any foreign government is exempt from 80 percent of the use tax, and on and after July 1, 2004, .,ti tho - te ^ai€ieat ion s h�1 v s e ta)—n€ S cti n 7203.1 c ac t apply and on and before June 30, 2005 , exempt from 75 percent of the use tax , and on httn://info.sen_ca_gnv/nub/hill/gen/sh 1751 _1 Rnfl/ch 177d h;11 'nnanani amPnrlarl ePn 1,++„t n nr - ,j SB 1774 Senate Bill - AMENDED Page 21 of 22 and after July 1, 2005, exempt from 67 percent of the use tax (b) On and after July 1, 2005, both of the following apply: (1) The tax rate imposed under an ordinance described in this section is deemed reduced by one-half of 1 percent. (2) (A) If the authority of a county or city and county to impose a tax rate under this part is increased to authorize a rate that exceeds the rate so imposed by that entity on July 1, 2005, but does not exceed the rate that the rate so imposed by the entity on January 1, 2004, the tax rate imposed under an ordinance described in this section is deemed to be the increased rate, which may not include an increase in excess of one-half of 1 percent. (B) Subparagraph (A) is a self-executing provision that operates without regard to any decision or act on the part of any local government. A'tax rate deemed increased under subparagraph (A) is not subject to voter approval under either statute or Article XIII C of the California Constitution. (3) If a county or city and county is later authorized to impose a rate under this part that exceeds the rate so imposed by that entity on July 1, 2005, and the rate subsequently imposed by that entity exceeds the rate that the entity imposed on January 1, 2004, the entity shall comply with any applicable voter -approval requirements set forth in the California Constitution or in statute. (c) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from former Section 7203.1 and the act that added this subdivision. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. SEC. 13. Section 7203.1 of the Revenue and Taxation Code is amended to read: 7203.1. (a) Notwithstanding any other provision of law, during the revenue exchange period only, the authority of a county or a city under this part to impose a tax rate as specified in an ordinance adopted pursuant to Sections 7202 and 7203 is suspended, and the tax rate to be applied instead during that period under any ordinance as so adopted is the applicable of the following: (1) In the case of a county, 1 percent. (2) In the case of a city, three-quarters of 1 percent.. (b) For purposes of this section, "revenue exchange period" means the period on and after July 1, 2004 and before the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code. (c) Subdivision (a) is a self-executing provision.that operates without regard to any decision or act on the part of any local government. A change in a local general tax rate resulting from either the rate limitations applied by subdivision .(a) or the end of the revenue exchange period is not subject to voter approval under either statute or Article XIII C of the California Constitution. (d) Existing tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies shall be deemed to be temporarily modified to account for the reduction in sales and use tax revenues resulting from this section, with those reduced revenues to be replaced as may otherwise be provided by law. (e) This section is repealed on July 1, 2005. httn://info_sen_ca_gov/nuh/hill/sen/sh 1751-1 Rflf/ch 177d hill ')nndndni an,P,.1P cPn t,*,„1 ai2 onna SB 1774 Senate Bill - AMENDED Page 22 of 22 SEC. 14. Section 11007 is added to the Revenue and Taxation Code, to read: 11007. (a) Notwithstanding any other provision of law, on and after July 1, 2005, all qualified revenues shall be deposited in the SAFE Vehicle License Fee Law Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (b) For purposes of this section, all of the following apply: (1) "Qualified revenues" means all of the following: (A) Those fees collected under this part, other than fees on trailer coaches and mobilehomes, over and above the costs refunds otherwise authorized by law, that are not otherwise required to be deposited in the Local Revenue Fund. (B) Those revenues that are required by ,Section 10754 to be transferred from the General Fund that are not otherwise required to be deposited in the Local Revenue Fund. (2) "Qualified revenues" do not include any of the following: (A) The amount that is appropriated for the purposes specified in Section 10003. (B) The amount determined necessary by the Pooled Money Investment Board to meet the transfers ordered or proposed to be ordered pursuant to Section 16310 of the Government Code. SEC. 15. Notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. SEC. 16. This act shall become operative only if Senate Constitutional Amendment of the 2003-04 Regular Session is approved by voters at the November 2, 2004, statewide general election and, in that event, shall become operative on the date upon which this act is chaptered or the effective date of that measure, whichever is later. SEC. 17. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to provide the necessary statutory changes necessary to implement Senate Constitutional Amendment of the 2003-04 Regular Session, which, if approved by voters, will become operative on November 3, 2004, it is necessary that this act take effect immediately. C-d , t r ad: 5 6425 _ 1. The c MMigS4-OR shall hot a aerxd spheres f influ nce more fr qu ntly than feur timos shhrinq aeq calohar year. Each g t f araondmonts may include amendmhhts to tho same sphoro of influonco or n r xi re amhhdi onts to-thesame spher f influ nc . Th initial spher f influence fex a far sed city r pr p s d sp cial district. http://info.sen.ca.gov/pub/bill/sen/sb 1751-1800/sb 1774 bill 20040401 amended sen.html 4/3/2004 atate INet 1 ext aearcn rage t of 2s In bill text the following has special meaning underline denotes added text s4 k- t t .t .ierot ,cl t , text .,.... 2003 CAA 3105 AUTHOR: Campbell VERSION: Introduced VERSION DATE: 04/01/2004 ASSEMBLY BILL No. 3105 INTRODUCED BY Assembly Members Campbell and Steinberg APRIL 1, 2004 An act to amend Section 29530 of, and to add Chapter 6.3 (commencing with Section 30020) to Division 3 of Title 3 of, and to repeal Section 30023 of, the Government Code, to amend Sections 7202 and 7203 of, to amend and repeal Section 7203.1 of, to amend, add, and repeal Section 97.68 of, to add Sections 6051.7, 6051.9, 6201.7, 6201.9, and 11007 to, to add and repeal Sections 97.69 and 97.70 of, the Revenue and Taxation Code, relating to local government finance, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 3105, as introduced, Campbell. Local government fmance. (1) A proposed amendment to the California Constitution, of the 2003-04 Regular Session, would, among other things, establish a School Assistance Fund for Education (SAFE) in the treasury of each county to receive specified revenues. This bill would implement this proposed constitutional amendment. This bill would create a State School Assistance Fund for Education in the State Treasury that would consist of 2 accounts: a SAFE Sales and Use Tax Revenue Account and a SAFE Vehicle License Fee Law Account, which accounts would respectively receive specified state sales and use tax revenues and vehicle license fee revenues. This bill would make an appropriation by continuously appropriating moneys in these accounts to county SAFES. This bill would require that moneys in a county SAFE be allocated for various purposes, including making advances to cities, counties, and cities and counties against these entities' annual ad valorem property tax allocations and making allocations to school entities in a county, as specified. (2) Existing property tax law requires the county auditor, for each fiscal year, to allocate property tax revenue to local jurisdictions in accordance with specified formulas and procedures, and generally http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 v13L 1YGL 1 VAL UGal G11 Page 2 of 23 requires that each jurisdiction be allocated an amount equal to the total of the amount of revenue allocated to that jurisdiction in the prior fiscal year, subject to certain modifications, and that jurisdiction's portion of the annual tax increment, as defined. Existing property tax law also reduces the amounts of ad valorem property tax revenue that would otherwise be annually allocated to the county, cities, and special districts pursuant to these general allocation requirements by requiring, for purposes of determining property tax revenue allocations in each county for the 1992-93 and 1993-94 fiscal years, that the amounts of property tax revenue deemed allocated in the prior fiscal year to the county, cities, and special districts be reduced in accordance with certain formulas. It requires that the revenues not allocated to the county, cities, and special districts as a result of these reductions be transferred to the Educational Revenue Augmentation Fund (ERAF) in that county for allocation to school districts, community college districts, and the county office of education. This bill would, for purposes of determining property tax revenue allocation amounts for the 2005-06 fiscal year, deem the amount of ad valorem property tax revenue allocated to each city, county, and city and county for the 2004-05 fiscal year to be the revenue protection amount (RPA). The bill would define the RPA as an amount generally equal to the amount of property tax revenue allocated to the entity for the 2004-05 fiscal year, the amount of specified vehicle license fee revenues allocated to the entity for that fiscal year, the amount of local sales and use tax revenue that would have been allocated to the entity for that fiscal year under a specified rate, and the 2005-06 ERAF factor, as defmed. This bill also would, for the 2006-07 fiscal year, increase the amount of property tax revenue deemed allocated to a city, county, or city and county for the 2005-06 fiscal year by the 2006-07 ERAF factor, as defmed. This bill also would, for a specified period, authorize a city, county, or city and county to request that its property tax allocation be increased by the new development adjustment amount, as defined. This bill also would, for the 2005-06 fiscal year and each fiscal year thereafter, require that each special district receive no less than the portion of property tax revenues that was allocated to that district for the 2003- 04 fiscal year, as specified. By imposing new duties upon local tax officials in the annual allocation of these revenues, this bill would impose a state -mandated local program. (3) The Sales and Use Tax Law imposes a tax on the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. Beginning on July 1, 2004, and continuing until a specified date after the Director of Finance makes a specified notification to the State Board of Equalization, that law imposes an additional state sales and use tax at the rate of 0.25%. This bill would, on and after July 1, 2005, impose an additional state sales and use tax at the rate of 0.25% that would be deposited in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education. This bill also would, on and after the specified date after the Director of Finance makes the specified notification to the State Board of Equalization, impose an additional state sales and use tax at the rate of 0.25% that would be deposited in that same account. (4) The Bradley -Burns Uniform Local Sales and Use Tax Law (Bradley -Burns Law) authorizes a county to impose a local sales and use tax at a rate of 1.25%, and similarly authorizes a city, located within a county imposing such a tax rate, to impose a local sales tax rate of 1% that is credited against the county rate. Beginning on July 1, 2004, existing law reduces by 0.25% the rate that may be imposed by a county or a city under the Bradley -Burns Law, but increases that rate by one -quarter of 1% on a specified date after the Director of Finance makes a specified notification to the State Board of Equalization. Existing law requires the county auditor to decrease, during the period that this Bradley -Burns Law http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 Jtate net 1 ext earcn rage s or Li rate decrease is operative, the amount of ad valorem property tax revenue allocated to a county's Educational Revenue Augmentation Fund by the countywide