BILL NUMBER: AB 1690 AMENDED
BILL TEXT

AMENDED IN SENATE  SEPTEMBER 4, 2003
AMENDED IN SENATE  AUGUST 29, 2003
AMENDED IN SENATE  AUGUST 18, 2003
AMENDED IN SENATE  JULY 16, 2003
AMENDED IN SENATE  JULY 2, 2003
AMENDED IN ASSEMBLY  JUNE 2, 2003
AMENDED IN ASSEMBLY  APRIL 23, 2003
AMENDED IN ASSEMBLY  APRIL 1, 2003

INTRODUCED BY   Assembly Member Leno
   (Principal coauthor:  Assembly Member Lieber)
   (Coauthors:  Assembly Members Bermudez, Calderon, Chavez,
Goldberg, Koretz, Laird, Montanez, Nation, Pavley, Steinberg, Vargas,
Wiggins, and Yee)
   (Coauthor:  Senator Burton)

                        FEBRUARY 21, 2003

    An act to add Article 4 (commencing with Section 55650) to
Chapter 4 of Part 2 of Division 2 of Title 5 of the Government Code,
and to amend Sections 17041.5 and 19533 of, to add Section 99.3 to,
and to add Part 10.1 (commencing with Section 18201) to, the Revenue
and Taxation Code, relating to local government.



LEGISLATIVE COUNSEL'S DIGEST


   AB 1690, as amended, Leno.   Public safety finance agencies.
   Under existing law, local fire protection, police, and emergency
medical services may be provided by, among other entities, a fire
protection district, a fire department or company organized in an
unincorporated town, a fire department established by a city or
county, a police protection district, a city police department, a
county sheriff, a county hospital, or a designated facility, as
defined.
   This bill would authorize any county or city and county to form a
public safety finance agency, as specified, for the purpose of
financing supplemental fire protection, police and sheriff, and
specified medical services, and financing needed capital improvements
for providers of these services, as specified.
   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.
   This bill would authorize any county or city and county that forms
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.  This bill would require the Franchise Tax Board (FTB) 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.  This bill would  also authorize  
require a county or city and county that imposes a local income tax
to enter into an agreement with  the FTB to  deduct
  allow the FTB to recover  its costs  ,
including start-up costs,  in  collecting  
administering  the tax  prior to transmitting the
revenues to the imposing local entity  .  This bill would
require the county auditor to allocate income tax revenues to the
county and to cities in the county according to a specified formula.

   This bill would also require the county auditor, in the case of a
county or city and county that has both formed a public safety
finance agency and adopted a local income tax, in the fiscal year
that begins during the first taxable year in which a local income tax
is imposed, to allocate the cumulative public safety amount, as
defined, to a public safety finance agency, and to commensurately
reduce the amount of ad valorem property tax revenue allocated to a
city and county, the county, and cities in a county by this same
amount.  This bill would also require the county auditor, in the
fiscal year that begins during the first fiscal year in which a
county or city and county ceases to impose an income tax, to reduce
the total amount of ad valorem property tax revenue allocated to a
public safety finance agency by the adjusted cumulative public safety
amount, as defined, and commensurately increase the total amount of
ad valorem property tax revenue allocated to a city and county, a
county, and cities in the county.  This bill would also require that
ad valorem property tax revenue allocations in subsequent fiscal
years incorporate the allocation adjustments required by the bill, as
provided.  This bill would also require the governing board of a
public safety finance agency to annually allocate these revenues
according to a specified formula.
   This bill would also provide that if any provision of the bill, or
any properly proposed ordinance enacted pursuant to the act, is
invalidated by an appellate court, then the remaining provisions of
the bill would become inoperative.
   This bill would also state legislative findings and declarations
regarding the specific public purposes served by specified provisions
of the bill.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Article 4 (commencing with Section 55650) is added to
Chapter 4 of Part 2 of Division 2 of Title 5 of the Government Code,
to read:

      Article 4.  Public Safety Finance Agency

   55650.  (a) Any county or city and county may form, by ordinance,
a public safety finance agency for the following purposes:
   (1) To finance supplemental fire protection services and finance
needed capital improvements for:
   (A) Its fire department or other outside agency that provides
structural fire protection services within the unincorporated areas
of the county.
   (B) The fire department or other outside agency that provides
structural fire protection services within the boundaries of each
city within the county.
   (C) The fire department that provides structural fire protection
services within the boundaries of a city and county.
   (2) To finance supplemental police or sheriff services and finance
needed capital improvements for:
   (A) The police or sheriff's department or other outside agency
that provides police or sheriff services within the unincorporated
areas of the county.
   (B) The police department or other outside agency that provides
police services within the boundaries of each city within the county.

