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ATTENDANCE - LEAGUE OF CALIFORNIA CITIES

VIEWS: 22 PAGES: 3

									                              LEAGUE OF CALIFORNIA CITIES
                         REVENUE AND TAXATION POLICY COMMITTEE
                                      HIGHLIGHTS
                                       March 2002



ATTENDANCE:
Members: Tim Raney (Chair), Citrus Heights; Mark Rozmus, (Vice Chair), San Marcos; Maria
Alegria, Pinole; Robert Biery, Westlake Village; Irwin Bornstein, Mission Viejo; Mary Bradley,
Sunnyvale; Jim Bruno, Thousand Oaks; Janice Cader-Thompson, Petaluma; Larry Cain, San Juan
Bautista; John Chlebnik, Calimesa; Mary Cortez, Big Bear Lake;Trish Dunlap, Chico; Glen Everroad,
Newport Beach; Fred Fowler, Sunnyvale; Ken Frank, Laguna Beach; Joseph Hilson, Hayward; Jerry
Jeffe, Los Angeles; Daniel Juarez, Hawthorne; Mike Kasperzak, Mountain View; Cheri Kelley,
Norwalk; Dick Kelly, Palm Desert; Linn Livingston, Newport Beach; David McPherson, San Jose;
Llewellyn Miller, Claremont; Al Nero, Brea; Michael Noll, Signal Hill; Laura Peabody, Fairfield; Michael
Reynolds, Redlands; Aleida Rios, Pittsburg; Phil Rockey, Oakdale; Michael Stover, Lakewood; James
Thalman, Chino Hills; Linda Wilson, Manhattan Beach

Guests: Anthony Gonsalves

League Staff: Frances Medema, Brian Cooley


I.     Welcome and Introductions
       Chair Tim Raney welcomed members and asked that members report on their largest source
       of general fund revenues in their introductions. Sales tax revenues were ranked number one
       on the list by all but a few of the members.

II.    The Fiscal Condition of California Cities – 2001 Report
       Charles Summerell, Institute for Local Self Government staff, outlined the key points of the
       report. The report summarizes the results of a survey of cities conducted in June 2001. Cities
       were asked to report on their city’s fiscal outlook for the coming year compared to the current
       year. They were also asked how certain issues such as unfunded mandates, binding
       arbitration and ERAF were impacting their financial condition. The report compares results by
       population size and region. Copies of the report are available on the Institute website
       www.ilsg.org. Summerell asked members to submit suggested improvements to the report by
       completing the comment form at the back of the report.

III.   State Board of Equalization Task Force Update
       Task force member Glen Everroad noted that a new agreement has been implemented that
       allows the State Board of Equalization (BOE) and cities and counties to work together to
       identify and resolve incorrect sales tax distributions. 46 cities have joined the program and 6
       pilot cities have realized $1.2 million in new revenues. Task force member David McPherson
       summarized recent regulatory actions by the State Board of Equalization that jeopardize sales
       tax revenues. The new regulations include sales tax refunds on bad debts for retail financing
       companies, lenient definitions on qualifications that allow a purchasing company to obtain
       sales tax permits, and eliminating certain items from gross receipts for sales tax purposes for
       caterers. BOE was scheduled to discuss within a few days regulations changes that would
       exclude retail sales on Indian reservations from sales and use tax. Members strongly
       opposed the proposal as the changes could encourage new sales tax sanctuaries on Indian
       reservations.
IV.    Legislative Update
      AB 1939 (Daucher) Local Government Finance.
      Assembly Member Daucher presented the details of the fiscal reform plan proposed under AB
      1939. Under the measure, eligible counties would apply to the Governor to set aside property
      tax revenue gains in excess of 2% to be allocated by negotiation among all local government
      agencies within the county. This option will be available only to counties where the county and
      all cities within that county have adopted approved housing elements.
      Committee Recommendation: Support.