adjustment amount, as defined, and requires the auditor to instead allocate this amount to the Sales and Use Tax Compensation Fund in the county. Existing law requires, during this same period, the county auditor to allocate moneys from the Sales and Use Tax Compensation Fund to cities and counties to reimburse these entities for any Bradley -Burns Law revenue losses resulting from the decreased rate that may be imposed under that law during this period. This bill would, on and after July 1, 2005, reduce by an additional 0.25% the rate that may be imposed by a county or a city under the Bradley -Burns Law. This bill also would repeal the provisions that increase this rate after the director's notification and thereby indefinitely reduce the rate that a city or a county may impose under the Bradley -Burns Law by 0.5%. This bill also would make conforming changes to related provisions. This bill also would, on July 1, 2005, repeal the provisions relating to Sales and Use Tax Compensation Funds, but would require that a city or a county be fully reimbursed with property tax revenues from an Educational Revenue Augmentation Fund for any Bradley -Burns Law revenue losses in the 2004-05 fiscal year that were not reimbursed under these provisions. This bill also would require the auditor to transfer property tax revenues from a city or a county to an Educational Revenue Augmentation Fund if that city or county received an amount in excess of the amount required to fully reimburse the entity for those Bradley -Burns Law revenue losses. (5) The Vehicle License Fee (VLF) Law establishes, in lieu of any ad valorem property tax upon vehicles, an annual license fee for any vehicle subject to registration in this state in the amount oft% of the market value of that vehicle, as specified, but offsets this amount by 67.5% for vehicle license fees with a final due date on or after July 1, 2001. Existing law allocates revenues derived under the VLF Law among counties and cities and also requires that General Fund moneys be transferred, as specified, to cities and counties to compensate for reduced revenues resulting from VLF offsets. Existing law requires counties to utilize certain VLF Law revenues for local health and welfare programs. This bill would require, on and after July 1, 2005, that specified vehicle license fees and General Fund revenues be deposited in the SAFE Vehicle License Fee Law Account for allocation to county SAFEs, as provided. This bill also would exclude from this requirement those VLF Law proceeds that are utilized by counties and cities for local health and welfare programs. (6) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates that do not exceed $1,000,000 statewide and other procedures for claims whose statewide costs exceed $1,000,000. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. (7) This bill would take effect immediately as an urgency statute. (8) This bill would provide that it shall become operative only if ACA the November 2, 2004, statewide general election. is approved by voters at Vote: 2/3. Appropriation: yes. Fiscal committee: yes. State -mandated local program: yes. http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text_version=CA2003000A3105 20... 4/3/2004 rJ LaLG LIWL 1GXL Oearcn Page 4 of 23 THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 29530 of the Government Code is amended to read: 29530. (a) If the board of supervisors so agrees by contract with the State Board of Equalization, the board of supervisors shall establish a local transportation fund in the county treasury and shall deposit in the fund all revenues transmitted to the county by the State Board of Equalization under Section 7204 of the Revenue and Taxation Code, which -that are derived from that portion of the taxes imposed by the county at a rate in excess of 1 percent, and on and after July 1, 2004, until the rut_ mo if e_ti_n_ i _ 3ubdivi3ion (a) of Scction 7203.1 of the Reventtc aid. Taxation Codc cca3c to apply, and on and before June 30, 2005, at a rate in excess of three-quarters of 1 percent, and on and after July 1, 2005, at a rate in excess of one-half of 1 percent, pursuant to Part 1.5 (commencing with Section 7200) of Division 2 of that code, less an allocation of the cost of the services of the State Board of Equalization in administering the sales and use tax ordinance related to the rate in excess of 1 percent, and on and after July 1, 2004, 203.1 of the Rcvcnuc and Taxation Codc cca3c to apply, and on and before June 30, 2005, to the rate in excess of three-quarters of 1 percent, and on and after July 1, 2005, to the rate in excess of one-half of 1 percent, and of the Director of Transportation and the Controller in administering the responsibilities assigned to him or her in Chapter 4 (commencing with Section 99200) of Part 11 of Division 10 of the Public Utilities Code. (b) Any interest or other income earned by investment or otherwise of the local transportation fund shall accrue to and be a part of the fund. SEC. 2. Chapter 6.3 (commencing with Section 30020) is added to Division 3 of Title 3 of the Government Code, to read: CHAPTER 6.3. SCHOOL ASSISTANCE FUNDS FOR EDUCATION (SAFES) 30020. (a) The State School Assistance Fund for Education is hereby created in the State Treasury. (b) In the fund created by subdivision (a), there is hereby created: (1) A SAFE Sales and Use Tax Revenue Account to receive those revenues specified in Sections 6051.7, 6051.9, 6201.7, and 6201.9 of the Revenue and Taxation Code. (2) A SAFE Vehicle License Fee Law Account to receive those revenues specified by Section 11007. (c) Notwithstanding Section 13340, moneys in the State School Assistance Fund for Education are continuously appropriated, without regard to fiscal years, in accordance with the following: (1) (A) With respect to those revenues deposited in the SAFE Sales and Use Revenue Account, to the Controller for allocation to the School Assistance Fund for Education in each county and city and county in an amount that is equal to the amount of revenue, less refunds, derived in that county or city and county from the taxes imposed by Sections 6051.7, 6051.9, 6201.7, and 6201.9 of the Revenue and Taxation Code. The State Board of Equalization shall notify the Controller of the amount that is required to be allocated each county School Assistance Fund for Education on or before the 26th day of each month. http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105_20... 4/3/2004 atate ivet t ext aearcn rage D or zi (B) With respect to those revenues deposited in the SAFE Vehicle License Fee Law Account, to the Controller for allocation to the School Assistance Fund for Education in each county and city and county. The moneys in the account shall be allocated to the School Assistance Fund for Education m each county and city and county in the proportion that the population of each county or city and county bears to the total population of all the counties and cities and counties of the state. (2) On or before the 27th day of each month, the Controller shall allocate to each county School Assistance Fund for Education the amounts deposited and remaining unexpended and unresolved in the . t State School Assistance Fund for Education as of the 15th day of each month. (d) The county auditor shall allocate moneys deposited in each county's School Assistance Fund for Education in the manner prescribed by this chapter and Sections 97.68 and 97.70 of the Revenue and Taxation Code. 30021. For purposes of Sections 2558, 42238, 84750, and 84751 of the Education Code and subdivision (n) of Section 95 of the Revenue and Taxation Code, the revenues that are allocated to school districts, county offices of education, and community college districts from a county School Assistance Fund for Education are deemed to be ad valorem property tax revenues. 30022. (a) On or before July 15, 2005, and on or before each July 15 thereafter, the county auditor shall estimate the annual property tax advance amount for the county or city and county and each city in the county. (b) (1) On or before July 31, 2005, and on or before the last day of each month thereafter, the auditor shall allocate from the county School Assistance Fund for Education to the county or city and county, and to each city in the county, an amount equal to one -twelfth of that entity's annual property tax advance amount. (2) If there is not enough money in a county School Assistance Fund for Education to make the allocations when required by paragraph (1), the auditor shall reduce the total amount required by that paragraph to be allocated to all entities in the county to the amount of money that is in that fund on the last day of the month. The amount allocated to each entity shall be reduced by an amount equal to the proportion that the amount required to be allocated to each entity in the county bears to the total amount that is required to be allocated to all entities in the county. (c) (1) On or before January 30, 2006, and on or before each June 29 and January 30 thereafter, the auditor shall reduce the total amount of ad valorem property tax revenue that would otherwise be allocated to each city, county, and city and county for that portion of the fiscal year by an amount equal to the amounts allocated under subdivision (b) to each of these entities in the immediately preceding six months. (2) If the amount of ad valorem property tax revenue that would otherwise be allocated to a city, county, or city and county for that portion of the fiscal year is less than the amount allocated to that entity under subdivision (b) in the immediately preceding six months, both of the following apply: (A) The auditor may not allocate ad valorem property tax revenue to that entity for that portion of the fiscal year. That amount of ad valorem property tax revenue that is not allocated to a city, county, or city and county as a result of paragraph (1) shall instead be deposited in the county School Assistance Fund for Education. (B) If a city, county, or city and county is not allocated any ad valorem property tax revenue for a http ://client. statenet.com/secure/pe/ts. cgi?mode=fetch&text_version=CA2003 000A3 l 05_20... 4/3/2004 JLate riet 1 ext 3earcn Page 6 of 23 portion of a fiscal year as a result of the application of subparagraph (B) of paragraph (1), and the amount allocated to that entity under this subdivision for the immediately preceding six months exceeds the amount of ad valorem property tax revenue that would have been allocated to that entity in the absence of that subparagraph, the auditor shall reduce by the same increment the amount that is required to be allocated to that entity under subdivision (b) for each of the next six months so as to make a total reduction that is equal to the difference between the following amounts: (i) The amount that was allocated to that entity for the immediately preceding six months. (ii) The amount of ad valorem property tax revenue that would have been allocated to that entity for that portion of the fiscal year if subparagraph (B) of paragraph (1) of subdivision (c) did not apply. (d) For purposes of this section, the "annual property tax advance amount" for a city, county, or city and county, means, for each fiscal year, an amount equal to the product of the following: (1) 0.9. (2) The difference between the following two amounts: (A) The estimated total amount of ad valorem property tax revenue that is required to be allocated to that entity for the fiscal year in which the estimate is made. (B) The estimated total amount of ad valorem property tax revenue that would have been required to be allocated to that entity for the fiscal year in which the estimate is made under the statutes in effect on January 1, 2004.. (e) For the 2006-07 fiscal year and each fiscal year thereafter, property tax allocations made pursuant to Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of the Revenue and Taxation Code, or any successor to that chapter, may not reflect, for a preceding fiscal year, any portion of any property tax revenue allocation required by this section. 