Development of local government financing measures

Typically placed in the California Revenue and Taxation Code, local jurisdictions are often authorized to assess local taxes. Accordingly, legislation is enacted to provide statutory authority for cities to tax a transaction and use the tax for general purposes up to a specified amount.

For example, the key provisions of such a bill would likely contain language similar to the following:

Notwithstanding any other law, the City of ___ may impose a General Purpose Transaction and Use Tax at a rate not to exceed 0.5% which, combined with all taxes imposed under Part 1.6 (to from section 7251), would exceed the limit set out in section 7251.1, if all of the following requirements are met:

(1) The city shall pass an ordinance proposing the transactions and use tax subject to any applicable voter approval requirements.

(2) The city ordinance proposing the transactions and the use tax shall be submitted to the electorate of the enacting city, as the case may be, and shall be approved by the electors voting on the ordinance as required by Article XIII C of the California Constitution. The election on the ordinance proposing transactions and use tax may take place on or after ___.

(3) The transaction and use tax is in accordance with the Transaction and Use Tax Act (Part 1.6 (from Section 7251)), except for Section 7251.1.

(4) The transaction and use tax is imposed on or after ___.

(5) Notwithstanding subsection (4), an order proposing a transaction and use tax under this section becomes effective pursuant to section 7265.

Notwithstanding section 7251.1, the tax rate authorized in subsection a) is not considered for the purposes of the combined rate limit established by this section.

There are a number of local jurisdictions in California that have this authority, and many more may seek similar statutory authority in the years to come.

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