RShall the Board of Supervisors levy a 1/4 percent

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1 SACRAMENTO COUNTY MEASURE R RShall the Board of Supervisors levy a 1/4 percent transaction and use tax (sales tax) for a maximum of 15 years for general governmental purposes? IMPARTIAL ANALYSIS OF MEASURE R (County Transaction and Use Tax (Sales Tax)) Prepared by Sacramento County Counsel If approved by the voters, Measure R would approve the adoption of an ordinance levying within the a onequarter percent transactions and use tax, commonly referred to as a sales tax, pursuant to Chapter 2 (commencing with Section 7285) of Part 1.7 of Division 2 of the Revenue and Taxation Code. The transactions and use tax authorized by Measure R would be levied for a period of fifteen (15) years after the operative date of the tax at which point it would no longer be imposed. The revenue from this transactions and use tax would be available for expenditure for general governmental purposes. Measure R requires approval by a majority vote of the qualified voters of the voting in the election on the issue. FULL TEXT OF MEASURE R AN ORDINANCE REPEALING AND REENACTING CHAPTER 3.44 TO THE SACRAMENTO COUNTY CODE TO LEVY A ONE-QUARTER PERCENT TRANSACTIONS AND USE TAX The Board of Supervisors of the, State of California, ordains as follows: SECTION 1. Chapter 3.44, Sections through , of Title 3 of the Sacramento County Code is repealed and reenacted to read as follows: CHAPTER 3.44 TRANSACTIONS AND USE TAX Title. This ordinance shall be known as the Transactions and Use Tax Ordinance (Chapter 3.44). The County of Sacramento hereinafter called "County." This Chapter shall be applicable in the incorporated and unincorporated territory of the County Purpose. a. During the past several fiscal years, the has faced a number of fiscal crises, the loss of property tax revenues resulting from diversion to education from Counties of such revenues by the Legislature, and unfunded social service and other costs mandated by the Legislature. During those years, virtually all County operations funded by County tax revenues have been subjected to budgetary and staffing reductions, leaving inadequate resources to fulfill service demands. The loss of revenue has been particularly felt in those areas deemed "quality of life" in which discretionary spending has been curtailed to maintain at least minimum service levels in mandated and other priority services. The purpose of this Chapter is to raise revenue with which to restore discretionary funds which have been lost to the County which will permit the Board of Supervisors to more properly balance expenditures between mandated or high priority services and "quality of life" services and community amenities through presentation for voter approval of a 1/4 percent Transactions and Use Tax on the November 7, 2006 general election ballot. Voters are being offered a single measure majority voter approval of which would vest discretion in the Board of Supervisors to expend the estimated $58.0 million annual revenues for general governmental purposes. b. This Chapter is adopted to achieve the following objectives, and its provisions are to be interpreted in order to accomplish such objectives: 1. To impose a Retail Transactions and Use Tax throughout the in accordance with the provisions of Part 1.6 (commencing with Section 7251) and Chapter 2 (commencing with Section 7285) of Part 1.7 of Division 2 of the Revenue and Taxation Code which authorize the Board of Supervisors to levy this tax provided that it is approved by a majority vote of the qualified voters of the voting in an election on the issue. 2. To adopt a Retail Transaction and Use Tax ordinance which 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. 3. To adopt a Retail Transactions and Use Tax ordinance which imposes a tax and provides a measure therefore 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. 4. To adopt a Retail Transactions and Use Tax ordinance which can be administered in a manner which 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 record keeping upon persons subject to taxation under the provisions of this Chapter Contract with State. a. Prior to the operative date of this Chapter, the County shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of the Transactions and Use Tax levied by this Chapter. b. If the County 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 caiendar quarter following the execution of such a contract Transactions and Use Tax. For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the County at the rate of one-quarter of one percent of the gross receipts of any retailer from the sale of all tangible property sold at retail in the County on and after the operative date of this Chapter. An excise tax is hereby imposed on the storage, use or other consumption in the County of tangible personal property purchased from any retailer on and after the operative date of this Chapter for storage, use or other consumption in the County at the rate of one-quarter of one percent of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax regardless of the place to which delivery is made Ballot Proposition. The ballot proposition for the measure shall read as follows: COUNTY SALES TAX Shall the Board of Supervisors levy a 1/4 percent transaction and use tax (sales tax) for a maximum of 15 years for general govern- Ballot Type 000 Page 132