   (C) The police and sheriff's department that provides police and
sheriff services within the boundaries of a city and county.
   (3) To finance supplemental emergency and trauma care services and
finance needed capital improvements for the county hospital system
or designated facilities, as defined in Section 1797.67 of the Health
and Safety Code, that provide emergency medical and trauma care
services within the boundaries of the county or city and county.
Moneys allocated for these purposes shall be distributed according to
the following schedule:
   (A) Sixty percent to reimburse physicians and surgeons for
providing emergency medical and trauma care services, as described in
Section 1797.98a of the Health and Safety Code.
   (B) Forty percent to hospitals and designated facilities providing
disproportionate trauma and emergency medical care services, as
described in Section 1797.98a of the Health and Safety Code.
   (b) In the case of a city, county, or city and county that does
not directly provide the services described in subdivision (a), that
portion of the funds of the public safety agency that are available
for the category of services not directly provided may be made
available only to the outside agency that directly provides that same
category of services within the boundaries of the city, county, or
city and county.
   (c) (1) (A) The governing body of the county or city and county
that forms a public safety finance agency shall be the governing body
of the public safety finance agency.
   (B) The members of the governing body of a public safety finance
agency shall serve in that capacity without compensation or
reimbursement for travel, per diem, or other expenses.
   (2) When a decision, determination, or other action by the public
safety finance agency formed pursuant to this section is required by
this article, the governing body of that agency may not delegate the
obligation to decide, determine, or act to another entity, unless
this article specifically provides for that delegation.
   (d) The territorial boundaries of a public safety finance agency
are coterminous with the territorial boundaries of the county or city
and county that forms the public safety finance agency.
   (e) A public safety finance agency formed pursuant to this section
may, in addition to any funds allocated to the agency pursuant to
Section 99.3 of the Revenue and Taxation Code, accept financial
assistance from the state or federal government or any public or
private source for any purpose set forth in subdivision (a).
   (f) All funds of a public safety finance agency formed pursuant to
this section shall be held in trust for the purposes set forth in
subdivision (a) and may not be utilized to supplant other funds
applied to fire protection or police or sheriff services.
   55651.  (a) The governing body of a public safety finance agency
shall establish a separate account for a county, each city within a
county, and a city and county to receive the moneys allocated to the
public safety finance agency pursuant to Section 99.3 of the Revenue
and Taxation Code.  In each fiscal year in which a public safety
finance agency receives an allocation pursuant to Section 99.3 of the
Revenue and Taxation Code, the governing body shall deposit in each
account an amount equal to the amount allocated to the agency that is
attributable to a reduction in the amount of property tax revenue
allocated, respectively, to the county, each city within the county,
and a city and county.
   (b) In each fiscal year, the governing body of a public safety
finance agency shall allocate the moneys from the accounts created
pursuant to subdivision (a) in the following manner:
   (1) From the account of each city within the county:
   (A) Forty percent for the purposes described in subparagraph (B)
of paragraph (1) of subdivision (a) of Section 55650.
   (B) Forty percent for the purposes described in subparagraph (B)
of paragraph (2) of subdivision (a) of Section 55650.
   (C) Twenty percent for the purposes specified in subparagraph (B)
of paragraphs (1) and (2) of subdivision (a) of Section 55650, as
specified in a written agreement between the following parties:
   (i) The chief fire official that directly provides structural fire
protection services within the boundaries of the city.
   (ii) The police chief that directly provides police services
within the boundaries of the city.
   (2) From the account of the county:
   (A) Forty percent for the purposes described in subparagraph (A)
of paragraph (1) of subdivision (a) of Section 55650.  If more than
one agency provides these services for a county, the amount allocated
from these moneys to each of these agencies shall be specified in a
