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Drafting Local Government Finance Measures

There are a number of local jurisdictions in California that have this authority

By Chris Micheli, June 10, 2022 2:45 pm

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

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

Notwithstanding any other law, the City of ___ may impose a transactions and use tax for general purposes at a rate of no more than 0.5 percent that, in combination with all taxes imposed pursuant to Part 1.6 (commencing with Section 7251), would exceed the limit established in Section 7251.1, if all of the following requirements are met:

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

(2) The city ordinance proposing the transactions and use tax is submitted to the electorate of the adopting city, as applicable, and is approved by the voters voting on the ordinance as required by Article XIII C of the California Constitution. The election on the ordinance proposing the transactions and use tax may occur on or after ___.

(3) The transactions and use tax conforms to the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), other than Section 7251.1.

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

(5) Notwithstanding paragraph (4), an ordinance proposing a transactions and use tax pursuant to this section shall become operative as provided in Section 7265.

Notwithstanding Section 7251.1, the tax rate authorized in subdivision (a) shall not be considered for purposes of the combined rate limit established by that section.

There are a number of local jurisdictions in California that have this authority, and many others could seek similar statutory authority in the coming years.

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