PURPOSE:

At the June 10, 2003 City Council meeting, Council Member Todd Campbell requested that the matter of Assembly Bill 1690 (Leno) be placed on the agenda for discussion.   Attached please find the latest amendment of the bill (Attachment I).

BACKGROUND:

Assembly Bill 1690 (AB 1690) would authorize any city, county, or city and county to form a public safety finance agency for the purposes of supplementing fire protection or police or sheriff services and for financing needed capital improvements for same.  Existing law provides that, with the exception of a business license tax, a city, county, city and county, or any other local entity may not impose or collect a local income tax.

AB 1690 would change the existing law by authorizing local government agencies that form a public safety finance agency to levy a local general income tax, if that tax is approved by a majority of the voters voting on that tax at an election.  The bill would require the Franchise Tax Board to administer and collect these local income taxes and require the board to transmit the revenues derived from these taxes within 60 days of collection. 

The bill would require that property tax revenue be annually assigned to the public safety finance agency, from the forming local government, in an amount that is equal to 50% of the amount of revenues estimated to be collected from the local income tax in the first 12 months of imposition.  In addition, the finance agency would be required to annually allocate these revenues according to a specified formula.  By imposing new revenue allocation duties upon local officials, this bill would impose a state-mandated local program.  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.

RECOMMENDATION:

It is staff�s recommendation that the City Council initiate discussion on the matter of AB 1690 and direct staff as necessary.

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