30023. (a) For the 2005-06 fiscal year, the auditor shall allocate from the county School Assistance Fund for Education to each qualified excess tax school entity in the county or city and county the Excess School Tax Entity (ETSE) reimbursement amount. (b) For each of the 2006-07 to the 2014-15 fiscal years, inclusive, the auditor shall allocate from the county School Assistance Fund for Education to each qualified excess tax school entity in the county or city and county the adjusted ETSE reimbursement amount. (c) For purposes of this section, all of the following apply: (1) (A) "ETSE reimbursement amount" means, with respect to each qualified excess tax school entity, an amount equal to the difference, if any, between the following two amounts: (i) The estimated amount of ad valorem property tax revenue that would have been allocated to that entity for the 2005-06 fiscal year under the statutes in effect on November 1, 2004. (ii) The estimated amount of ad valorem property tax revenue that will be allocated to that entity for the 2005-06 fiscal year under the act that added this section. (B) The auditor shall make the estimates described in paragraph (1) on or before August 1, 2005. http://client.statenet.corn/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 State Net Text Search rage / or Li (2) "Adjusted ETSE reimbursement amount" means an amount equal to the ETSE reimbursement amount for a qualified excess tax school entity multiplied by the following amount for each applicable fiscal year: (A) For the 2006-07 fiscal year: 0.9. (B) For the 2007-08 fiscal year: 0.8. (C) For the 2008-09 fiscal year: 0.7. (D) For the 2009-10 fiscal year: 0.6. (E) For the 2010-11 fiscal year: 0.5. (F) For the 2011-12 fiscal year: 0.4. (G) For the 2012-13 fiscal year: 0.3. (H) For the 2013-14 fiscal year: 0.2. (I) For the 2014-15 fiscal year: 0.1. (3) "Qualified excess tax school entity" means a school district or a county office of education that is an excess tax school entity, as defined in subdivision (n) of Section 95 of the Revenue and Taxation Code, for which the amount described in clause (i) of subparagraph (A) of paragraph (1) exceeds the amount described in clause (ii) of that same subparagraph. (d) For the 2006-07 fiscal year and each fiscal year thereafter, property tax revenue allocations made pursuant to Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of the Revenue and Taxation Code, or any successor to that chapter, may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year. (e) This section is repealed on July 1, 2015. 30024. (a) After making the allocations required by Sections 30022, 30023, and Sections 97.68 and 97.70 of the Revenue and Taxation Code, the auditor shall allocate any moneys remaining in a county School Assistance Fund for Education according to this section. (b) (1) On or before August 20, 2005, and on or before each February 20 and August 20 thereafter, the county auditor shall allocate the remaining moneys in a county School Assistance Fund for Education to school districts and county offices of education, in total, and to community college districts, in total, in the same proportion that property tax revenues were distributed to school districts and county offices of education, in total, and community college districts, in total, during the 2004-05 fiscal year. (2) The county auditor shall, based on information provided by the county superintendent of schools pursuant to this paragraph, allocate that proportion of the revenue in the county School Assistance Fund for Education to be allocated to school districts and county offices of education only to those school districts and county offices of education within the county that are not excess tax school entities, as defined in subdivision (n) of Section 95 of the Revenue and Taxation Code. The county superintendent of schools shall determine the amount to be allocated to each school district in inverse proportion to the http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 £la[e iNet lexi aearcn Page 8 of 23 amounts of property tax revenue per average daily attendance in each school district. For each county office of education, the allocation shall be made based on the historical split of base property tax revenue between the county office of education and school districts within the county. In no event may any additional money be allocated from the county School Assistance Fund for Education to a school district or county office of education upon that district or county office of education becoming an excess tax school entity. If, after determining the amount to be allocated to each school district and county office of education, the county superintendent of schools determines there are still additional funds to be allocated, the county superintendent of schools shall determine the remainder to be allocated in inverse proportion to the amounts of property tax revenue, excluding Educational Revenue Augmentation Fund moneys, per average daily attendance in each remaining school district, and on the basis of the historical split described above for each county office of education that is not an excess tax school entity, until all funds that would not result in a school district or county office of education becoming an excess tax school entity are allocated. The county superintendent of schools may determine the amounts to be allocated between each school district and county office of education to ensure that all funds that would not result in a school district or county office of education becoming an excess tax school entity are allocated. (3) The county auditor shall, based on information provided by the Chancellor of the California Community Colleges pursuant to this paragraph, allocate that proportion of the revenue in the School Assistance Fund for Education to be allocated to community college districts only to those community college districts within the county that are not excess tax school entities, as defined in subdivision (n) of Section 95 of the Revenue and Taxation Code. The chancellor shall determine the amount to be allocated to each community college district in inverse proportion to the amounts of property tax revenue per funded full-time equivalent student in each community college district. In no event may any additional money be allocated from the county School Assistance Fund for Education to a community college district upon that district becoming an excess tax school entity. (4) (A) If, after making the allocation required pursuant to paragraph (2), the auditor determines that there are still additional funds to be allocated, the auditor shall allocate those excess funds pursuant to paragraph (3). If, after making the allocation pursuant to paragraph (3), the auditor determines that there are still additional funds to be allocated, the auditor shall allocate those excess funds pursuant to paragraph (2). If, after determining the amount to be allocated to each community college district, the Chancellor of the California Community Colleges determines that there are still additional funds to be allocated, the Chancellor of the California Community Colleges shall determine the remainder to be allocated to each community college district in inverse proportion to the amounts of property tax revenue, excluding Educational Revenue Augmentation Fund moneys, per funded full-time equivalent student in each remaining community college district that is not an excess tax school entity until all funds that would not result in a community college district becoming an excess tax school entity are allocated. (B) If, after making the allocations pursuant to paragraphs (2) and (3) and subparagraph (A), the auditor determines that there are still additional funds to be allocated, the auditor shall allocate those excess funds to the county superintendent of schools. Funds allocated pursuant to this paragraph shall be counted as property tax revenues for special education programs in augmentation of the amount calculated pursuant to Section 2572 of the Education Code, to the extent that those property tax revenues offset state aid for county offices of education and school districts within the county pursuant to subdivision (c) of Section 56836.08 of the Education Code. SEC. 3. Section 97.68 of the Revenue and Taxation Code is amended to read: 97.68. Notwithstanding any other provision of law, in allocating ad valorem property tax revenue http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 State Net Text Search Page 9 of 23 allocations for each fiscal year during the fiscal adjustment period, all of the following apply: (a) (1) The total amount of ad valorem property tax revenue otherwise required to be allocated to a county's Educational Revenue Augmentation Fund shall be reduced by the countywide adjustment amount. (2) The countywide adjustment amount shall be deposited in a Sales and Use Tax Compensation Fund that shall be established in the treasury of each county. (b) For purposes of this section, the following definitions apply: (1) "Fiscal adjustment period" means the period beginning with the 2004-05 fiscal year and continuing through the fiscal year in which the Director of Finance notifies the State Board of Equalization pursuant to subdivision (b) of Section 99006 of the Government Code. (2) "Countywide adjustment amount" means the combined total revenue loss of the county and each city in the county that is annually estimated by the Director of Finance, based on the taxable sales in that county in the prior fiscal year as determined by the State Board of Equalization and reported to the director on or before August 15 of each fiscal year during the fiscal adjustment period, to result for each of those fiscal years from the 0.25 percent reduction in local sales and use rate tax authority applied by Section 7203.1. (c) For each fiscal year during the fiscal adjustment period, moneys in the Sales and Use Tax Compensation Fund shall be allocated among the county and the cities in the county, and those allocations shall be subsequently adjusted, as follows: (1) The Director of Finance shall, on or before September 1 of each fiscal year during the fiscal adjustment period, notify each county auditor of that portion of the countywide adjustment amount for that fiscal year that is attributable to the county and to each city within that county. (2) The county auditor shall allocate revenues in the Sales and Use Tax Compensation Fund among the county and cities in the county in the amounts described in paragraph (1). The auditor shall allocate one-half of the amount described in paragraph (1) in each January during the fiscal adjustment period and shall allocate the balance of that amount in each May during the fiscal adjustment period. (3) After the end of each fiscal year during the fiscal adjustment period, other than a fiscal year subject to subdivision (d), the Director of Finance shall, based on the actual taxable sales for the prior fiscal year, recalculate each amount estimated under paragraph (1) and notify the county auditor of the recalculated amount. (4) If the amount recalculated under paragraph (3) for the county or any city in the county is greater than the amount allocated to that local agency under paragraph (2), the county auditor shall, in the fiscal year next following the fiscal year for which the allocation was made, transfer an amount of ad valorem property tax revenue equal to this difference from the Sales and Use Tax Compensation Fund to that local agency. (5) If the amount recalculated under paragraph (3) for the county or any city in the county is less than the amount allocated to that local agency under paragraph (2), the county auditor shall, in the fiscal year next following the fiscal year for which the allocation was made, reduce the total amount of ad valorem property tax revenue otherwise allocated to that city or county from the Sales and Use Tax Compensation Fund by an amount equal to this difference and instead allocate this difference to the http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 OteLIC INCL rCXL aeareri Page 10 of 23 county Educational Revenue Augmentation Fund. (6) If there is an insufficient amount of moneys in a county's Sales and Use Tax Compensation Fund to make the transfers required by paragraph (4), the county auditor shall transfer from the county Educational Revenue Augmentation Fund an amount sufficient to make the full amount of these transfers. (d) (1) If Section 7203.1 ceases to be operative during any calendar quarter that is not the calendar quarter in which the fiscal year begins, the excess amount, as defined in paragraph (2), of the county and each city in the