HomeMy WebLinkAboutO-1604 Amend Ch 3.15 Essential Services Transactions & Use Tax for additional 8 YearsORDINANCE NO. 1604 (2014 Series)
AN ORDINANCE OF THE CITY COUNCIL AND THE PEOPLE OF
THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING CHAPTER
3.15 OF THE MUNICIPAL CODE TO EXTEND THE EXISTING
"ESSENTIAL SERVICES TRANSACTIONS (SALES) AND USE TAX," FOR
AN ADDITIONAL EIGHT YEARS (MARCH 31, 2023), TO BE
ADMINISTERED BY THE STATE BOARD OF EQUALIZATION; UPDATE
THE PURPOSE STATEMENT; AND PROVIDE FOR ADDITIONAL
CITIZEN OVERSIGHT AND ACCOUNTING TRANSPARENCY.
WHEREAS, in 2006, the voters of San Luis Obispo approved the San Luis Obispo
Essential Services Measure (also commonly known as Measure Y, its 2006 ballot designation) with
64.77% of the vote, establishing a half -cent per dollar sales tax to address fiscal challenges
including State takeaways totaling more than $22 million over the prior 15 years, and ongoing State
funding reductions of $3 million annually; and
WHEREAS, the purpose of Measure Y was to secure a local revenue source to protect
and maintain essential community services such as neighborhood street paving and pothole
repair, traffic congestion relief, police protection, fire and paramedic services, flood
protection, senior citizen services and facilities, neighborhood code enforcement, open space
preservation and other vital general purpose services; and
WHEREAS, the voter's approval of Measure Y in 2006 allowed the City to: restore its
neighborhood paving and flood protection programs; restore sworn police positions that had been
cut, as well as restore the City's Fire Marshal to a full -time position; and restore its open space
acquisition program, aiding in the purchase of portions of the Irish Hills, Stenner Canyon, and
Reservoir Canyon natural reserves; and also gave the City the ability to provide added services for
residents, including hiring two neighborhood services specialists, hiring two downtown daytime
police patrol officers, and hiring a ranger services maintenance worker; and
WHEREAS, the City's financial challenges continued after the adoption of Measure Y due
to the Great Recession — which impacted all of the City's major revenue sources including property
tax, transient occupancy tax, and sales tax — but even during the Great Recession, the City was still
able to maintain a high level of service for its residents; and,
WHEREAS, due to Measure Y revenue and the financial stability created by City actions —
including (1) compensation reductions agreed to by employees saving the City over $3 million in
ongoing, annual savings, and (2) pension reform efforts that require employees to pay their share of
pension costs, and implementation of three tiers of retirement benefits so that, over time, the cost to
the City for retirement benefits for new public employees will be significantly reduced — the City
has invested in new Capital Improvement Projects, such as the Santa Rosa Skate Park, the Bob
Jones Trail bridge at Los Osos Valley Road, and is in a position to make new open space
acquisitions in the City's greenbelt; and
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Ordinance No. 1604 (2014 Series)
Page 2
WHEREAS, the City Council appointed a 10- person citizen advisory committee to analyze
the City's stewardship of Measure Y resources and report back to the City Council with its
recommendations, and following several meetings, a public opinion survey, a public open house,
and deliberations among the committee members, the committee recommended that the City
Council place a measure before the voters to extend the Essential Services Sales and Use Tax for
another eight years; and
WHEREAS, the City's Essential Services Sales and Use Tax includes substantial
accountability measures including: requirements for independent annual financial audits;
integration of use of funds into the City's budget and goal- setting process; annual community
reports; and annual citizen engagement meetings; and
WHEREAS, the City Council desires to include additional accountability measures,
including a Citizen's Revenue Enhancement Oversight Commission and a new Fiscal
Responsibility Philosophy to increase transparency and accountability and to ensure the
expenditure of revenue measure funds in alignment with evolving community priorities, as defined
through citizen engagement and City Council direction; and
WHEREAS, the City's Essential Services Transactions (Sales) and Use Tax Ordinance is
found in Chapter 3.15 of the City's Municipal Code; and
WHEREAS, Section 3.15.03 of this Chapter sets forth a expiration date of March 31, 2015,
at which time Chapter 3.15 will expire, unless extended by the voters of the City at an election
called for that purpose; and
WHEREAS, the City Council desires to place a measure before the voters in the
November 2014 General Election to extend the City's existing one -hall' percent Transactions and
Use Tax, Chapter 3.15, for another eight years, to March 31, 2023.
