BILL ANALYSIS
SB 27
Page 1
SENATE THIRD READING
SB 27 (Hancock)
As Amended February 23, 2009
2/3 vote. Urgency
SENATE VOTE :33-0
LOCAL GOVERNMENT 6-0
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|Ayes:|Caballero, Knight, | | |
| |Arambula, Davis, Duvall, | | |
| |Skinner | | |
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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.
SB 27
Page 2
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.
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 take effect immediately upon
enactment.
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 : This bill, 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.
This bill 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.
SB 27
Page 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.
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.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
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