Economic Development

SB 1 (Steinberg) – Support
As Amended on April 15, 2013

SB 1, by Senate President Pro Tem Darrell Steinberg, would create a structure for continuing economic development activities consistent with the state’s sustainable development goals.

The foundation of our support is allowing counties a clear option whether or not to financially participate in tax increment financing for economic development purposes. We believe an approach that encourages collaboration between counties and cities will best serve Californians. This approach would not only allow counties appropriate control over their own general funds, but necessitates discussions about what kinds of development benefits the community as a whole.

Recent amendments would prohibit a county or city that had a redevelopment area from forming a Sustainable Communities Investment Authority pursuant to the bill until all of the former redevelopment agencies debts are fully paid.

The Senate Transportation and Housing Committee will consider SB 1 at its hearing next Tuesday, April 23.

Sales and Use Taxes

AB 479 (Donnelly) – Oppose Unless Amended
As Amended on April 1, 2013

AB 479, by Assembly Member Tim Donnelly, would exempt textbooks purchased by college students from sales and use taxes.

Counties receive as much as 3.3125 cents, or almost 45 percent, of the revenue the sales tax generates, depending on where the sale takes place. Importantly, this includes 1.0625 cents for 2011 Realignment. It also includes a half-cent for 1991 Realignment, most of another half-cent for Proposition 172 public safety services, a quarter-cent that funds county transportation activities, and of course the site-dependent penny for Bradley-Burns (part of which is currently redirected to the state but reimbursed through property taxes).

If favoring these purchases is an issue of statewide concern, as passing this bill would indicate, then the state should use statewide revenues to reimburse counties and other local agencies for their losses, as provided by statute. Alternatively, the bill could exempt the local portions of the tax from the special treatment the bill would implement.

The Assembly Revenue and Taxation Committee will consider AB 479 at its hearing on April 22, 2013.

AB 486 (Mullin) – Oppose Unless Amended
As Amended on April 10, 2013

AB 486, by Assembly Member Kevin Mullin, would exempt manufacturing equipment from sales and use and transactions and use taxes.

AB 486 excludes from the exemption many of the portions of the sales tax that benefit counties and other local agencies, but it fails to either exclude or reimburse counties for losses related to the portion that funds 2011 Realignment.

The Assembly Revenue and Taxation Committee will consider AB 486 at its hearing on April 22, 2013.

AB 1326 (Gorell) – Oppose Unless Amended
As Introduced on February 22, 2013

AB 1326, by Assembly Member Jeff Gorell, would exempt equipment for manufacturing unmanned aerial vehicles from sales and use taxes.

AB 1326, like the two measures above, fails to reimburse local agencies for the resulting revenue loss.

If favoring these purchases is an issue of statewide concern, as passing this bill would indicate, then the state should use statewide revenues to reimburse counties and other local agencies for their losses, as provided by statute. Alternatively, the bill could exempt the local portions of the tax from the special treatment the bill would confer.

The Assembly Revenue and Taxation Committee will consider AB 1326 at its hearing on April 22, 2013.

Property Tax

AB 1322 (Patterson) – Support
As Introduced on February 22, 2013

AB 1322, by Assembly Member Jim Patterson, would restore the Senior Citizens’ Property Tax Postponement Program in a manner that would create a financially sustainable program. Regrettably, the state’s Senior Citizens’ Property Tax Postponement Program was eliminated in the February 2009 budget agreement.

The Senior Citizen’s Property Tax Postponement Program offered income-eligible seniors and the disabled the opportunity to postpone their property tax payments in exchange for full repayment with interest when their home is sold. The program had a minimal start-up cost and, in most years, generated revenue for the state General Fund. Unfortunately, in large part due to the recent recession and housing crisis, the program failed to pay for itself in 2007-08 and 2008-09, making it a target for elimination given the state’s budget crisis.

In the ensuing years, CSAC, along with county assessors, auditor-controllers, and treasurer-tax collectors, worked with the Legislature, the State Controller’s Office, and the State Treasurer’s Office to identify program improvements and a new financing mechanism that would ensure that the program would be fully self-funded while continuing to allow eligible Californians to utilize this important service. The Legislature eventually approved a program that allowed counties to voluntarily provide the program locally; however, that program failed to authorize counties to establish a priority lien as security for repayment. As a result, to our knowledge, only one county has opted to provide the program locally. AB 1322 instead provides a fiscally sustainable mechanism to reestablish the program on a statewide basis. 

The premise of the Senior Citizens’ Property Tax Postponement Program was to provide assistance to income eligible seniors and the disabled to allow them to stay in their homes by deferring their property taxes until sale of the property or death. California counties support AB 1322.

The Assembly Revenue and Taxation Committee will consider AB 1322 at its hearing on April 22, 2013.

Sales Tax

AB 718 (Melendez) – Oppose Unless Amended
As Introduced on February 21, 2013

AB 718, by Assembly Member Melissa Melendez, would make April 15 a sales tax holiday. It would not apply to the use tax. The bill except the Bradley-Burns portion of sales taxes from the exemption, but not any of the other pieces of sales tax that benefit counties, such as the portions that pay for 2011 Realignment, 1991 Realignment, and Proposition 172. If the state prioritizes purchases made on this day as opposed to other days, it should use state funds to do so or else reimburse counties for their losses.

The Assembly Revenue and Taxation Committee will be considering AB 718 at its hearing on Monday, April 15.

AB 220 (Ting) – Oppose Unless Amended
As Amended on April 8, 2013

AB 220, by Assembly Member Philip Ting, would exempt low-emission vehicles from the sale and use taxes until 2018. The bill except the Bradley-Burns portion of sales taxes from the exemption, but not any of the other pieces of sales tax that benefit counties, such as the portions that pay for 2011 Realignment, 1991 Realignment, and Proposition 172. If the state prioritizes purchases of these cars over other products, it should use state funds to do so or else reimburse counties for their losses.

The Assembly Revenue and Taxation Committee will be considering AB 220 at its hearing on Monday, April 15.

Local Finance

SB 56 (Roth) – Support
As Amended on March 4, 2013

SB 56, by Senator Richard Roth, would provide a “Vehicle License Fee Adjustment Amount” for those newly incorporated cities and cities with annexed properties that were impacted by SB 89 (2011). CSAC supports this measure, as it would provide immediate financial assistance to the four newly incorporated cities in Riverside County.

Prior to the passage of SB 89 (2011), the four newly incorporated cities in Riverside County relied on current state law in evaluating their fiscal viability through the LAFCO process. In each case, LAFCO considered the Vehicle License Fee (VLF) revenue special allocation in their evaluation of the new cities’ revenue, which informed the eventual LAFCO vote to allow the local voters to consider incorporation. When SB 89 passed and redirected those VLF revenues to 2011 realignment, these fledgling cities were impacted in a significant way. 

SB 56 provides a mechanism by which the newly incorporated cities and cities with annexed properties can resume receipt of revenues anticipated prior to their incorporations/annexations. By establishing a “Vehicle License Fee Adjustment Amount” and replacing the lost VLF revenues with property taxes from the schools’ share (as currently exists for all other cities and counties in the state), SB 56 restores funds to those impacted by SB 89 and ensures their continued viability.

The Senate Governance and Finance Committee will consider SB 56 at its hearing next Wednesday, April 17.