2 mental purposes? Pursuant to Revenue and Taxation Code Section 7285, the Retail Transactions and Use Tax measure shall be placed on the November 7, 2006, general election ballot. If less than a majority of the qualified voters voting on the Retail Transactions and Use Tax measure approve the measure during the November 7, 2006, election, the tax shall not be imposed Place of Sale. For the purposes of the transactions tax levied by 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 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 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, wherever the State of California is named or referred to as the taxing agency, the name of the County shall be substituted therefore. The substitution, however, shall not be made when 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 of the State of California; the substitution shall not be made when the result of that substitution would require action to be taken by or against the County 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; the substitution shall not be made 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 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 I of Division 2 of the Revenue and Taxation Code, or to 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 provisions of that code; the substitution shall not be made in Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code. The word "County" 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 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 Exemptions and Exclusions. a. There shall be excluded from the measure of the transactions tax and the use tax levied by this Chapter 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. b. There are exempted from the computation of the amount of transactions tax levied by this Chapter 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 County which are shipped to a point outside the County, 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 paragraph, delivery to a point outside the County shall be satisfied: i. 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 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-county address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his principal place of residence. ii. With respect to commercial vehicles, by registration to a place of business out-of-county 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 (3) and (4), the sale or lease of 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. c. There is exempted from the use tax imposed by this ordinance, the storage, use or other consumption in the County 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 of the Revenue and Taxation Code, but does not apply to fuel or petroleum products. 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 Ballot Type 000 Page 133

3 fixed by a lease prior to the operative date of this Chapter. 5. For the purposes of subsections (3) and (4), 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 subparagraph (7), a retailer engaged in business in the County shall not be required to collect a use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the County or participates within the County 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 County or through any representative, agent, canvasser, solicitor, subsidiary, or person in the County under the authority of the retailer. 7. "A retailer engaged in business in the County" 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 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 a use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the County. d. Any person subject to a 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 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 of Division 2 of the Revenue and Taxation Code, and all amendments of 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 Sunset. The tax imposed by this Chapter shall be imposed for fifteen years from the operative date of the tax as set forth in this ordinance and, thereafter, shall no longer be imposed Enjoining 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 County, or against any officer of the State or the County, to prevent or enjoin the coliection 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 Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Chapter or any part thereof is for any reason held to be invalid, such invalidity shall not affect the validity of the remaining portion of this Chapter or any part thereof. The Board of Supervisors of the hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases be declared invalid. SECTION 2. Election. An election on the issue of levying a transactions and use tax pursuant to this ordinance shall be held together with the statewide general election on November 7, SECTION 3. Effective and Operative Date. This ordinance shall become effective only if the Retail Transactions and Use Tax is approved by a majority vote of the qualified voters of the County of Sacramento voting on the measure at the November 7, 2006, election. If the foregoing condition is satisfied, this ordinance shall become effective immediately upon certification of the results of the November 7, 2006, election regarding the retail transactions and use tax by the Board of Supervisors. The transactions and use tax levied under this ordinance shall become operative on the first day of the first calendar quarter commencing more than 110 days after the effective date of the ordinance or on such later date as necessary to facilitate collection of the tax by the State Board of Equalization. SECTION 4. This ordinance was introduced and the title thereof read at the regular meeting of the Board of Supervisors on July 25, 2006, at which time further reading was waived by a four/fifths vote of those Supervisors present. On a motion by Supervisor Dickinson, seconded by Supervisor Collin, the foregoing ordinance was passed and adopted by the Board of Supervisors of the, State of California, this 2nd day of August 2006, by the following vote, to wit: AYES: Supervisors, Collin, Dickinson, Nottoli, Peters NOES: Supervisors, MacGlashan ABSENT: Supervisors, None ABSTAIN: Supervisors, None ARGUMENT IN FAVOR OF MEASURE R Measure R is a responsible and urgently needed investment in our community - a powerful economic engine that could revitalize downtown Sacramento, create thousands of new jobs, bring new pride and national recognition to our region, and generate funding to improve life in every Sacramento County community. "Every citizen in the county benefits from Measure R," says Brooks Truitt of the Sacramento County Alliance of Neighborhood Associations. "Its revenue can be fairly divided among every community in the county, where local citizens could then decide how to use the funds to improve their neighborhoods." Imagine your community finally having the revenue it needs for new projects that ease traffic, improve local parks and schools, increase police and fire protection, and improve neighborhoods. Measure R could make this possible. lmagine a new community-owned sports and entertainment complex in the heart of our region - a vibrant new home for the Kings, Monarchs, concerts and other sporting, entertainment and community events. Measure R could make this possible by transforming the blighted downtown rail yard into a vibrant new city center featuring shops, restaurants, housing, entertainment and a regional transportation hub to be enjoyed by all. Measure R provides over $1.2 billion, which could be used for these or other community improvements throughout Sacramento County by increasing our local sales tax just one-quarter of a cent for 15 years. That's only 25 cents on a $I00 purchase. Measure R would help us deal with the problems created by rapid growth - like crime, gridlock, crowded schools and blighted neighborhoods. Supported by respected community leaders and trusted civic Ballot Type 000 Page 134