NOW, THEREFORE, BE IT ORDAINED by the Council and the People of the City
of San Luis Obispo as follows:
Section 1. Chapter 3.15 of the City's Municipal Code is hereby amended and re-
enacted in full to read as follows:
Chapter 3.15
ESSENTIAL SERVICES TRANSACTIONS (SALES) AND USE TAX
3.15.010 Title.
This chapter shall be known as the "city of San Luis Obispo essential services transactions (sales)
and use tax ordinance." The city of San Luis Obispo hereinafter shall be called the "city." This
chapter shall be applicable in the incorporated territory of the city.
3.15.020 Pti rpose. . ............................
This chapter is adopted to achieve the following, among other purposes, and directs that the
provisions hereof be interpreted in order to accomplish those purposes:
Ordinance No. 1604 (2014 Series)
Page 3
A. To protect and maintain essential services and facilities— such as open space preservation; bike
lanes, sidewalks and other traffic congestion relief projects; public safety; neighborhood street
paving and code enforcement; flood protection; senior citizen programs including services and
facilities; and other vital general purpose services and capital improvement projects —by extending
a general purpose retail transactions and use tax of one -half percent in accordance with the
provisions of Part 1.6 (commencing with Section 725 1) of Division 2 of the Revenue and Taxation
Code and Section 7285.9 of Part 1.7 of Division 2, which authorizes the city to adopt this general
purpose tax chapter, which shall be operative if two - thirds of the council and a majority vote of the
electors voting on the measure, vote to approve the extension of this general purpose revenue source
at an election called for that purpose.
B. To adopt a retail transactions and use tax chapter that incorporates provisions identical to those of
the sales and use tax law of the state of California insofar as those provisions are not inconsistent
with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and
Taxation Code.
C. To adopt a retail transactions and use tax chapter that imposes a tax and provides a measure
therefor that can be administered and collected by the State Board of Equalization in a manner that
adapts itself as fully as practicable to, and requires the least possible deviation from, the existing
statutory and administrative procedures followed by the State Board of Equalization in
administering and collecting the California State sales and use taxes.
D. To adopt a retail transactions and use tax chapter that can be administered in a manner that will
be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the
Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at
the same time minimize the burden of recordkeeping upon persons subject to taxation under the
provisions of this chapter.
3.15.030 Eight -,year sunset.
The authority to levy the tax imposed by this chapter shall expire in eight years, on March 31, 2023,
unless extended by the voters.
3.15.040 Fiscal accountability provisions — Citizen oversight and independent annual financial
audits.
Along with the city's ongoing commitment to citizen involvement as a fundamental principle of
good government, specific citizen oversight and fiscal accountability provisions are hereby
established as follows:
Ordinance No. 1604 (2014 Series)
Page 4
A. Revenue Enhancement Oversight Commission. A citizen's commission will be
established to provide transparency and maximize City accountability. The Commission will
be responsible for reviewing and making budget recommendations directly to the City
Council regarding expenditures from the essential services transactions (sales) and use tax,
and reporting annually to the community on the City's use of these tax revenues.
B. Accounting and Tracking Expenditures. The funds collected through the City of San Luis
Obispo essential services transactions (sales) and use tax ordinance shall be accounted for
and tracked by the City Treasurer separately to facilitate citizen oversight.
C. Independent Annual Financial Audit. The amount generated by this general purpose
revenue source and how it was used shall be included in the annual audit of the city's
financial operations by an independent certified public accountant.
D. Integration of the Use of Funds into the City's Budget and Goal- Setting Process. The
estimated revenue and proposed use of funds generated by this measure shall be an integral
part of the city's budget and goal- setting process, and significant opportunities will be
provided for meaningful participation by citizens in determining priority uses of these funds.
E. Annual Community Report. A written report shall be reviewed at a public hearing by the
Revenue Enhancement Oversight Commission, and a summary will be provided annually to
every household in the community detailing how much revenue is being generated by the
measure and how funds are being spent.
F. Annual Citizen Oversight Meeting. An invitation will be extended each year to the entire
community inviting them to participate in a forum to review and discuss the use of the
revenue generated by this measure. City staff will also be available to meet with any group
that requests a specific briefing with their members to discuss and answer questions about
the revenues generated by the measure and their uses.
3.15.050 Transactions .(sales).. tax rate.,_...... W..,.- .,,.,- .....- ...,.�..........,_....., m.. .......... _.. ,.....,.__ ..._ ................_ ............. ..I............................
For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all
retailers in the incorporated territory of the city at the rate of one -half percent of the gross receipts of
any retailer from the sale of all tangible personal property sold at retail in said territory on and after
the operative date of this chapter.
