HomeMy WebLinkAboutG.9 - GT Transactions Use Tax PPTTRANSACTIONS & USE TAX
January 9, 2024
Adrian R. Guerra, City Attorney
1
City Council Goals
›Goal #1
–“Ensure Our Fiscal Viability” by identifying additional revenue
sources
2
Background
›Ad Hoc Citizens Committee recommended City Council
consider adoption of 1.00% transactions and use tax
›City Council directed staff to provide follow up
presentation on options and corresponding procedures
to establish transactions and use tax
3
City’s Tax Rates
›Current city-wide tax: 7.75%
›State law sales tax cap: 10.25%
›Remaining available: 2.50%
›Maximum allowed to be captured: 2.00%
4
Taxing Jurisdiction Rate_
California state sales tax 6.00%
San Bernardino County sales tax 0.25%
Grand Terrace sales tax 1.00%
Special tax (San Bernardino County)0.50%
Combined Sales Tax:7.75%
Transactions and Use Tax
›Type of sales tax
›Governed by Transactions and Use Tax Law
›Distinct from sales and use taxes (Bradley-Burns sales tax)
5
Transactions and Use Tax Sales and Use Tax
Allocated to jurisdiction where
goods are delivered or placed into
use.
Allocated to the jurisdiction where
the sale is made.
Transactions and Use Tax for General Purpose
(General Tax)
›A city may levy, increase, or extend a transactions and
use tax for general purposes at a rate of 0.125% or a
multiple thereof if:
–The ordinance proposing that tax is approved by a two-thirds
vote of all members of that governing body; and
–The tax is approved by a majority vote of qualified voters of the
City.
6
General Tax in General Election
›Measure must be consolidated with general municipal
election where City Council seats are up for election
›Next general election: November 5, 2024
7
General Tax in Special Election
›Measure may be presented to the electorate at a special
election in cases of emergency declared by a unanimous
vote of the governing body
–Emergency would be “fiscal” emergency and City Council would
need to adopt facts and findings in resolution supporting the
declaration of an emergency
›No special election in 2024
8
Transactions and Use Tax for Specific Purpose
(Special Tax)
›City may levy, increase, or extend a transactions and use tax for specific purpose
›Tax may be levied, increased, or extended at a rate of 0.125% or a multiple thereof if:
–The ordinance proposing the tax is approved by two-thirds vote of all
members of City Council;
–Approved by two-thirds vote of qualified voters of the City voting in
an election on the issue;
–Tax conforms to the Transactions and Use Tax Law; and
–The ordinance includes an expenditure plan describing specific
projects for which revenues from the tax may be expended.
9
Special Tax in General Election
›City may place special tax on ballot by ordinance or resolution, adopted after notice and a public hearing
–Ordinance must include:
›Type of tax;
›Rate;
›Method of collection;
›Date on which election on measure will be held; and
›Purpose for which tax will be used.
›Next general election: November 5, 2024
10
Special Tax in Special Election
›No special election in 2024
›If City Council chooses to proceed with special tax
measure, must be presented in upcoming November
2024 general election
11
Three Resolutions
The following items regarding transactions and use tax must be completed by City Council:
›Adoption of three resolutions:
1.Ordering submission to qualified electors of the City of a certain
measure relating to a transactions and use tax at the general
election to be held on November 5, 2024.
2.Setting priorities for filing written argument(s) and directing the
City Attorney to prepare an impartial analysis regarding the
transactions and use tax measure.
3.Providing for the filing of rebuttal arguments for a transactions and
use tax measure submitted at the general election on November 5,
2024.
12
Reading of an Ordinance
›If all three resolutions are adopted a first reading, by
title only, of an ordinance relating to transactions and
use tax measure
›Must be completed by August 9, 2024
›Recommend adoption of resolutions by second meeting
in June 2024
13
Initiative Process
›If City Council elects not to move forward with
transactions and use tax, residents may still pursue tax
by initiative measure
›If initiative petition is sufficient, City Council has three
options:
1.Adopt the ordinance
2.Submit the ordinance to the voters at next regular election
3.Order a report
›Recommended option: Submit ordinance to voters,
consistent with California Constitution
14
Fiscal Impact
›Costs anticipated include:
–City Attorneys’ fees to prepare necessary resolutions and
ordinance; and
–Costs for public outreach and education on measure.
15
Recommendation
›Direct staff whether or not to prepare necessary
resolutions and an ordinance to establish a transactions
and use tax; or
–If so directed, provide direction as to rate for implementation
and whether such tax shall be a general tax or special tax.
›Provide other direction to staff.
16