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HomeMy WebLinkAbout2008-08-26 - AGENDA REPORTS - MEASURE R SALES TAX (2)SUBSEQUENT NEED DATE: SUBJECT: DEPARTMENT Agenda Item: CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval Item to be presented by August 26, 2008 %I f / - Marsha McLean MEASURE R- ONE-HALF CENT SALES TAX INCREASE City Manager's Office RECOMMENDED ACTION City Council take a position in opposition of the Los Angeles County Metropolitan Transportation Authority (Metro) one-half cent sales tax increase proposal- Measure R. BACKGROUND On Thursday July 24, 2008 the Los Angeles County Metropolitan Transportation Authority (Metro) board approved a sales tax increase ballot measure for the November 4, 2008, election. If the measure passes by the required 2/3 of voters throughout Los Angeles County, the Los Angeles County sales tax rate will increase by one-half percent to 8.75 percent, which could raise approximately $30 billion to $40 billion for transit and highway projects. However, as written, the Measure R does not ensure that 100 percent of sales tax generated within each region will remain in that area. Before the measure can be placed on the ballot, the State Legislature must authorize it. The authorizing legislation, Assembly Bill 2321, was approved by the Senate Appropriation Committee on August 13, 2008. One of the key components of AB 2321 is the implementing Expenditure Plan. The Expenditure Plan must include a list of projects to be funded with the new sales tax revenue and the estimated budget for each project. AB 2321 states the Metro should choose projects that "... strive to maintain the fair and equitable geographic balance in the plan and shall strive to complete those capital projects as soon as practicable..." 1 Those who oppose Measure R argue that the current measure does not provide any provisions that will ensure that sales tax distributions will be equitable, as per the intent of AB 2321. For APPROVED example, over the 30 -year life of this sales tax increase, the Santa Clarita Valley will double in population and make up 11% of the County's population, yet will receive only 5% of the project funding, therefore depriving the City of Santa Clarita its fair share. The total amount of revenue specifically identified for the Santa Clarita area would be approximately $500 million. This does not include Santa Clarita's share of the local return and other improvements that would benefit Santa Clarita residents, such as enhanced Metrolink service. In addition, Metro's Measure R has no provision to recalculate the sales tax distribution as our City and the North Los Angeles County continues to grow over the next 30 years. The Los Angeles County Board of Supervisors Sales Tax Rebuttal Argument is asking that municipalities within Los Angeles County vote "no" on Measure R and encourage Metro to revisit the apportionment formula and consider- density, air quality, and where transportation issues occur throughout the County of Los Angeles for more equitable distribution of funds. Councilmember Marsha McLean received a request from Supervisors Michael D. Antonovich and Gloria Molina, asking to be a signer of the Sales Tax Rebuttal Argument. This would require Councilmember McLean to sign the Sales Tax Rebuttal argument by Thursday, August 28, 2008. In addition to the Metro proposed one-half percent sales tax increase, the Governor is also proposing a temporary one -cent sales tax increase for three years. If both proposed tax increases go into effect, residents in the City of Santa Clanta will be paying 9.75 percent sales tax. This item qualifies as a subsequent need to the agenda because the request to oppose Measure R was made subsequent to the posting of the agenda, and a formal opposition would need to be accomplished prior to the next City Council meeting to enable Councilmember McLean to sign the ballot argument by Thursday, August 28, 2008. ALTERNATIVE ACTIONS 1. Support Measure R 2. Take no position on the above measure and direct staff to monitor Measure R. 3. Other action as determined by the City Council. FISCAL IMPACT All activities associated with the recommended actions are contained within the approved 2008/2009 budget. However, if Measure R is approved it will impact future available funding for local transportation projects at currently unknown levels.