Purchasing and Use Tax

SB 1125 (Hancock) – Request for Comment
As Amended on April 17, 2012

SB 1125, by Senator Loni Hancock, would require companies that counties and cities contract with purchases from outside of the state to register with the Board of Equalization. The purpose of the bill is to help close the use tax gap; the more out-of-state sellers registered with the BOE, the more use tax those companies will be required to report. Consumers almost never report use tax, as required. The use tax is allocated both to the state and to counties and cities through the county pool.

Counties and cities would be able to skirt the requirement with a finding of “compelling government interest,” but the most recent amendments would limit that to no more than five percent of the total number of contract purchases from a vendor.

Please send any comments on this bill, formal or informal, to Geoffrey Neill.

Redevelopment

SB 1151 (Steinberg) – Support in Concept
As Amended on March 29, 2012

SB 1156 (Steinberg) – Support in Concept
As Amended on March 29, 2012

These two bills, SB 1151 and SB 1156, by Senate President Pro Tem Darrell Steinberg, would create a structure for continuing redevelopment activities in the form of county-city joint powers authorities.

The foundation of CSAC’s support is that counties would have an option whether to financially participate in a Community Development and Housing Joint Powers Authority. The approach outlined in the bill package encourages a collaborative partnership between local governments to jointly govern and utilize various financing tools formerly afforded redevelopment agencies to provide economic development that also focuses on the public good. As you well know, counties provide numerous programs on behalf of the state, especially after the recent realignment, and are the level of government responsible for the general health and welfare of all the state’s residents. 

While CSAC supports economic development consistent with the SB 375 goals, as allowed by the two bills as currently drafted, we would support both an expansion of the project area definition and the list of eligible uses currently outlined in the bills in order to support the myriad of public safety, and health and human services that counties provide on behalf of the state. We envision a new structure for community development and affordable housing that gives counties and cities working together the power to both spur economic development and at the same time provide the public infrastructure that can help ensure the community’s success. This infrastructure could include transitional housing for people entering or reentering the workforce after incarceration or a childhood spent in the foster system, as well as others who need transitional and supportive housing. It could include the child care facilities that allow parents to work, or the clinics that keep those housed locally healthy, working, and out of emergency rooms. Some rural and disadvantaged communities need upgraded infrastructure to simply meet health and safety standards.

The Senate Transportation Committee passed SB 1151 and 1156 at its hearing on Tuesday, April 24, along party lines with one Democrat not voting. They now move to the Senate Appropriations Committee.

Realignment

SB 1566 (Negrete McLeod) – Oppose
As Amended on April 10, 2012

SB 1566, by Senator Negrete McLeod, would give a share of vehicle license fees to newly incorporated cities and to cities that recently annexed inhabited land.

As part of last year’s realignment, the state transferred two revenue sources to counties: the portion of VLF that counties weren’t already receiving and a specific share of the state’s sales tax. The VLF revenue is specifically allocated to public safety programs.

The explicit understanding of 2011 Realignment is that counties take on the considerable risk that these funding sources will be sufficient to fund the realigned services, and in return the shift in funding sources will be permanent and uninterrupted. Unfortunately, SB 1566 would alter this agreement made last year. It does so in two ways.

First, under the bill’s provisions, there is no guarantee that the amount of money transferred to newly incorporated cities and cities with recent inhabited annexations will not interfere with the realignment appropriation to counties. The bill removes DMV’s appropriation of $25 million from the Motor Vehicle License Fee Account, but if the calculation grants new cities more than that amount in any future year, it would directly reduce realignment funding.

Second, SB 1566 would grant these cities permanent funding. Prior to realignment, all cities received a share of VLF revenues based on their population. New cities received a greater share of VLF that stepped down over five years to the amount that all other cities received. This bill would give new cities both the startup amount and the ongoing amount, guaranteeing that over time the amount appropriated would take away money guaranteed to public safety realignment.

CSAC is meeting with the author’s office and the sponsor of the bill to try to alleviate these concerns.

The Senate Transportation and Housing Committee passed SB 1566 at its hearing on Tuesday, April 24. The bill now moves to the Senate Appropriations Committee, where it is scheduled to be heard on Monday, May 7.