county shall be reallocated from each of those local agencies to the Educational Revenue Augmentation Fund. (2) For purposes of this subdivision, "excess amount" means the product of both of the following: (A) The total amount of ad valorem property tax revenue allocated to that local agency pursuant to paragraph (2) of subdivision (c). (B) That percentage of the fiscal year in which Section 7203.1 is not operative. (e) For the 2005-06 fiscal year and each fiscal year thereafter, the amounts determined under subdivision (a) of Section 96.1, or any successor to that provision, may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year. (f) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. The allocation made pursuant to subdivisions (a) and (c) shall be adjusted to comply with this paragraph. (2) Require an increased ad valorem property tax revenue allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (g) Existing tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies shall be deemed to be temporarily modified to account for the reduced sales and use tax revenues, resulting from the temporary reduction in the local sales and use tax rate, with those reduced revenues to be replaced in kind by property tax revenue from a Sales and Use Tax Compensation Fund or an Educational Revenue Augmentation Fund, on a temporary basis, as provided by this section. (h) This section is repealed on July 1, 2005. SEC. 4. Section 97.68 is added to the Revenue and Taxation Code, to read: 97.68. Notwithstanding any other provision of law: (a) In allocating ad valorem property tax revenue for the 2005-06 fiscal year, each county auditor http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 State Net Text Search Page 11 of 23 shall deem the total amount of ad valorem property tax revenue allocated to each city, county, and city and county for the 2004-05 fiscal year to be the revenue protection amount for that city, county, or city and county. (b) In allocating ad valorem property tax revenue for the 2006-07 fiscal year, each county auditor shall increase the amount of ad valorem property tax revenue deemed allocated to each city, county, and city and county for the 2005-06 fiscal year by an'amount equal to the 2006-07 ERAF factor for that city, county, or city and county. (c) For the 2005-06 fiscal year and each fiscal year thereafter, the auditor shall allocate to each special district no less than that share of ad valorem property tax revenues that were allocated to that district for the 2003-04 fiscal year. (d) The county auditor shall make the allocations required by subdivisions (a), (b), and (c) in accordance with the following: (1) The auditor shall first reduce the total amount of ad valorem property tax revenue that is otherwise required to be allocated to the county Educational Revenue Augmentation Fund by an amount necessary to complete the allocations required by subdivisions (a), (b), and (c). (2) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to be allocated to a county Educational Revenue Augmentation Fund for the auditor to make the allocation reduction required by paragraph (1), the auditor shall additionally reduce the total the amount of ad valorem property tax revenue that is otherwise required to be allocated to all school districts and community college districts by an amount necessary to complete the allocations required by subdivisions (a), (b), and (c). The amount of the reduction for each school district and community college district in the county shall be an amount equal to the proportion that the enrollment of the school district or community college district bears to the total enrollment of all school districts and community college districts in a county. (3) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to be allocated to school districts and community college districts in a county to complete the allocations required by subdivisions (a), (b), and (c), the auditor shall additionally allocate to each local agency an amount of revenue from the county School Assistance Fund for Education to complete the allocations required by subdivisions (a), (b), and (c). (e) For purposes of this section, all of the following apply: (1) The "revenue protection amount" means,'with respect to a city, county, or city and county, the sum of the following four amounts: (A) The actual amount of ad valorem property tax revenue allocated to that entity for the 2004-05 fiscal year, excluding any amount allocated to that entity under former Section 97.68 for that fiscal year. (B) (i) The total amount of revenue that would have been transmitted to that entity under the Bradley - Burns Uniform Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2) for the 2004-05 fiscal year, as adjusted under Section 29530 of the Government Code, if the total tax rate imposed under that part was: (I) In the case of a county or city and county, three-quarters of 1 percent. http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 _20... 4/3/2004 )Ld LC 1'4eL i CM oearcn - Page 12 of 23 (II) In the case of a city, one-half of 1 percent. (ii) On or before July 15, 2005, the State Board of Equalization shall determine the amount described in clause (i) for each city, county, and city and county and shall notify the auditor of each county of the amounts determined with respect to the county and cities in the county. (C) The difference between the following two amounts: (i) The total amount that would have been appropriated to that entity for the 2004-05 fiscal year under the Vehicle License Fee Law (Part 5 (commencing with Section 10701) of Division 2), as that law read on January 1, 2004, if Section 10754 was not operative. (ii) The total amount of vehicle license fee revenue that was appropriated to that entity for the 2004- 05 fiscal year from the Local Revenue Fund under Chapter 6 (commencing with Section 17600) of Part 5 of Division 9 of the Welfare and Institutions Code. (D) The 2005-06 ERAF factor. (2) The "2005-06 ERAF factor" means, with respect to a city, county, or city and county, an amount equal to the product of the following: (A) 0.5. (B) The difference between the following two amounts: (i) The amount of ad valorem property tax revenue that would have been allocated to that entity for the 2004-05 fiscal year under the statutes in effect on January 1, 2004, excluding any amount allocated to that entity under former Section 97.68 for that fiscal year. (ii) The actual amount of ad valorem property tax revenue allocated to that entity for the 2004-05 fiscal year, excluding any amount allocated to that entity under former Section 97.68 for that fiscal year. (3) The "2006-07 ERAF factor" means, with respect to a city, county, or city and county, the sum of the following: (A) The amount of the 2005-06 ERAF factor. (B) The difference between the following two amounts: (i) The additional amount of ad valorem property tax revenue that would have been allocated to that entity for the 2005-06 fiscal year, if an amount equal to the 2005-06 ERAF factor for that entity was allocated to that entity for the 2004-05 fiscal year. (ii) The amount of the 2005-06 ERAF factor. (f) For the 2006-07 fiscal year and each fiscal year thereafter, ad valorem property tax revenue allocations made pursuant to this chapter shall fully reflect the allocation adjustments required by this section for a preceding fiscal year. (g) This section may not be construed to do any of the following: http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105_20... 4/3/2004 State Net "Text Search rage 1 s of 23 (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. Any excess, additional, or remaining.funds in an Educational Revenue Augmentation Fund shall be allocated to cities, counties, and cities and counties, and special districts in the manner prescribed by those provisions as they read on January 1, 2004. (2) Require an increased ad valorem property tax revenue allocation or increased tax -increment allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or • allocated in a county. (4) Alter the duties of a city, county, or city and county with respect to the programs and services that are financed with revenues that are required by the Vehicle License Fee Law revenues to be deposited in the Local Revenue Fund created by Section 17600 of the Welfare and Institutions Code. (h) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues and the reduction in vehicle license fee revenues resulting from Section 7203.1 and the act that added this section These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. (i) Indebtedness agreements, entered into by a city, county, or city and county prior to the operative date of this section, that promised to provide any Vehicle License Fee Law revenues of a city, county, or city and county as the consideration or collateral for those agreements are deemed modified to account for the reduction in vehicle license fee revenues that are allocated to these entities as a result of the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. SEC. 5. Section 97.69 is added to the Revenue and Taxation Code, to read: 97.69. (a) On or before August 1, 2005, the Director of Finance shall, in consultation with the State Board of Equalization, determine whether or not the amount allocated to each city, county, and city and county under former Section 97.68 of the Revenue and Taxation Code, as that statute read on June 30, 2005, fully reimbursed each of these entities for its actual local sales and use tax revenue losses during the 2004-05 fiscal year resulting from the one -quarter of 1 percent sales and use tax rate authority suspension applied for that fiscal year by Section 7203.1. The Director of Finance shall, on or before August 15, 2005, notify each county auditor of the amounts determined under this subdivision for the county or city and county, and each city in the county. (b) (1) If it is determined that a city, county, or city and county was not allocated, under former Section 97.68 of the Revenue and Taxation Code, as that statute read on June 30, 2005, an amount to complete the full reimbursement for the revenue loss described in subdivision (a), the auditor shall, on or before June 30, 2006, increase the total amount of ad valorem property tax revenue allocated to that entity for the 2005-06 fiscal year by the amount necessary to fully reimburse that entity for this loss. (2) On or before June 30, 2006, the auditor shall reduce the total amount of ad valorem property tax revenue allocated to the county Educational Revenue Augmentation Fund for the 2005-06 fiscal year by http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 atate ivet 1 ext search Page 14 of 23 an amount equal to the total amount of ad valorem property tax revenue required by paragraph (1) to be allocated, as applicable, to a city, county, or city and county. (c) (1) If it is determined that a city, county, or city and county was allocated, under former Section 97.68 of the Revenue and Taxation Code, as that statute read on June 30, 2005, an amount in excess of the amount necessary to fully reimburse that entity for the revenue loss described in subdivision (a), the auditor shall, on or before June 30, 2006, reduce the total amount of ad valorem property tax revenue allocated to that entity for the 2005-06 fiscal year by an amount equal to the overpayment. (2) On or before June 30, 2006, the auditor shall increase the total amount of ad valorem property tax revenue allocated to the county Educational Revenue Augmentation Fund for the 2005-06 fiscal year by an amount equal to the total amount of ad valorem property tax revenue that is not allocated to a city, county or city and county as a result of paragraph (1). (d) For the 2006-07 fiscal year and each fiscal year thereafter, ad valorem property tax revenue allocations made pursuant to this chapter may not reflect any portion of any property tax revenue allocation required by this section for a preceding fiscal year. (e) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. Any excess, additional, or remaining funds in an Educational Revenue Augmentation Fund shall be allocated to cities, counties, and cities and counties, and special districts in the manner prescribed by those provisions as they read on January 1, 2004. (2) Require an increased ad valorem property tax revenue allocation or increased tax -increment allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (f) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from Section 7203.1 and the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. (g) This section is repealed on July 1, 2006. SEC. 6. Section 97.70 is added to the Revenue and Taxation Code, to read: 97.70. (a) (1) On and after January 1, 2005, and on or before December 31, 2007, each city, county, or city and county may request that the total amount of ad valorem property that is otherwise required to be allocated to that entity for the fiscal year in which the request is made be increased by the new development adjustment amount. A city, county, or city and county may make only one request under this paragraph. (2) If a request is made under paragraph (1), the auditor shall, for the fiscal year in which the request http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 State Net Text Search Page 15 of 23 is made, increase the total amount of ad valorem property that is otherwise required to be allocated to that entity for that fiscal year by the new development adjustment amount. (b) For each fiscal year for which an allocation is required to be made under subdivision (a), the county auditor shall make these allocations in accordance with the following: (1) The auditor shall first reduce the total amount of ad valorem property tax revenue that is otherwise required to be allocated to the county Educational Revenue Augmentation Fund by an amount equal to the countywide new development adjustment amount. (2) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to be allocated to a county Educational Revenue Augmentation Fund for the auditor to make the allocation reduction required by paragraph (1), the auditor shall additionally reduce the total the amount of ad valorem property tax revenue that is otherwise required to be allocated to all school districts and community college districts by an amount necessary to complete the allocations required by subdivision (a). The amount of the reduction for each school district and community college district in the county shall be an amount equal to the proportion that the enrollment of the school district or community college district bears to the total enrollment of all school districts and community college districts in a county. (3) If, for the relevant fiscal year, there is not enough ad valorem property tax revenue that is otherwise required to be allocated to school districts and community college districts in a county to complete the allocations required by subdivision (a), the auditor shall additionally allocate to, as applicable, the county, city and county, and each city in the county an amount of revenue from the county School Assistance Fund for Education to complete the allocations required by subdivision (a). (c) For purposes of this section, all of the following apply: (1) (A) The "new development adjustment amount" means, with respect to a city, county, or city and county, an amount equal to the estimated amount of sales and use tax revenue that would be collected from a retailer, subject to tax under the Bradley -Burns Uniform Local Sales and Use Tax Law, or any successor to that law, that makes sales of tangible personal property from a qualified parcel, in the first full fiscal year in which that retailer makes those sales from that parcel, and transmitted to the city, county, or city and county if the total rate imposed under that law for that fiscal year was one-half of 1 percent and Section 29530 of the Government Code did not apply. (B) "Countywide new development adjustment amount" means the total amount determined under subparagraph (A) for an applicable fiscal year for, as applicable, a city and county, or a county and the cities in that county. (C) The State Board of Equalization shall determine the amounts specified in subparagraphs (A) and (B) for each entity that makes a request under subdivision (a) and shall, on or before the end of the fiscal year for which an allocation is required under that subdivision, notify the chief financial officer of each requesting entity of the amount determined for that entity and the auditor of each county of the amounts determined with respect to these entities in a county. (2) "Qualified parcel" means a parcel of real property that was committed, pursuant to a development plan or redevelopment agreement with a city, county, or city and county the application for which was accepted as complete by that city, county, or city and county on or before January 1, 2005, to be put to use for making retail sales of tangible personal property, on or after January 1, 2005. http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20.... 4/3/2004 State Net l ext Search Page 16 of 23 (d) For the 2006-07 fiscal year and each fiscal year thereafter, ad valorem property tax revenue allocations made pursuant to this chapter shall fully reflect the allocation adjustments required by this section for a preceding fiscal year. (e) This section may not be construed to do any of the following: (1) Reduce any allocations of excess, additional, or remaining funds that would otherwise have been allocated to cities, counties, cities and counties, or special districts pursuant to clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.2 and clause (i) of subparagraph (B) of paragraph (4) of subdivision (d) of Section 97.3, had this section not been enacted. Any excess, additional, or remaining funds in an Educational Revenue Augmentation Fund shall be allocated to cities, counties, and cities and counties in the manner prescribed by those provisions as they read on January 1, 2004. (2) Require an increased ad valorem property tax revenue allocation or increased tax -increment allocation to a community redevelopment agency. (3) Alter the manner in which ad valorem property tax revenue growth from fiscal year to fiscal year is determined or allocated in a county. (f) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from Section 7203.1 and the act that added this section. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. (g) This section is repealed on July 1, 2008. SEC. 7. Section 6051.7 is added to the Revenue and Taxation Code, to read: 6051.7. (a) (1) In addition to the other taxes imposed by this part, for the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of one -quarter of 1 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the gross receipts derived from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on July 1, 2005. SEC. 8. Section 6051.9 is added to the Revenue and Taxation Code, to read: 6051.9. (a) (1) In addition to the other taxes imposed by this part, for the privilege of selling tangible http ://client. statenet.com/secure/pe/ts. cgi?mode=fetch&text_version=CA2003000A3105_20... 4/3/2004 State Net Text Search rage r / or zs personal property at retail a tax hereby imposed upon all retailers at the rate of one -quarter of 1 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the gross receipts derived from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code. SEC. 9. Section 6201.7 is added to the Revenue and Taxation Code, to read: 6201.7. (a) (1) In addition to the other taxes imposed by this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer at the rate of one -quarter of 1 percent of the sales price of the property. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the storage, use, or other consumption in this state of tangible personal property, other than fuel or petroleum products, by operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on July 1, 2005. SEC. 10. Section 6201.9 is added to the Revenue and Taxation Code, to read: 6201.9. (a) (1) In addition to the other taxes imposed by this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer at the rate of one -quarter of 1 percent of the sales price of the property. (2) In addition to any otherwise applicable exemption, there is exempted from the tax imposed by paragraph (1) the storage, use, or other consumption in this state of tangible personal property, other than fuel or petroleum products, by operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 atate Net next Search Page 18 of 23 foreign government. (b) All revenues, less refunds, derived from the taxes imposed by this section shall be collected by the State Board of Equalization and deposited, on or before the 15th day of each month, in the SAFE Sales and Use Tax Revenue Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (c) This section shall become operative on the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code. SEC. 11. Section 7202 of the Revenue and Taxation Code is amended to read: 7202. The sales tax portion of any sales and use tax ordinance adopted under this part shall be imposed for the privilege of selling tangible personal property at retail, and shall include provisions in substance as follows: (a) A provision imposing a tax for the privilege of selling tangible personal property at retail upon every retailer in the county at the rate of 11/4 percent , and on and after July 1, 2005, at the rate of three- quarters of 1 percent, of the gross receipts of the retailer from the sale of all tangible personal property sold by that person at retail in the county. (b) Provisions identical to those contained in Part 1 (commencing with Section 6001), insofar as they relate to sales taxes, except that the name of the county as the taxing agency shall be substituted for that of the state and that an additional seller's permit shall not be required if one has been or is issued to the seller under Section 6067. (c) A provision that all amendments subsequent to the effective date of the enactment of Part 1 (commencing with Section 6001) relating to sales tax and not inconsistent with this part, shall automatically become a part of the sales tax ordinance of the county. (d) A provision that the county shall contract prior to the effective date of the county sales and use tax ordinances with the State Board of Equalization to perform all functions incident to the administration or operation of the sales and use tax ordinance of the county. Any such contract shall contain a provision that the county agrees to comply with the provisions of Article 11 (commencing with Section 29530) of Chapter 2 of Division 3 of Title 3 of the Government Code. (e) A provision that the ordinance may be made inoperative not less than 60 days, but not earlier than the first day of the calendar quarter, following the county's lack of compliance with Article 11 (commencing with Section 29530) of Chapter 2 of Division 3 of Title 3 of the Government Code or following an increase by any city within the county of the rate of its sales or use tax above the rate in effect at the time the county ordinance was enacted. (f) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California upon a retailer or consumer. (g) A provision that there is exempted from the sales tax 80 percent, and on and after July 1, 2004, and on and before June 30, 2005 , 75 percent, and on and after July 1, 2005, 67 percent of the gross receipts from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105_20... 