BILL ANALYSIS
SB 27
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Anna Marie Caballero, Chair
SB 27 (Hancock) - As Amended: February 23, 2009
SENATE VOTE : 33-0
SUBJECT : Local agencies: sales and use tax: reallocation.
SUMMARY : Prohibits a local agency from entering into any form
of agreement with a retailer that would involve the shifting of
any amount of Bradley-Burns local tax proceeds if the agreement
results in a reduction in the amount of revenue that is received
by another local agency from the same retailer if it is located
within that other local agency, and continues to maintain a
physical presence and location there. Specifically, this bill :
1)Prohibits a city, county, or city and county from entering
into any form of agreement that would result, directly or
indirectly, in the payment, transfer, diversion or rebate of
any amount of Bradley-Burns local tax proceeds to any person
for any purpose when both of the following apply:
a) The agreement results in a reduction in the amount of
Bradley-Burns tax proceeds received by another local agency
from a retailer within the territorial jurisdiction of that
other local agency; and,
b) The retailer continues to maintain a physical presence
and location within the territorial jurisdiction of that
other local agency.
2)Provides that the bill's provisions do not apply to
Bradley-Burns local tax proceeds provided by a local agency to
a retailer if those proceeds are used to reimburse the
retailer for the construction of public works improvements
that serve all or a portion of the territorial jurisdiction of
the local agency.
3)Provides that the bill's provisions do not apply to an
agreement to pay or rebate any tax revenue resulting from the
imposition of a sales and use tax relating to a buying
company.
SB 27
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4)Provides that the bill's provisions do not apply to any
agreement by a local agency to pay or rebate any use tax
revenue resulting from the imposition of a sales and use tax
relating to a use tax direct payment permit.
5)Provides that the bill will be effective on the date the act
takes effect.
6)Contains an urgency clause.
EXISTING LAW prohibits a redevelopment agency or a local agency,
as defined, from providing any form of financial assistance to a
vehicle dealer or big box retailer, or a business entity that
sells or leases land to a vehicle dealer or big box retailer,
that is relocating from the territorial jurisdiction of one
community or local agency to the territorial jurisdiction of
another community or local agency, as specified.
FISCAL EFFECT : None
COMMENTS :
1)SB 27, sponsored by the City of Livermore, will prohibit
cities or counties from using Bradley-Burns sales taxes
rebates as an incentive to draw sales tax-generating
activities away from other communities. This bill is
substantially similar to AB 697 (Hancock) which was vetoed by
the Governor last year with the generic "budget delay" veto
message.
2)SB 27 is in response to a situation in which the cities of
Livermore, Industry, and San Diego are losing millions of
dollars in Bradley-Burns sales tax revenues because a major
retailer in those cities consolidated its sales activities
into the City of Fillmore. Under an agreement between the
City of Fillmore and a private consulting firm, the firm
receives 85% of the Bradley-Burns revenues that are
attributable to a retailer that worked with the firm to
relocate the sales office into Fillmore. In turn, the
majority of the 85% gets rebated to the relocated retailer.
The sponsor notes that the losing cities are still left with
the burden of providing vital police, fire, and other public
services to the distribution facilities of the retailer
remaining in their jurisdiction.
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3)There have been several attempts in the Legislature to address
the issue of rebating sales tax. AB 178 (Torlakson), Chapter
462, Statutes of 1999, required a community that uses
financial incentives to lure a big-box retailer or auto dealer
from a neighboring community to offer the other community a
contract apportioning the sales taxes generated by the
business between the two jurisdictions. The provisions of
Chapter 462 were replaced by tougher restrictions, with the
enactment of SB 114 (Torlakson), Chapter 781, Statutes of
2003. This measure prohibits a community from providing any
form of financial assistance to a vehicle dealer or big-box
retailer relocating from a neighboring community within the
same county.
4)According to the League of California Cities, "this measure is
designed to prospectively restrict a practice that has been
engaged in by some cities where a lucrative sales tax
incentive is provided to a retailer to relocate the situs
location of a business, but the physical location of the
business is not moved." It is important to note that this
measure does not limit other incentives that local governments
may choose to use; rather the bill prohibits those rebates
that would negatively affect the sales tax received by other
local governments because of the consolidation of a sales
office into one location.
5)This bill contains an urgency clause and will take effect
immediately upon the Governor's signature.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Livermore [SPONSOR]
American Federation of State, County and Municipal Employees,
SB 27
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AFL-CIO
CA Narcotic Officers Association
CA Police Chiefs Association
CA Peace Officers' Association
CA Professional Firefighters
CA State Association of Counties
City of Industry
League of California Cities
Livermore-Pleasanton Firefighters Local 1974
MuniServices, LLC
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958