This chapter gives the Sacramento Transportation Authority explicit authority to place transactions-and-use (sales) tax measures that apply to part — not all — of Sacramento County, and to adopt expenditure plans and governance rules tied to those partial‑county measures. It also authorizes the authority to issue bonds for high‑occupancy toll lanes and other toll facilities and to use a range of revenue sources to repay those bonds.
The law expands eligible expenditure categories to include infrastructure that supports infill and transit‑oriented development, allows limited utility spending within those plans, and sets procedural and voting rules for adopting partial‑county measures and for subsequent implementation decisions. The changes create a new legal framework for geographically targeted transportation funding and project packaging in Sacramento County.
At a Glance
What It Does
The chapter lets the authority put a sales tax and matching county transportation expenditure plan on the ballot for an area smaller than the county. It requires the governing board to adopt any partial‑county ordinance by a two‑thirds vote of its total membership and to submit the measure to voters in the affected area.
Who It Affects
City and county officials in Sacramento, the Sacramento Transportation Authority and CARTA (Capital Area Regional Tolling Authority), developers pursuing infill and transit‑oriented projects, and voters/taxpayers inside any newly defined taxed area.
Why It Matters
This is a new model for targeted, local transportation finance in California: it lowers the geographic scale for placing a county transportation sales tax before voters and ties new authority to bond issuance, toll revenue arrangements, and capped utility spending within projects designed to support infill.
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What This Bill Actually Does
The chapter begins by defining terms and making clear it applies to the Sacramento Transportation Authority. It updates the authority’s toolkit in two broad ways: by permitting geographically targeted sales‑tax measures and by expanding what tax proceeds may fund.
The governing board can adopt an ordinance and expenditure plan that applies to a portion of the county rather than the entire county, but the board must first set the taxed area and adopt the ordinance by a two‑thirds vote of the board’s full membership; the measure then goes to voters who live in that area.
On allowable spending, the chapter adds construction, modernization, and improvements that support infill or transit‑oriented development when those areas are nominated by local governments and included in regionally adopted plans that further state greenhouse gas goals. The statute treats traditional transportation projects as the baseline eligible uses but permits limited utility work — water, stormwater, wastewater or similar utility facilities — only if paired with transportation investments, and caps such utility allocations at 5 percent of total tax revenues in the expenditure plan.
It also says revenues must primarily benefit the taxed portion of the county, requires objective eligibility guidelines to define “primary benefit,” and mandates that tax revenues supplement, not replace, other transportation funding.The chapter also authorizes the authority to issue bonds for toll facilities — including high‑occupancy toll lanes — and to repay those bonds from toll revenue or any other lawfully available authority funds (for example, sales tax receipts, development impact fees, or grants). If bonds are to be repaid from toll revenue for a facility run by CARTA, the authority must sign an agreement with CARTA and CARTA’s governing board must approve a toll facility expenditure plan.
Bond issuance requires a resolution adopted by a two‑thirds vote of the governing board that states maximum principal, term and interest, and bonds must include the standard disclosure that they do not pledge the state’s full faith and credit; the maximum interest rate is limited by existing Government Code rules.Procedurally, when a measure applies only to part of the county the law imposes additional checks: the authority cannot adopt the related expenditure plan until both the board of supervisors and the city councils representing a majority of cities included in the taxed area (and a majority of the incorporated population included) approve it. After voter approval, most implementation decisions and any expenditure plan amendments affecting the taxed area must be approved by a majority drawn from two groups: members representing the cities included in the taxed area, and all members appointed from the board of supervisors.
The chapter also clarifies that state districting vocabulary cannot be read to block a partial‑county transactions and use tax if other Revenue and Taxation Code requirements are met.One narrow temporal carve‑out: the new infill/utility spending authorization does not apply to retail transactions and use taxes that voters approved before January 1, 2026.
The Five Things You Need to Know
An expenditure plan may allocate no more than 5% of total tax revenues to utility‑type infrastructure (water, stormwater, wastewater) and only if those utility works are bundled with a transportation project.
The governing board must adopt an ordinance for a partial‑county tax by a two‑thirds vote of the board’s total membership before sending the measure to voters in the taxed area.
Before the authority adopts an expenditure plan that applies to part of the county, the board of supervisors and the city councils representing a majority of the included cities — and a majority of the included incorporated population — must approve the plan.
Bonds for toll facilities require a two‑thirds‑vote resolution specifying maximum principal, maximum term, and maximum interest; the bonds must state they do not pledge the State of California’s full faith and credit.
The added infill and utility spending authority does not apply to transactions and use taxes that voters approved prior to January 1, 2026.
Section-by-Section Breakdown
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Findings and intent
This opening section sets the policy rationale: Sacramento’s mix of incorporated cities and a large developed unincorporated population creates recurring pavement and corridor impacts and a need for coordinated infill-supporting investment, and constitutional vote thresholds make countywide taxes harder to pass. Practically, the findings justify a local, partial‑county approach by tying it to minimizing construction disruption and supporting infill.