4/3/2004 State Net Text Search rage i or 23 use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (h) A provision that any person subject to a sales and use tax under the county ordinance shall be entitled to credit against the payment of taxes due under that ordinance the amount of sales and use tax due to any city in the county; provided that the city sales and use tax is levied under an ordinance including provisions in substance as follows: (1) A provision imposing a tax for the privilege of selling tangible personal property at retail upon every retailer in the city at the rate of 1 percent or less , and on and after July 1, 2005, at a rate of one- half of 1 percent or less, of the gross receipts of the retailer from the sale of all tangible personal property sold by that person at retail in the city and a use tax of 1 percent or less , and on and after July 1, 2005, at a rate of one-half of 1 percent or less, of purchase price upon the storage, use or other consumption of tangible personal property purchased from a retailer for storage, use or consumption in the city. (2) Provisions identical to those contained in Part 1 (commencing with Section 6001), insofar as they relate to sales and use taxes, except that the name of the city as the taxing agency shall be substituted for that of the state (but the name of the city shall not be substituted for the word "state" in the phrase "retailer engaged in business in this state" in Section 6203 nor in the definition of that phrase in Section 6203) and that an additional seller's permit shall not be required if one has been or is issued to the seller under Section 6067. (3) A provision that all amendments subsequent to the effective date of the enactment of Part 1 (commencing with Section 6001) relating to sales and use tax and not inconsistent with this part, shall automatically become a part of the sales and use tax ordinance of the city. (4) A provision that the city shall contract prior to the effective date: of the city sales and use tax ordinance with the State Board of Equalization to perform all functions incident to the administration or operation of the sales and use tax ordinance of the city which shall continue in effect so long as the county within which the city is located has an operative sales and use tax ordinance enacted pursuant to this part. (5) A provision that the storage, use or other consumption of tangible personal property, the gross receipts from the sale of which has been subject to sales tax under a sales and use tax ordinance enacted in accordance with this part by any city and county, county, or city in this state, shall be exempt from the tax due under this ordinance. (6) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California upon a retailer or consumer. (7) A provision that there are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of aircraft to be used or consumed principally outside the city in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. (8) A provision that, in addition to the exemptions provided in Sections 6366 and 6366.1, the storage, use, or other consumption of tangible personal property purchased by operators of aircraft and used or consumed by the operators directly and exclusively in the use of the aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 State Net text Search Page 20 of 23 issued pursuant to the laws of this state, the United States, or any foreign government is exempt from the use tax. (i) On and after July 1, 2005, both of the following apply: (1) The tax rate imposed under an ordinance described in this section is deemed reduced by one-half of 1 percent. (2) (A) If the authority of a city, county, or city and county to impose a tax rate under this part is increased to authorize a rate that exceeds the rate so imposed by that entity on July 1, 2005, but does not exceed the rate so imposed by the entity on January 1, 2004, the tax rate imposed by the entity under an ordinance described in this section is deemed to be the increased rates which may not include an increase in excess of one-half of 1 percent. (B) Subparagraph (A) is a self-executing provision that o aerates without re • and to an decision or act on the part of any local government. A tax rate deemed increased under subparagraph (Al is not subject to voter approval under either statute or Article -XIII C of the California Constitution. (3) If a city, county, or city and county is later authorized to impose a rate under this part that exceeds the rate so imposed by that entity on July 1, 2005, and the rate subsequently imposed by that entity exceeds the rate that the entity imposed on January 1, 2004, the entity shall comply with any applicable voter -approval requirements set forth in the California Constitution and in statute. (j) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from former Section 7203.1 and the act that added this subdivision. These agreements are modified in that these reduced revenues are, in kind and in lieu thereof, replaced with ad valorem property tax revenue. SEC. 12. Section 7203 of the Revenue and Taxation Code is amended to read: 7203. (a) The use tax portion of any sales and use tax ordinance adopted under this part shall impose a complementary tax upon the storage, use or other consumption in the county of tangible personal property purchased from any retailer for storage, use or other consumption in the county. That tax shall be at the rate of 11/4 percent , and on and after July 1, 2005, three-quarters of 1 percent, of the sales price of the property whose storage, use or other consumption is subject to the tax and shall include: -fa. (1) Provisions identical to the provisions contained in Part 1 (commencing with Section 6001), other than Section 6201 insofar as those provisions relate to the use tax, except that the name of the county as the taxing agency enacting the ordinance shall be substituted for that of the state (but the name of the county shall not be substituted for the word "state" in the phrase "retailer engaged in business in this state" in Section 6203 nor in the definition of that phrase in Section 6203). (2) A provision that all amendments subsequent to the date of such ordinance to the provisions of the Revenue and Taxation Code relating to the use tax and not inconsistent with this part shall automatically become a part of the ordinance. http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 State Net Text Search rage z 1 (3) A provision that the storage, use or other consumption of tangible personal property, the gross receipts from the sale of which has been subject to sales tax under a sales and use tax ordinance enacted in accordance with this part by any city and county, county, or city in this state, shall be exempt from the tax due under this ordinance. (4) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California upon a retailer or consumer. (5) A provision that, in addition to the exemptions provided in Sections 6366 and 6366.1, the storage, use, or other consumption of tangible personal property, other than fuel or petroleum products, purchased by operators of aircraft and used or consumed by the operators directly and exclusively in the use of the aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this state, the United States or any foreign government is exempt from 80 percent of the use tax, and on and after July 1, 2004, . d on and before June 30, 2005 , exempt from 75 percent of the use tax , and on and after July 1, 2005, exempt from 67 percent of the use tax (b) On and after July 1, 2005, both of the following apply: (1) The tax rate imposed under an ordinance described in this section is deemed reduced by one-half of 1 percent. (2) (A) If the authority of a county or city and county to impose a tax rate under this part is increased to authorize a rate that exceeds the rate so imposed by that entity on July 1, 2005, but does not exceed the rate that the rate so imposed by the entity on January 1, 2004, the tax rate imposed under an ordinance described in this section is deemed to be the increased rate, which may not include an increase in excess of one-half of 1 percent. (B) Subnaraaratih (A) is a self-executing provision that operates without regard to any decision or act on the part of any local government. A tax rate deemed increased under subparagraph (A) is not subject to voter approval under either statute or Article XIII C of the California Constitution. (3) If a county or city and county is later authorized to impose a rate under this part that exceeds the ' rate so imposed by that entity on July 1, 2005, and the rate subsequently imposed by that entity exceeds the rate that the entity imposed on January 1, 2004, the entity shall comply with any applicable voter - approval requirements set forth in the California Constitution or in statute. (c) Tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies are deemed to be modified to account for the reduction in local sales and use tax revenues resulting from former Section 7203.1 and the act that added this subdivision. These agreements are modified in that these reduced revenues are in kind and in lieu thereof re laced with ad valorem roe tax revenue. SEC. 13. Section 7203.1 of the Revenue and Taxation Code is amended to read: http:1/client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105_20... 4/3/2004 mate iiet i ext aearcn Page 22 of 23 7203.1. (a) Notwithstanding any other provision of law, during the revenue exchange period only, the authority of a county or a city under this part to impose a tax rate as specified in an ordinance adopted pursuant to Sections 7202 and 7203 is suspended, and the tax rate to be applied instead during that period under any ordinance as so adopted is the applicable of the following: (1) In the case of a county, 1 percent. (2) In the case of a city, three-quarters of 1 percent. (b) For purposes of this section, "revenue exchange period" means the period on and after July 1, 2004, and before the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code. (c) Subdivision (a) is a self-executing provision that operates without regard to any decision or act on the part of any local government. A change in a local general tax rate resulting from either the rate limitations applied by subdivision (a) or the end of the revenue exchange period is not subject to voter approval under either statute or Article XIII C of the California Constitution. (d) Existing tax exchange or revenue sharing agreements, entered into prior to the operative date of this section, between local agencies or between local agencies and nonlocal agencies shall be deemed to be temporarily modified to account for the reduction in sales and use tax revenues resulting from this section, with those reduced revenues to be replaced as may otherwise be provided by law. (e) This section is repealed on July 1, 2005. SEC. 14. Section 11007 is added to the Revenue and Taxation Code, to read: 11007. (a) Notwithstanding any other provision of law, on and after July 1, 2005, all qualified revenues shall be deposited in the SAFE Vehicle License Fee Law Account in the State School Assistance Fund for Education created by Section 30020 of the Government Code. (b) For purposes of this section, all of the following apply: (1) "Qualified revenues" means all of the following: (A) Those fees collected under this part, other than fees on trailer coaches and mobilehomes, over and above the costs refunds otherwise authorized by law, that are not otherwise required to be deposited in the Local Revenue Fund. (B) Those revenues that are required by Section 10754 to be transferred from the General Fund that are not otherwise required to be deposited in the Local Revenue Fund. (2) "Qualified revenues" do not include any of the following: (A) The amount that is appropriated for the purposes specified in Section 10003. (B) The amount determined necessary by the Pooled Money Investment Board to meet the transfers ordered or proposed to be ordered pursuant to Section 16310 of the Government Code. http://client.statenet.com/secure/pe/ts.cgi?mode=fetch&text version=CA2003000A3105 20... 4/3/2004 SEC. 15. Notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. SEC. 16. This act shall become operative only if Assembly Constitutional Amendment of the 2003-04 Regular Session is approved by voters at the November 2, 2004, statewide general election and, in that event, shall become operative on the the date upon which this act is chaptered or the effective date of that measure, whichever is later. SEC. 17. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to provide the necessary statutory changes necessary to implement Assembly Constitutional Amendment of the 2003-04 Regular Session, which, if approved by voters, will become operative on November 3, 2004, it is necessary that this act take effect immediately. Copyright 2004 State Net. All Rights Reserved. http:/Iclient.statenet.com/secure/pe/ts.cgi?mode=fetch&text_version=CA2003000A3105 20... 