written agreement between the governing bodies of each of these
agencies.
   (B) Forty percent for the purposes described in subparagraph (A)
of paragraph (2) of subdivision (a) of Section 55650.
   (C) Ten percent for the purposes specified in subparagraph (A) of
paragraphs (1) and (2) of subdivision (a) of Section 55650 for that
county as specified in a written agreement between the following
parties:
   (i) The chief fire official or officials that directly provide
structural fire protection services in the unincorporated areas of
the county.
   (ii) As applicable, the sheriff or police chief that directly
provides sheriff or police services in the unincorporated areas of
the county.
   (D) Ten percent for the purposes specified in paragraph (3) of
subdivision (a) of Section 55650.
   (3) From the account of a city and county:
   (A) Forty percent for the purposes described in subparagraph (C)
of paragraph (1) of subdivision (a) of Section 55650.
   (B) Forty percent for the purposes described in subparagraph (C)
of paragraph (2) of subdivision (a) of Section 55650.  The amount
allocated from these moneys to the sheriff and the police chief in a
city and county shall be specified in a written agreement between
these parties.
   (C) Ten percent for the purposes specified in subparagraph (C) of
paragraphs (1) and (2) of subdivision (a) of Section 55650 as
specified in a written agreement between the following parties:
   (i) The chief fire official that directly provides structural fire
protection services within the city and county.
   (ii) The sheriff that directly provides sheriff services in the
city and county.
   (iii) The police chief that directly provides police services in
the city and county.
   (D) Ten percent for the purposes specified in paragraph (3) of
subdivision (a) of Section 55650.
   (c) The governing body of a public safety finance agency shall
allocate the moneys received pursuant to subdivision (e) of Section
55650 for any purpose specified in subdivision (a) of that section in
a manner determined by that governing body.
   55652.  (a) The county auditor shall allocate the revenues a
county receives pursuant to Section 18205 of the Revenue and Taxation
Code according to the following schedule:
   (1) Twenty percent shall be allocated to the county.
   (2) (A) The balance shall be allocated among the county and the
cities in the county in percentage shares that:
   (i) In the case of a county, correspond to the percentage of the
county's total population that lives in unincorporated areas of the
county.
   (ii) In the case of a city, correspond to the percentage of the
county's total population that lives in each city in the county.
   (B) (i) The county auditor shall determine the percentage share
described in clause (i) of subparagraph (A) in the following manner:
   (I) Determine the total population in the county.
   (II) Determine the population in the unincorporated areas of the
county.
   (III) Divide the amount determined pursuant to subclause (II) by
the amount determined pursuant to subclause (I), rounded to the
nearest one-thousandth of 1 percent.
   (ii) The county auditor shall determine the percentage share
described in clause (ii) of subparagraph (A) for each city in the
county in the following manner:
   (I) Determine the total population in the county.
   (II) Determine the population of the relevant city in the county.
   (III) Divide the amount determined pursuant to subclause (II) by
the amount determined pursuant to subclause (I), rounded to the
nearest one-thousandth of 1 percent.
   (b) The population determinations described in subdivision (a)
shall be made on the basis of the later of the following:
   (1) The most recent population estimates for counties and cities
that have been made by the population research unit in the Department
of Finance.
   (2) The most recent census validated by the population research
unit in the Department of Finance.
  SEC. 2.  Section 99.3 is added to the Revenue and Taxation Code, to
read:
   99.3.  For the purposes of the computations required by this
chapter:
   (a) If a public safety finance agency is formed by a county or
city and county ordinance pursuant to Section 55650 of the Government
Code and is located within a county or city and county for which an
income tax authorized by Part 10.1 (commencing with Section 18201)
has been approved by the voters, in the fiscal year that begins
during the first taxable year in which that income tax is imposed,
the auditor shall do all of the following:
   (1) Reduce the total amount of ad valorem property tax revenue
allocated to a city by that city's public safety amount.
   (2) Reduce the total amount of ad valorem property tax revenue