4 organizations, Measure R benefits all citizens, and could create thousands of new jobs, generate millions of new dollars for our local economy, and bring new pride, energy and national recognition to our region. Share the vision - vote YES on Measure R. s/barbara Harris, 2005 Sacramento County Teacher of the Year s/matthew R. Mahood, President and CEO Sacramento Metropolitan Chamber of Commerce s/julius Cherry, Fire Chief, Sacramento Fire Department s/richard Pan, M.D., Governing Board Member, Cover the Kids ARGUMENT AGAINST MEASURE R Measure R, the Arena Tax, is bad for Sacramento County taxpayers. Together with Measure Q, it raises your sales tax to build a new arena so that one ultra-wealthy family can profit from the arena without building it themselves. This is a foolish tax, considering that we have more pressing priorities like repairing our levee system. Measure R increases the tax on every taxable item we buy. Seniors, single moms, the disabled -- those who can't afford to attend basketball games or concerts -- will be hurt most by a new tax. Meanwhile, Las Vegas-based Maloof Sports and Entertainment will reap all the revenue from every event at this $500 million arena, including parking and concessions, for a measly $4 million annual rent. Is that fair? That's not all. The local governments of Sacramento County saw the opportunity to get a slice of a new sales tax and as a result, the proposed tax is twice what they need for a new arena. A pure arena tax could have been 1/8. Instead, they doubled it. Now half of this $1.2 billion tax will go to politicians with few strings attached. This is truly a case where the rich get richer while the poor get poorer. Measure R is also risky. Supporters claim that a new arena will provide economic benefits. But respected economists who study the urban impact of arenas say this isn't true. Increased traffic, noise, litter, and competition from arena concessions can drive customers away from local restaurants and other businesses. Under the Arena Tax deal, small businesses pay, we pay, but the Maloofs are excused from paying about $5 million in property taxes. Is that fair? Government should not tax its citizens to subsidize multi-millionaires. Vote No on Measures R and Q. For more information, visit s/jon Coupal, Howard Jarvis Taxpayers Association s/larry Carr, SMUD Board of Directors, Ward 6 s/grantland Johnson, People United for a Better Sacramento Former Member, Sacramento County Board of Supervisors s/dave Jones, State Assemblymember REBUTTAL TO ARGUMENT IN FAVOR OF MEASURE R Measure R is an irresponsible tax and a bad deal. Funds from Measure R will be used to build an arena for the benefit of the Maloof family with little or no benefit to taxpayers or local businesses. Supporters of Measure R also known as the Arena Tax claim it will be an "economic engine," but economic studies show that publicly funded sports venues fail to generate significant economic growth. University of Chicago Economist Allen Sanderson says "if you want to inject money into the local economy, it would be better to drop it from a helicopter than invest in a new ballpark." Instead of increasing funding for police and fire protection, Measure R raises $600 million for an arena. That's why the Sacramento Police Officers Association urges you to vote "No" on Measure R. Instead of increasing funds for schools, taxpayer-funded sports arenas have caused cutbacks in education in cities including Cleveland. Instead of helping small businesses grow, the new arena will take away business from local restaurants and other establishments. We should not be raising taxes to pay for basketball arenas when all the profits go to the team owners. Sports team owners build successful new arenas in other cities without taxpayer subsidies. How can supporters honestly claim that an arena is an "urgently needed investment" when we have other needs like repairing levees, improving schools or reducing traffic? The Arena Tax is a bad deal for Sacramento County taxpayers. Vote No on Measure R. s/marcie Launey, Teacher, President, Sacramento City Teachers Association s/steve Cohn, Sacramento City Councilmember s/amelia Zamora, League of United Latin American Citizens (LULAC) s/linda Lee, Commissioner, Sacramento First 5 s/ron Dwyer-Voss, Board Member, Natomas Unified School District REBUTTAL TO ARGUMENT AGAINST MEASURE R Opponents say Measure R is "foolish" and "bad" for taxpayers but here are the facts: Measure R generates over $600 million that can be shared by every community in Sacramento County to fund services that directly benefit taxpayers, like after-school programs, road improvements, emergency services and police protection. This is "bad" for taxpayers? s/jerry Camous, Sacramento Police Officers Association Ballot Type 000 Page 135 Measure R also provides funding that can replace ARCO arena with a new COMMUNITY-OWNED sports and entertainment center. A recent economic study found this investment would generate nearly $550 million in new revenue for city and county taxpayers enough money to completely pay for the project.

5 The project could be part of an exciting downtown revitalization featuring new housing, shops, entertainment and restaurants all citizens can enjoy a project that attracts new businesses, creates new jobs and generates millions of dollars in new revenue for city and county taxpayers. This is a "foolish" investment? Opponents claim the Maloofs are "excused" from paying about $5 million in property taxes. In truth, the Maloofs have already agreed to pay off in advance the $70 million loan owed to the city by the previous Kings owners. Measure R lets us grow our economy, improve local services and retain our increasing national reputation as one of America's most vibrant and desirable areas. And despite the wild and reckless claims by Measure R opponents, the REAL cost of this measure is less than a cup of coffee every month for the average Sacramento County taxpayer. Share the vision. YES on Measure R. s/matthew R. Mahood, President & CEO Sacramento Metropolitan Chamber of Commerce s/virginia Moose, Board Member, Sacramento Area Flood Control Agency s/derrick R. Fong, Owner Mikuni Japanese Restaurants s/andy Plescia, Former City of Sacramento Economic Development Director s/adam Grzybicki, Board Member Sacramento County Taxpayers League Ballot Type 000 Page 136