4/3/2004 SCA 21 Senate Constitutional Amendment INTRODUCED Page 1 of 7 BILL NUMBER: SCA 21 INTRODUCED BILL TEXT INTRODUCED BY Senators Torlakson and Johnson (Principal coauthor: Senator Margett) APRIL 1, 2004 Senate Constitutional Amendment No. 21--A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by amending subdivision (c) of Section 8 of Article IV thereof, by amending subdivision (a) of Section 1 of Article XIII A thereof, by amending Section 6 of Article XIII B. thereof, and by adding Article XIII E thereto, relating to local government finance. LEGISLATIVE COUNSEL'S DIGEST SCA 21, as introduced, Torlakson. Local government finance. (1) The California Constitution requires that ad valorem property tax revenues be allocated according to law. Existing statutes require the county auditor, in each fiscal year, to allocate property tax revenues to local jurisdictions in accordance with specified formulas and procedures. The Bradley -Burns Uniform Local Sales and Use Tax Law authorizes a county to impose a local sales and use tax at a rate of 1.25%, and similarly authorizes a city, located within a county imposing such a tax rate, to impose a local sales tax rate of 1% that is credited against the county rate. Beginning on July 1, 2004, and continuing until the Director of Finance makes a specified notification to the State Board of Equalization, existing law partially suspends the authority of a city or a county to impose a sales and use tax rate under the Bradley -Burns Law. The Vehicle License Fee (VLF) Law establishes, in lieu of any ad valorem property tax upon vehicles, an annual license fee for any vehicle subject to registration in this state in the amount of 2% of the market value of that vehicle, as specified, but offsets this amount by 67.5% for vehicle license fees with a final due date on or after July 1, 2001. The California Constitution generally requires that revenues derived from the annual vehicle license fee be allocated among the cities and the counties. The VLF law also requires that General Fund moneys be transferred, as specified, to cities and counties to compensate for reduced revenues resulting from VLF offsets. This measure would enact the Local Taxpayers and Public Safety Protection Act to require statewide voter approval for any legislative measure that would, as specified, affect the revenue streams to local governments under the laws described above. This measure would also suspend the operation of an interim measure, as defined, that took effect between November 1, 2003, and the effective date of this measure, as specified. (2) Under the California Constitution, whenever the Legislature or a state agency mandates a new program or higher level of service on any local government, the state is required to provide a subvention of funds to reimburse the local government, with specified exceptions. Existing statutory law establishes a procedure for local government agencies to file claims for reimbursement of these costs http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca_21 bill_20040401_introduced.html 4/3/2004 SCA 21 Senate Constitutional Amendment - INTRODUCED Page 2 of 7 with the Commission on State Mandates. This measure also would provide that, for purposes of these provisions, the Legislature or any state agency mandates a new program or higher level of service only when it establishes a new mandated program, otherwise requires the provision of services not previously required, increases the frequency or duration of required services, increases the number of persons eligible to receive required services, or transfers complete or partial financial responsibility for a program from the state to local government. This measure would, for the initial fiscal year in which a local government incurs costs for which reimbursement is required, require the state to subvene funds to reimburse those costs within 180 days following the operative date of the mandate, or, if the requirement to provide a subvention is contested, within 180 days following a final determination by the Commission on State Mandates, any successor to the commission, or a court that a subvention is required. It would require the Legislature to appropriate sufficient funds to provide this subvention in the annual Budget Act or other statute. It would, for costs for which reimbursement is required that are incurred in each fiscal year subsequent to the initial fiscal year, require the state to provide the subvention annually, and the Legislature to appropriate sufficient funds to provide this annual subvention in the Budget Act for that subsequent fiscal year. This measure also would, if the Legislature does not appropriate sufficient funds to provide the subvention required for the initial fiscal year or any subsequent fiscal year, allow a local government to elect to continue to perform the mandate and receive reimbursement thereafter, or to suspend performance of the mandate until the state provides the required subvention. It would, however, prohibit a local government from suspending a mandate that requires the local government to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employment. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State -mandated local program: no. Resolved by the Senate, the Assembly concurring, That the Legislature of the State of California at its 2003-04 Regular Session commencing on the second day of December 2002, two-thirds of the membership of each house concurring, hereby proposes to the people of the State of California that the Constitution of the State be amended as follows: First --That this measure is known and shall be cited as the Local Taxpayers and Public Safety Protection Act. Second --That the .people of the State of California find. all of the following: (a) Restoring local control over local tax dollars is vital to ensure that local tax dollars are used to provide critical local services including,but not limited to, police, fire, emergency and trauma care, public health, libraries, criminal justice, and road and street maintenance. Reliable funding for these services is essential for the security, well-being, and quality of life of all Californians. (b) For many years, the Legislature has taken away local tax http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca 21_bill_20040401_introduced.html 4/3/2004 SCA 21 Senate Constitutional Amendment -INTRODUCED Page 3 of 7 dollars used by local governments so that the State could control those local tax dollars. In fact, the Legislature has been taking away billions of local tax dollars each year, forcing local governments to either raise local fees or taxes to maintain services, or to cut back on critically needed local services. (c) The Legislature's diversion of local tax dollars from local governments harms local governments' ability to provide such specific services as police, fire, emergency and trauma care, public health, libraries, criminal justice, and road and street maintenance. (d),In recognition of the harm caused by the diversion of local tax dollars and the importance of voter control of major decisions concerning government finance, and consistent with existing provisions of the California Constitution that give the people the right to voteon fiscal changes, the people of the State of California want the right to vote upon actions by the state government that take local tax dollars from local governments. (e) This measure is designed to ensure that the people of the State of California have the right to approve or reject the actions of state government that take away local revenues that otherwise fund vitally needed local services. (f) This measure strengthens the requirement that the State reimburse local governments for the cost of implementing new or expanded programs mandated by the State. (g) This measure does not amend or modify the school -funding initiatives that are set forth in Sections 8 and 8.5 of Article XVI of the California Constitution, as added by Proposition 98 at the November 8, 1988, general election, and as amended by Proposition 111 at the June 5, 1990, primary election. (h) Therefore, the people of the State of California declare that all of the following are the purposes of this measure: (1) To require voter -approval before the Legislature removes local tax dollars from the control of local government, as described in this measure. (2) To ensure that local tax dollars are dedicated to the funding of local public services by local governments. (3) To provide adequate funds to local government for local services, including, but not limited to, police, fire, emergency and trauma care, public health, libraries, criminal justice, and road and street maintenance. (4) To ensure that the Legislature reimburses local governments when the State requires local governments to assume financial responsibility for a new program or the expansion of an existing program, or to assume greater financial responsibility for an existing program. (5) To prohibit the Legislature from deferring or delaying annual reimbursements to local governments for state -mandated local programs. Third --That subdivision (c) of Section 8 of Article IV thereof is amended to read: (c) (1) Exc pt ac pr vid d in paragraphs (2) and (3) f '-ems T�i�i n, a Subject to Article XIII E, all of the following apply: (1) A statute , other than a statute described in paragraphs (2) and (3), enacted at a regular session shall go into effect on January 1 next following a 90-day period from the date of enactment of the statute and a statute enacted at a special session shall go into effect on the 91st day after adjournment of the special session at which the bill was passed. (2) A statute, other than a statute establishing or changing boundaries of any legislative, congressional, or other election http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca 21_bill_20040401_introduced.html 4/3/2004 SCA 21 Senate Constitutional Amendment - INTRODUCED Page 4 of 7 district, enacted by a bill passed by the Legislature on or before the date the Legislature adjourns for a joint recess to reconvene in the second calendar year of the biennium of the legislative session, and in the possession of the Governor after that date, shall go into effect on January 1 next following the enactment date of the statute unless, before January 1, a copy of a referendum petition affecting the statute is submitted to the Attorney General pursuant to subdivision (d) of Section 10 of Article II, in which event the statute shall go into effect on the 91st day after the enactment date unless the petition has been presented to the Secretary of State pursuant to subdivision (b) of Section 9 of Article II. (3) Statutes calling elections, statutes providing for tax levies or appropriations for the usual current expenses of the State, and urgency statutes shall go into effect immediately upon their enactment. Fourth --That subdivision (a) of Section 1 of Article XIII A thereof is amended to read: SECTION 1. (a) The maximum amount of any ad valorem tax on real property shall may not exceed - no 1 percent (1t ) of the full cash value of Euch the property. The —pc-- 1 percent (1) tax --to shall be collected by the counties and apportioned according to law to the diEtrictE jurisdictions within the counties , subject to Article XIII E . Fifth --That Section 6 of Article XIII B thereof is amended to read: SEC. 6. (a) Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the State shall provide a subvention of funds to reimburse such the local government for the costs of ouch the program or increased level of service, except that the Legislature may, but need not, provide Euch a subvention of funds for the following mandates: (a) (1) Legislative mandates requested by the local agency affected .,— (b) (2) Legislation defining a new crime or changing an existing definition of a crime r (c) (3) Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975. (b) (1) For the initial fiscal year in which a local government incurs costs for which reimbursement is required by subdivision (a), the State shall subvene funds to reimburse those costs within 180 days following the operative date of the mandate, or, if the requirement to provide a subvention is contested, within 180 days following a final determination by the Commission on State Mandates, any successor to the commission, or a court that a subvention is required. The Legislature shall appropriate sufficient funds to provide this subvention in the annual Budget Act or other statute. (2) For costs for which reimbursement is required that are incurred in each fiscal year subsequent to the initial fiscal year, a local government seeking reimbursement shall submit an annual claim, and the State shall provide an annual subvention of funds. The Legislature shall appropriate sufficient funds to provide this annual http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca 21 bill_20040401_introduced.html 4/3/2004 SCA 21 Senate Constitutional Amendment - INTRODUCED Page 5 of 7 subvention in the Budget Act for that subsequent