allocated to the county by the county public safety amount.
   (3) Reduce the total amount of ad valorem property tax revenue
allocated to a city and county by the city and county public safety
amount.
   (4) Allocate the cumulative public safety amount to a public
safety finance agency.
   (b) In the fiscal year that begins during the first taxable year
in which a county or city and county ceases to impose an income tax
that was imposed pursuant to Part 10.1 (commencing with Section
18201), the auditor shall do all of the following:
   (1) Increase the total amount of ad valorem property tax revenue
allocated to a city by that city's adjusted public safety amount.
   (2) Increase the total amount of ad valorem property tax revenue
allocated to the county by the county adjusted public safety amount.
   (3) Increase the total amount of ad valorem property tax revenue
allocated to a city and county by the city and county adjusted public
safety amount.
   (4) Decrease the total amount of ad valorem property tax revenue
allocated to a public safety finance agency by the adjusted
cumulative public safety amount.
   (c) In each fiscal year that follows a fiscal year in which
subdivision (a) or (b) applies, ad valorem property tax revenue
allocations made pursuant to Sections 96.1 and 96.5 shall fully
incorporate the allocation adjustments made by this section.
   (d) For purposes of this section:
   (1) Upon the approval of an income tax authorized by Part 10.1
(commencing with Section 18201), the governing body of the imposing
county or city and county shall give notice of that approval to the
Franchise Tax Board and to the auditor of the county or city and
county.  The notice to the Franchise Tax Board shall specify the
county or city and county that has received approval for the
imposition of the income tax.
   (2) (A) The Franchise Tax Board shall, within 60 days of receiving
notice of the approval of the income tax authorized by Part 10.1
(commencing with Section 18201), estimate, based upon historical data
on state income tax collections for residents of that county or city
and county, the amount of income tax to be collected on behalf of
the county or city and county in the first 12 months in which that
income tax is imposed, and notify the county auditor of this
estimate.
   (B) Upon receipt of the estimate described in subparagraph (A),
the county auditor shall, based upon this estimate, determine the
amount of this estimated amount that would have been allocated to the
county and to the cities in the county in that year pursuant to
Section 55652 of the Government Code.
   (3) A city's "public safety amount" means an amount of ad valorem
property tax revenue equal to the lesser of:
   (A) Fifty percent of the amount estimated, with respect to that
city, by the county auditor pursuant to subparagraph (B) of paragraph
(2).
   (B) All of the ad valorem property tax revenue that is to be
allocated to that city in the fiscal year in which subdivision (a)
applies.
   (4) The "county public safety amount" of a county means an amount
of ad valorem property tax revenue equal to the lesser of:
   (A) Fifty percent of the amount estimated, with respect to that
county, by the county auditor pursuant to subparagraph (B) of
paragraph (2).
   (B) All of the ad valorem property tax revenue that is to be
allocated to that county in the fiscal year in which subdivision (a)
applies.
   (5) The "city and county public safety amount" means an amount of
ad valorem property tax revenue equal to the lesser of:
   (A) Fifty percent of the amount estimated, with respect to that
city and county, by the Franchise Tax Board pursuant to subparagraph
(A) of paragraph (2).
   (B) All of the ad valorem property tax revenue that is to be
allocated to that city and county in the fiscal year in which
subdivision (a) applies.
   (6) "Cumulative public safety amount" means:
   (A) With respect to a county, an amount of ad valorem property tax
revenue equal to the total of the amounts determined, pursuant to
paragraphs (3) and (4), for the county and all the cities in the
county in the fiscal year in which subdivision (a) applies.
   (B) With respect to a city and county, an amount of ad valorem
property tax revenue equal to the total of the amount determined,
pursuant to paragraph (5), for the city and county in the fiscal year
in which subdivision (a) applies.
   (7) A city's "adjusted public safety amount" means an amount of ad
valorem property tax revenue equal to the difference between the
following two amounts:
   (A) The amount of that revenue that would otherwise have been
allocated to that city in the fiscal year in which subdivision (b)
applies if subdivisions (a) and (c) did not apply in any fiscal year.