3.15.060 Use tax rate.
An excise tax is hereby imposed on the storage, use or other consumption in the city of tangible
personal property purchased from any retailer on and after the operative date of this chapter for
storage, use or other consumption in said territory at the rate of one -half percent of the sales price of
the property. The sales price shall include delivery charges when such charges are subject to state
Ordinance No. 1604 (2014 Series)
Page 5
sales or use tax regardless of the place to which delivery is made.
3.15.070 01) era
tive date......._..,..W, ...,,_�.... ....... �,,....,.._..�..... ., ...,...,........... _ __..,.
"Operative date" means the first day of the first calendar quarter commencing more than one
hundred ten days after the adoption of the ordinance codified in this chapter.
3.15.080 Contract with state.
Prior to the operative date, the city shall contract with the State Board of Equalization to perform all
functions incident to the administration and operation of this transactions and use tax chapter;
provided, that if the city shall not have contracted with the State Board of Equalization prior to the
operative date, it shall nevertheless so contract and in such a case the operative date shall be the first
day of the first calendar quarter following the execution of such a contract.
3.1.5.090 Place of sale.
For the purposes of this chapter, all retail sales are consummated at the place of business of the
retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out -
of -state destination or to a common carrier for delivery to an out -of -state destination. The gross
receipts from such sales shall include delivery charges, when such charges are subject to the state
sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no
permanent place of business in the state or has more than one place of business, the place or places
at which the retail sales are consummated shall be determined under rules and regulations to be
prescribed and adopted by the State Board of Equalization.
115.100 Adoption.of provisions of state law.
Except as otherwise provided in this chapter and except insofar as they are inconsistent with the
provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part
1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby
adopted and made a part of this chapter as though fully set forth herein.
115410 Limitations on adoption of state law and collection of use taxes.
In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
A. Wherever the state of California is named or referred to as the taxing agency, the name of this
city shall be substituted therefor. However, the substitution shall not be made when:
1. The word "state" is used as a part of the title of the State Controller, State Treasurer,
State Board of Control, State Board of Equalization, State Treasury, or the Constitution
Ordinance No. 1 604 (2014 Series)
Page 6
of the State of California.
2. The result of that substitution would require action to be taken by or against this city
or any agency, officer, or employee thereof rather than by or against the State Board of
Equalization, in performing the functions incident to the administration or operation of
this chapter.
3. In those sections, including, but not necessarily limited to, sections referring to the
exterior boundaries of the state of California, where the result of the substitution would
be to:
a. Provide an exemption from this tax with respect to certain sales, storage, use or
other consumption of tangible personal property which would not otherwise be
exempt from this tax while such sales, storage, use or other consumption remain
subject to tax by the state under the provisions of Part 1 of Division 2 of the
Revenue and Taxation Code; or
b. Impose this tax with respect to certain sales, storage, use or other consumption
of tangible personal property, which would not be subject to tax by the state under
the said provision of that code.
4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797
or 6828 of the Revenue and Taxation Code.
B. The word "city" shall be substituted for the word "state" in the phrase "retailer engaged in
business in this state" in Section 6203 and in the definition of that phrase in Section 6203. (Ord.
1495 §11,2006)
3.15.120 Permit not required.
If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation
Code, an additional transactor's permit shall not be required by this chapter.
3.15.130 Exemptions and exclusions
The following transactions shall be exempted and excluded:
A. There shall be excluded from the measure of the transactions tax and the use tax the amount of
any sales tax or use tax imposed by the state of California or by any city, city and county, or county
pursuant to the Bradley -Burns Uniform Local Sales and Use Tax Law or the amount of any state -
administered transactions or use tax.
Ordinance No. 1604 (2014 Series)
Page 7
B. There are exempted from the computation of the amount of transactions tax the gross receipts
from:
1. Sales of tangible personal property, other than fuel or petroleum products, to
operators of aircraft to be used or consumed principally outside the county in which the
sale is made and directly and exclusively in the use of such aircraft as common carriers
of persons or property under the authority of the laws of this state, the United States, or
any foreign government.
2. Sales of property to be used outside the city which is shipped to a point outside the
city, pursuant to the contract of sale, by delivery to such point by the retailer or his
agent, or by delivery by the retailer to a carrier for shipment to a consignee at such
point. For the purposes of this section, delivery to a point outside the city shall be
satisfied:
a. With respect to vehicles (other than commercial vehicles) subject to registration
pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the
Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public
Utilities Code, and undocumented vessels registered under Division 3.5
(commencing with Section 9840) of the Vehicle Code by registration to an out -of-
city address and by a declaration under penalty of perjury, signed by the buyer,
stating that such address is, in fact, his or her principal place of residence; and
b. With respect to commercial vehicles, by registration to a place of business out -
of -city and declaration under penalty of perjury, signed by the buyer, that the
vehicle will be operated from that address.