fiscal year. (c) (1) If, for any claim for reimbursement for which the Commission on State Mandates, any successor to the commission, or a court has made a final determination that a subvention of funds is required, the Legislature has not appropriated funds sufficient for full reimbursement of costs incurred in the initial fiscal year as required by paragraph (1) of subdivision (b), or for costs incurred in any subsequent fiscal year as required by paragraph (2) of subdivision (b), then, subject to paragraph (2), the affected local government may do one of the following: (A) Continue to perform the mandate, in which case the local government shall be reimbursed for its costs to perform the mandate through a subsequent appropriation and subvention of funds. (B) Suspend performance of the mandate until, pursuant to an appropriation of sufficient funds, the State provides the subvention required by this section. A local government shall be reimbursed for its costs for any portion of the fiscal year during which it performs the mandate. (2) A requirement to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree, or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employment and that otherwise constitutes a mandate subject to this section may not be suspended by a local government pursuant to this subdivision. (d) For purposes of this section, the Legislature or a state agency mandates a new program or higher level of service only when it establishes a new program, otherwise requires the provision of services not previously required to be provided, increases the mandated frequency or duration of required services, increases the number of persons eligible to receive required services, or transfers complete or partial financial responsibility for a program from the State to local government. Sixth --That Article XIII E is added thereto, to read: ARTICLE XIII E SECTION 1. For purposes of this article, all of the following apply: (a) "Local government" means any city, county, city and county, or special district. (b) (1) "Local government base year amount" means an amount of money equal to the amount received by a local government for the 2002-03 fiscal year pursuant to the Vehicle License Fee Law (Part 5 (commencing with Section 10701) of Division 2 of the Revenue and Taxation Code), as annually adjusted on each July 1 to reflect changes, since the prior fiscal year, in the market value of vehicles that are subject to tax under that part. If the tax imposed by that part is repealed and there is no successor to that tax, the local government base year amount shall be adjusted annually on July 1 by the change in the cost of living and for the change in population as defined with respect to an entity of local government in Section 8 of Article XIII B. (c) "Local government payment deferral amount of 2003"means the amount of money required to be transferred from the General Fund pursuant to subparagraph (D) of paragraph (3) of subdivision (a) of Section 10754 of the Revenue and Taxation Code, as that section read on January 1, 2004. (d) "Local property tax revenues" means both of the following: (1) The proportionate share of ad valorem property tax revenue, collected by a county under subdivision (a) of Section 1 of Article http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca 21 bill 20040401_introduced.html 4/3/2004 SCA 21 Senate Constitutional Amendment INTRODUCED Page 6 of 7 XIII A, that would have been allocated to a local government for a fiscal year under the statutes in effect on January 1, 2003. (2) The amount of the payment required to be made to a redevelopment agency under Section 33670 of the Health and Safety Code, as that section read on January 1, 2003. (e) "Special District" means an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited geographic boundaries. "Special district" includes a redevelopment agency, but does not include a city, county, city and county, school district, community college district, or county office of education. (f) "State" means the State of California and its officers, agencies, and employees. (g) "Interim measure" means a measure that took effect on or after November 1, 2003, and before the effective date of this article, that would have required voter approval under Section 2 of this article if that measure were to first become operative on or after the effective date of this article. "Interim measure" does not include any of the following: (1) An act that was approved by voters and took effect on or after November 1, 2003, and before the effective date of this article. (2) Chapter 2 of the Statutes of 2003, Fifth Extraordinary Session. (3) Resolution Chapter 1 of the Statutes of 2003, Fifth Extraordinary Session. (h) "Period of suspension" means the period from the effective date of this article to the date on which the first statewide election is held that follows that date, inclusive. SEC. 2. (a) Notwithstanding any other provision of law, approval by a majority of the statewide electorate voting on the issue is required before any provision of any measure that does any of the following takes effect: (1) Apportions local property tax revenues in a manner that reduces, suspends, or delays the receipt of the proportionate share of local property tax revenues that a local government would have received under the statutes in effect on January 1, 2003. (2) Requires a local government to remit local property tax revenues, apportioned to that local government, to any of the following: (A) The State. (B) A fund created by state law, regardless of whether the fund is in the State Treasury or the treasury of a local government (C) Another local government, without the consent of the local government that is required to remit these revenues. (3) Reduces, delays, or suspends the receipt of the local government base year amount by a local government without appropriating an equal amount of money to a local government to offset this reduction, delay, or suspension. (4) Reduces, suspends, or delays a local government's receipt of its portion of the local government payment deferral amount of 2003, as that portion would have been determined under the statutes in effect on January 1, 2004. (5) Restricts the authority of a local government to impose a rate under, or changes the method of distributing revenues derived under, the Bradley -Burns Uniform Local Sales and Use Tax Law set forth in Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code, as that law read on January 1, 2004. (6) Extends beyond the revenue exchange period, as defined in Section 7203.1 of the Revenue and Taxation Code as that section read on March 3, 2004, the suspension of the authority, set forth in that http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca 2 1 bi11_20040401_introduced.html 4/3/2004 SCA 21 Senate Constitutional Amendment INTRODUCED Page 7 of 7 section on that date, of a city, county, or city and county to impose a sales and use tax rate under the Bradley -Burns Uniform Local Sales and Use Tax Law. (7) Reduces, during any period in which the rate authority suspension described in paragraph (6) is operative, the payments to a city, county, or city and county that are required by Section 97.68 of the Revenue and Taxation Code, as that section read on March 3, 2004. (b) Notwithstanding any other provision of law, an act that is subject to voter approval under subdivision (a) may not be presented to the Governor unless that act is approved by both houses of the Legislature by the same vote that is required to enact the annual Budget Act. (c) The Secretary of State shall present the following question on the ballot for the next following statewide general election for each measure approved by the Legislature that contains any provision that requires voter approval under subdivision (a): "Shall that. action taken by the Legislature in (Chapter of the Statutes of ), which affects local revenues, be approved." SEC. 3. (a) Except as provided in subdivision (b), the operation of any interim measure is suspended on the effective date of this section, unless the interim measure or another measure provides on that date for an equal amount of money to be allocated to a local government to offset any revenue loss that resulted from the interim measure. (b) An interim measure, the operation of which was suspended under subdivision (a), may not resume operation unless the measure is approved by voters, in the manner specified in Section 2, at the first statewide general election that follows the effective date of this section. If voters approve the interim measure at that election, the interim measure resumes operation on the day after the election. Seventh --This measure shall be liberally construed to effectuate its purposes as set forth in subdivision (h) of the second clause of this measure. This measure may not be construed to do either of the following: (a) Alter the apportionment of local property tax revenues as established in any measure that took effect on or before January 1, 2003. (b) Prohibit the Legislature from reapportioning local property tax revenues in a manner consistent with the requirements of this measure. Eighth --That the provisions of this measure are severable. If any provision of this measure or any application of a provision of this measure is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application. http://info.sen.ca.gov/pub/bill/sen/sb_0001-0050/sca 21 bill_20040401_introduced.html 4/3/2004 Message Page 1 of2 Scully, Pat From: Joe A. Gonsalves & Son [gonsalvi@pacbell.net] Sent: Wednesday, April 14, 2004 4:30 PM To: gonsalvi@pacbell.net Subject: FW: SB 1744 clears Senate Local Government Committee TO: CITY MANAGER FROM: ANTHONY AND JASON GONSALVES SUBJECT: SENATE LOCAL GOVERNMENT COMMITTEE PASSES SALES TAXNEHICLE LICENSE FEE/PROPERTY TAX LEGISLATION DATE: WEDNESDAY, APRIL 14, 2004 This morning the Senate Local Government Committee heard SB1744 by Senators Johnson and Torlakson. While recognizing the complexity and potential problems with such legislation the Chair Senator Torlakson continually requested his committee members vote for the bill in order to further the discussions. In the end Senators Torlakson, Margett, Machado, and Ackerman voted for the legislation while Senator Soto voted No, stating that she was "unwilling to take off her city hat". 4/14/2004 Message Page 2 of 2 Senators Machado and Margett voted aye, only after insisting upon a commitment from Senator Torlakson that he would bring the legislation back to his committee for a full policy hearing. Senator Machado specifically stated "this is the policy committee and I am unwilling to move this legislation without such a commitment" he continued by stating the need for the legislation to be fully vetted by the policy committee and if it were being considered for a policy vote, he would not be willing to support it. Senator Ackerman expressed his willingness to further the discussion; he said he felt the "stars may be aligned, given the bipartisan interest within both houses as well as the Administration's interest". We will continue to meet with the members of the Legislature as well as the Administration in opposition to SB1774/SCA22 as well as the Assembly version contained with AB3105/aca30. Given the fact that the Governor will be asked to weigh in on these proposals at some time in the near future, we respectfully request you communicate your opposition to the proposals to the Governor's office ASAP. We are currently told the Governor has not taken a position on the measures and we feel the best chance we have in preventing such a position is for him to hear from the communities throughout the State. Lastly, representatives from CSAC were the lone supporters of SB 1744 this morning, while representatives from our office, League of Cities, California Redevelopment Association, and the cities of Ontario, Montclair, San Bernardino, Fontana, Rancho Cucamonga, and Carlsbad provided testimony in opposition. Specifically Ken Hunt; city of Fontana, Diane Williams; city of Fontana, and Joe Garuba; city of Carlsbad did an outstanding job of communicating to the members of the committee the reasons why a one size fits all approach will not achieve the perceived objectives. Please feel free to contact us with any questions or concerns you may have, we will continue to keep you apprised as we battle these bills within each house. 4/14/2004