   (B) The amount of that revenue that would otherwise have been
allocated to that city in the fiscal year in which subdivision (b)
applies if subdivision (b) did not apply in that fiscal year.
   (8) The "county adjusted public safety amount" means an amount of
ad valorem property tax revenue equal to the difference between the
following two amounts:
   (A) The amount of that revenue that would otherwise have been
allocated to that county in the fiscal year in which subdivision (b)
applies if subdivisions (a) and (c) did not apply in any fiscal year.

   (B) The amount of that revenue that would otherwise have been
allocated to that county in the fiscal year in which subdivision (b)
applies if subdivision (b) did not apply in that fiscal year.
   (9) The "city and county adjusted public safety amount" means an
amount of ad valorem property tax revenue equal to the difference
between the following two amounts:
   (A) The amount of that revenue that would otherwise have been
allocated to the city and county in the fiscal year in which
subdivision (b) applies if subdivisions (a) and (c) did not apply in
any fiscal year.
   (B) The amount of that revenue that would otherwise have been
allocated to the city and county in the fiscal year in which
subdivision (b) applies if subdivision (b) did not apply in that
fiscal year.
   (10) "Adjusted cumulative public safety amount" means:
   (A) With respect to a county, an amount of ad valorem property tax
revenue equal to the total of the amounts determined, pursuant to
paragraphs (7) and (8), for the county and all the cities in the
county in the fiscal year in which subdivision (b) applies.
   (B) With respect to a city and county, an amount of ad valorem
property tax revenue equal to the total of the amount determined,
pursuant to paragraph (9), for the city and county in the fiscal year
in which subdivision (b) applies.
   (e) This section may not be construed to do either of the
following:
   (1) Require the auditor to reduce or increase the amount of ad
valorem property tax revenue required to be contributed by any city,
county, city and county, or special district to an Educational
Revenue Augmentation Fund.
   (2) Require a public safety finance agency to contribute ad
valorem property tax revenue to an Educational Revenue Augmentation
Fund.
  SEC. 3.  Section 17041.5 of the Revenue and Taxation Code is
amended to read:
   17041.5.  Except as provided in Part 10.1 (commencing with Section
18201), notwithstanding any statute, ordinance, regulation, rule or
decision to the contrary, no city, county, city and county,
governmental subdivision, district, public and quasi-public
corporation, municipal corporation, whether incorporated or not or
whether chartered or not, shall levy or collect or cause to be levied
or collected any tax upon the income, or any part thereof, of any
person, resident or nonresident.
  SEC. 4.  Part 10.1 (commencing with Section 18201) is added to the
Revenue and Taxation Code, to read:

      PART 10.1.  LOCAL INCOME TAX

   18201.  (a) (1) Any county or city and county that has formed a
public safety finance agency by ordinance pursuant to Section 55650
of the Government Code may levy a general tax upon the taxable income
of any individual who is a resident of the county or city and county
for each taxable year beginning on or after January 1, 2004.  The
tax may not exceed an amount equal to the net tax defined in Section
17039 multiplied by 10 percent.
   (2) Any ordinance adopted by a county or city and county for the
purpose of levying a tax on income shall be subject to approval by a
majority of the voters voting on that issue at an election.
   (b) This section may not be construed so as to prohibit the levy
or collection of any otherwise authorized license tax upon a business
measured by or according to gross receipts.
   18202.  A local income tax imposed under this part shall be
administered in the same manner as a tax imposed under Part 10
(commencing with Section 17001).  Part 10.2 (commencing with Section
18401) shall apply to any tax imposed under this part in the same
manner and with the same force and effect and to the full extent as
if the language of that part has been incorporated in full into this
part, except to the extent that any provision is inconsistent with
this part or is not relevant to this part.
   18203.  For purposes of this part, the term "resident" means an
individual who resides in the county or the city and county for more
than six months during the taxable year.
   18204.  (a) (1) The Franchise Tax Board shall revise the personal
income tax returns required to be filed pursuant to Part 10.2
(commencing with Section 18401) to allow an individual to report and
pay a local income tax in accordance with this part.  The returns
shall require the taxpayer to include the individual's county or city
and county of residence.
   (2) If a taxpayer fails to include the taxpayer's county or city
and county of residence on the return, the county or city and county
of residence will be the county or city and county as may be
determined by the Franchise Tax Board.
   (3) If a taxpayer fails to include a county or city and county of
residence on the return as required by paragraph (1), then any
adjustment required to make the local income tax assessment on the
return shall be treated as arising out of a mathematical error and
shall be assessed and collected under Section 19051.
   (b) Paragraph (1) of subdivision (a) does not apply with respect
to returns for any taxable year beginning on or after January 1 of a
calendar year unless the Franchise Tax Board receives notice of
approval of a local income tax, as required by Section 99.3, by June
1 of that calendar year.
   18205.  (a) The Franchise Tax Board shall transmit local income
tax revenues and applicable penalties and interest collected pursuant
to this part, net of refunds, to the county or the city and county
to which the amount due is owing on or before 60 days after the
personal income tax return is processed or the income tax is
collected, whichever is later.
   (b) In the case of a county, the county auditor shall allocate the
moneys received by a county pursuant to subdivision (a) among the
county and the cities in the county in the manner specified in
Section 55652 of the Government Code.
   18206.   (a)  A county or city and county that enacts a
local income tax in accordance with this part shall enter into an
agreement with the Franchise Tax Board to provide for reimbursement
to the Franchise Tax Board of expenses incurred by the Franchise Tax
Board to implement and administer this part. 
   (b) Any agreement between the Franchise Tax Board and a county or
a city and county shall provide that an amount equal to all start-up
costs necessary to administer the income tax of that county or city
and county imposed pursuant to this part shall be received by the
Franchise Tax Board before it incurs any cost associated with the
activity permitted by this part on behalf of that county or city and
county.  For the purposes of this section, start-up costs include,
but are not limited to, costs associated with the purchasing of
equipment, the development of processes, and labor.
  SEC. 5.  Section 19533 of the Revenue and Taxation Code is amended
to read:
   19533.  If the debtor has more than one debt being collected by
the Franchise Tax Board and the amount collected by the Franchise Tax
Board is insufficient to satisfy the total amount owing, the amount
collected shall be applied in the following priority:
   (a) Payment of any delinquencies transferred for collection under
Article 5 (commencing with Section 19270) of Chapter 5.
   (b) Payment of any taxes, additions to tax, penalties, interest,
fees, or other amounts due and payable under Part 7.5 (commencing
with Section 13201), Part 10 (commencing with Section 17001), Part 11
(commencing with Section 23001), or this part.
   (c) Payment of any taxes, additions to tax, penalties, interest,
fees, or other amounts due and payable under Part 10.1 (commencing
with Section 18201).
   (d) Payment of delinquent wages collected pursuant to the Labor
Code.
   (e) Payment of delinquencies collected under Section 10878.
   (f) Payment of any amounts due that are referred for collection
under Article 5.5 (commencing with Section 19280) of Chapter 5.
   (g) Payment of any amounts that are referred for collection
pursuant to Section 62.9 of the Labor Code.
   (h) Payment of delinquent penalties collected for the Department
of Industrial Relations pursuant to the Labor Code.
   (i) Payment of delinquent fees collected for the Department of
Industrial Relations pursuant to the Labor Code.
   (j) Notwithstanding the payment priority established by this
section, voluntary payments made by a taxpayer designated by the
taxpayer as payment for a personal income tax liability, shall not be
applied pursuant to this priority, but shall instead be applied
solely to the personal income tax liability for which the voluntary
payment was made.
  SEC. 6.  If any provision of this act, or any ordinance that is
properly proposed by a local governing body pursuant to this act, is
held invalid in a final decision of an appellate court, the remaining
provisions of this act shall become inoperative.
  SEC. 7.  In enacting this act, the Legislature finds and declares
that the provision of government services in the cities in a county
is of vital interest to that county.  Therefore, the Legislature
finds and declares that the revenue transfers from a county to cities
in the county required by Section 55652 of the Government Code serve
a specific public purpose of the counties that transfer this
revenue.