3. The sale of tangible personal property if the seller is obligated to furnish the property
for a fixed price pursuant to a contract entered into prior to the operative date of this
chapter.
4. A lease of tangible personal property, which is a continuing sale of such property,
for any period of time for which the lessor is obligated to lease the property for an
amount fixed by the lease prior to the operative date of this chapter.
5. For the purposes of subsections (B)(3) and (4) of this section, the sale or lease of
tangible personal property shall be deemed not to be obligated pursuant to a contract or
Ordinance No. 1604 (2014 Series)
Page 8
lease for any period of time for which any party to the contract or lease has the
unconditional right to terminate the contract or lease upon notice, whether or not such
right is exercised.
C. There are exempted from the use tax imposed by this chapter, the storage, use or other
consumption in this city of tangible personal property:
1. The gross receipts from the sale of which have been subject to a transactions tax
under any state - administered transactions and use tax ordinance.
2. Other than fuel or petroleum products purchased by operators of aircraft and used or
consumed by such operators directly and exclusively in the use of such aircraft as
common carriers of persons or property for hire or compensation under a certificate of
public convenience and necessity issued pursuant to the laws of this state, the United
States, or any foreign government. This exemption is in addition to the exemptions
provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State
of California.
3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a
contract entered into prior to the operative date of this chapter.
4. If the possession of, or the exercise of any right or power over, the tangible personal
property arises under a lease which is a continuing purchase of such property for any
period of time for which the lessee is obligated to lease the property for an amount
fixed by a lease prior to the operative date of this chapter.
5. For the purposes of subsections (C)(3) and (4) of this section, storage, use, or other
consumption, or possession of, or exercise of any right or power over, tangible personal
property shall be deemed not to be obligated pursuant to a contract or lease for any
period of time for which any party to the contract or lease has the unconditional right to
terminate the contract or lease upon notice, whether or not such right is exercised.
6. Except as provided in subsection (C)(7) of this section, a retailer engaged in business
in the city shall not be required to collect use tax from the purchaser of tangible
personal property, unless the retailer ships or delivers the property into the city or
participates within the city in making the sale of the property, including, but not limited
to, soliciting or receiving the order, either directly or indirectly, at a place of business
of the retailer in the city or through any representative, agent, canvasser, solicitor,
Ordinance No. 1604 (2014 Series)
Page 9
subsidiary, or person in the city under the authority of the retailer.
7. A retailer engaged in business in the city shall also include any retailer of any of the
following: vehicles subject to registration pursuant to Chapter 1 (commencing with
Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with
Section 21411 of the Public Utilities Code, or undocumented vessels registered under
Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall
be required to collect use tax from any purchaser who registers or licenses the vehicle,
vessel or aircraft at an address in the city.
D. Any person subject to use tax under this chapter may credit against that tax any transactions tax
or reimbursement for transactions tax paid to a district imposing, or retailer liable for, a transactions
tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to
the person of the property the storage, use or other consumption of which is subject to the use tax.
3.1_5.140 Amendments.
All amendments subsequent to the effective date of this chapter to Part 1 of Division 2 of the
Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Part
1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6
and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of
this chapter; provided, however, that no such amendment shall operate so as to affect the rate of tax
imposed by this chapter.
3.15.150 Eqjoining collection forbidden.
No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or
proceeding in any court against the state or the city, or against any officer of the state or the city, to
prevent or enjoin the collection under this chapter, or Part 1.6 of Division 2 of the Revenue and
Taxation Code, of any tax or any amount of tax required to be collected.
Section 2. A summary of this ordinance, together with the names of Council members
voting for and against, shall be published at least five (5) days prior to its final passage, in The
Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect upon
adoption by the voters.
INTRODUCED on July 1, 2014 AND FINALLY ADOPTED by the Council of the
City of San Luis Obispo on July 15, 2014 on the following roll call vote:
AYES: Council Members Ashbaugh Smith,
Vice Mayor Christianson and Mayor Marx
Ordinance No. l 604 (2014 Series)
Page 10
NOES: Council Member Carpenter
ABSENT: None
PASSED AND ADOPTED by the Voters of the City San Luis Obispo on November 4,
2014 by the following vote tally:
AYES: 8,728 70.32%
NOES: 3,684 29.68%
Mayor`�J n Marx
ATTEST:
APPROVED AS TO FORM:
ristine Dietrick
Attorney