Definitions
The statute defines key terms used later (for example, 'active transportation,' 'authority,' 'expenditure plan,' 'ordinance,' and 'CARTA'). Those definitions matter because they narrow the scope of eligible projects (active transportation aligned with a particular Streets & Highways Code cross‑reference) and clarify which institutional actors (CARTA) are implicated when toll revenues or facilities are involved.
Bond authority for toll facilities and CARTA coordination
This section authorizes the authority to issue bonds for toll facilities and allows repayment from toll revenue or other lawfully available funds. If toll revenue will repay bonds for a CARTA‑operated facility, the authority must reach an agreement with CARTA and CARTA must approve a toll facility expenditure plan. Bond issuance is governed by a two‑thirds governing‑board resolution that sets maximum principal, term, and interest; bonds must include the statutory disclaimer that they are not state obligations and are subject to the Government Code interest cap.
Expanded expenditure categories: infill and limited utilities
The bill adds construction, modernization, and improvements that support infill or transit‑oriented development to the allowable expenditure categories, but only for areas nominated by local governments and included in regionally adopted plans that further state greenhouse gas reduction goals. It limits non‑transportation utility spending to 5% of tax revenues and requires that utility spending be paired with transportation projects. It also includes a sunset‑style exclusion: these added permissions do not apply to retail taxes approved before January 1, 2026.
Partial‑county ordinances: area rules, voting, and benefit tests
This section lays out how to create a partial‑county transactions tax: the governing board must set the taxed area before voters decide, and adopt the ordinance by at least a two‑thirds vote of the total membership. Geographic rules require whole‑city or whole‑unincorporated‑area inclusion, and the taxed area must include at least two cities or one city plus the unincorporated county area. Revenues must confer a 'primary benefit' to the taxed portion; the expenditure plan must include objective guidelines defining that term and must be accessible to voters. The section also requires local approvals (board of supervisors and affected city councils representing a majority of cities and incorporated population) before adopting a partial‑county expenditure plan and sets majority rules for subsequent implementation votes drawn from city representatives and all supervisors.
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Explore Transportation in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Residents and businesses inside a taxed area — they stand to receive targeted roadway, transit, active‑transportation, and infill‑supporting investments intended to address local corridor deterioration and construction impacts.
- Local governments and planners that nominate infill/transit areas — the bill creates a financing stream they can use to package transportation and limited utility work to enable redevelopment and transit‑oriented projects.
- Developers pursuing infill or transit‑oriented development — predictable, locally dedicated infrastructure funding reduces the coordination and financing gap that often slows redevelopment projects.
- CARTA and other tolling operators — the authority can finance toll facilities with bonds and enter formal revenue arrangements with CARTA, potentially accelerating toll‑based projects.
Who Bears the Cost
- Taxpayers in the taxed portion of Sacramento County — they will pay any new transactions‑and‑use tax imposed in their area and bear the fiscal burden of bond repayment if sales tax revenue is pledged.
- The Sacramento Transportation Authority — the authority takes on project packaging, bond issuance risk, and the implementation complexity of ensuring expenditures meet the 'primary benefit' test and objective guidelines.
- Cities and the county government that must sign off — city councils and the board of supervisors must approve partial‑county expenditure plans before adoption, creating political and administrative costs and potential bargaining.
- CARTA (operational tradeoffs) — CARTA must negotiate agreements on toll revenue use and approve toll expenditure plans; those obligations may constrain CARTA’s operational flexibility and revenue allocations.
Key Issues
The Core Tension
The central dilemma is between targeted local control and equitable, efficient regional planning: permitting partial‑county sales taxes and packaged infill investments increases local choice and project specificity, but it risks fragmenting countywide funding, producing uneven service levels across jurisdictions, and creating complex governance and legal disputes over which projects 'primarily benefit' the taxed area.
Several implementation and policy challenges stand out. First, the 'primary benefit' requirement and objective eligibility guidelines are necessary to defend geographically targeted revenues, but the statute leaves the content of those guidelines unspecified; disputes about how to measure 'primary benefit' or whether an expenditure primarily helps the taxed area are a likely source of litigation or political conflict.
Second, the 5 percent cap on utility spending creates a tight corridor for packaging necessary utility upgrades with transportation projects; small systems or projects that require more extensive utility work may find the cap constraining, which could force awkward financing splits or delay needed public‑works elements.
Third, allowing partial‑county taxes changes political dynamics: the two‑thirds governing‑board adoption rule and the requirement for supervisor/city approvals make the path to adoption more complex and potentially favor bargaining that extracts concessions, increasing transaction costs. Finally, tying bond repayment to toll revenue or sales tax receipts expands financing flexibility but concentrates risk: if tolls underperform or sales tax growth lags, debt service pressure could force reprioritization of projects or require the authority to shift other funds — raising questions about the practical limits of the 'supplement, not supplant' language.
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