Government Finance and Administration Committee Summary

The CSAC Government Finance and Administration Policy Committee met on May 18 at the CSAC Legislative Conference. Supervisor Hannigan of Solano County and Supervisor Morris of Trinity County presided as chair and vice-chair, respectively. The meeting packet is available here.

Committee takes action on sales tax expansion. The Committee took action on legislative efforts proposing to expand sales and use tax beyond its current scope. While there are many proposals introduced each year seeking to exempt certain products from sales and use tax, the reverse is true with AB 274/ACA 2 (Garcia) which proposes to expand the application of sales tax to also include candy and processed snack foods. After a robust discussion on both the “candy tax” specifically as well as sales and use expansions more broadly, the Committee passed a motion to take a “support” position on AB 274 and to form a working group to establish further policies on sales tax reform efforts, which may include a tax on certain services in lieu of products or goods. Both were ultimately approved by the Board of Directors later that afternoon.

Committee takes action on CalPERS divestment mandates. The Committee also took action on legislative efforts proposing to mandate that CalPERS divest from certain industries. The motivation for these divestment proposals is rarely, if ever, fiscal. Instead, they seek to uphold California’s core values and affect a more focused dialogue on critical issues such as supporting clean energy, opposing nuclear armament, and opposing human rights violations. Recognizing that such proposals could weaken the funding status of CalPERS and increase employer contributions, the Committee passed a motion to “oppose” CalPERS divestment mandates which was later approved by the Board of Directors.

State budget update. Carolyn Chu from the Legislative Analyst’s Office provided an update on the Governor’s May Revision and the state’s fiscal forecast. Her PowerPoint presentation can be downloaded here.

Funding for County Elections. James Schwab from the Secretary of State’s Office presented information on AB 668, also known as the Voting Modernization Bond Act of 2018 that will provide $450 million to counties for voting systems if approved by voters.

Board of Equalization Status Report. CSAC staff provided an update on the State Board of Equalization audit by the Department of Finance and corrective action sought to either reduce the BOE’s authority or dismantle the Board entirely and reassign their duties. This stems partially from a misallocation error ranging from possibly $100 million to $300 million in sales tax.

Legislative update. CSAC staff discussed several key bills the team has been working on this legislative session. Accomplishments thus far include significant strides in way of preserving the local share of sales and use tax revenues in addition to protecting local governments from onerous and counterproductive reporting requirements. Staff is having equal success with CSAC’s sponsored measure, AB 467, which is moving through the process unopposed and would cut down on elections costs incurred by counties when a transportation tax is on the ballot. On a less positive note, staff highlighted AB 1250, a bill CSAC opposes that would prevent local governments from contracting for a wide range of personal services, closing off what is often the least-costly method of providing many services (including legal representation, permit review, IT services, revenue collection, ambulance services, waste management, and laundry).