      AB 2878 (Wiggins). Local Government Finance.
      Dan Flynn, staff consultant to Assembly Member Wiggins, outlined the purpose and content of
      the bill. This bill proposes to replace VLF backfill funds with property tax revenues and swap
      city sales tax revenues for county property tax revenues through a revenue neutral
      adjustment. The committee took issue with two elements of the bill. First, the committee
      observed that any transfer of a protected revenue (sales tax) for an unprotected revenue
      source (property taxes) would put city revenues at risk and ran counter to current League
      policy. Second, committee members observed that any measure that addresses changes to
      local revenues must be backed by a constitutional protection provision.
      Committee Recommendation: Oppose.

      Community Public Health and Safety Protection Act. (Ballot measure proposed by League,
      California State Association of Counties and California Special District Association)

      AB 680 (Steinberg) Land Use: Sales Tax and Property Tax Allocation.
      League First Vice President John Russo and Executive Director Chris McKenzie updated the
      committee on recent Executive Board and staff actions and decisions on both the ballot
      measure and AB 680.

      The League and its partners on the ballot measure decided to postpone signature gathering
      on the ballot measure. The League Board adopted several conditions that must be met in
      order to proceed with the measure. One key condition was receipt of favorable Title and
      Summary language from the Attorney General and Legislative Analysts Office. The language
      that was received in early March polled very poorly with likely voters. The Board concluded
      that it would not be advisable to attempt to raise funds given the polling data. The ballot
      measure will be reconsidered in future elections as local fiscal conditions and voter sentiment
      change.

      Assembly Member Steinberg requested a meeting with the League Executive Board and
      expressed a willingness to explore alternatives to AB 680. One option the League proposed is
      to double-join AB 680 to a bill containing the League’s constitutional protection ballot measure.
      Other issues raised included a requirement that the State contribute funds to address local
      fiscal problems and concern that transferring funds across jurisdictional boundaries may not
      resolve local and regional service needs. Committee members held firm over the current
      policy of situs based sales tax distribution and reaffirmed opposition to AB 680 if sales tax
      reallocation were included. However, several committee members agreed that the bill opened
      important discussion on the broad policy issues of how to address long term regional needs.



      Committee Recommendation: Continue to oppose AB 680 in its current form and authorize
      staff to work with the author to craft a bill that supports city objectives, such as constitutional
      protection of revenues, and that does not change the Bradley Burns sales tax situs based
      distribution.
       SB 10XXX (Sher). Sales and Use Taxes: Exemption: Diesel.
       Committee Recommendation: Support.

       AB 2690 (Cardoza). Controller: Court Financial Statements: Audits.
       Committee Recommendation: Support in concept work with authors to identify key
       issues.

       State Budget
       David Jones, League legislative consultant, updated members on the current State Budget
       status. The deficit estimates by the Department of Finance total $12 billion and the Legislative
       Analysts Office estimates $17 billion. Budget negotiations will heat up after the May Revision
       is released.

V.     2002 League Priorities and 2002 Committee Work Program
       Vice Chair Mark Rozmus led the discussion of the committee’s work program efforts to support
       the League 2002 priorities. Committee members identified actions already taken in 2002 that
       promote the League priorities and proposed proactive short and long term goals the committee
       would develop, especially in the area of fiscal protection. Rozmus will prepare a committee
       progress and future activities report for the Board.

VI.    Other Business
       Report on National League of Cities (NLC) Conference
       California representatives to the NLC policy committees discussed the key issues discussed at
       each policy committee. NLC Board Member Joe Hilson reported that the conference and NLC
       priorities represent four core themes: homeland security; racial equality; liveability; and
       children.

       California Commission on Tax Policy in the New Economy
       Several members attended the first meeting of the commission created by a SB 1933 (2000
       session), a Vasconcellos bill to study current tax policy and flexible tools to adapt to the ever
       changing economy. Members that attended were optimistic that this commission offered cities
       an opportunity to have a voice in future tax policy direction. The commission must present a
       final report by December 2003. Policy committee members that attend the commission
       meetings were asked to bring progress reports to the Revenue and Taxation committee.

       Committee members were reminded of the deadline for submittal of Annual Conference
       Resolutions (Friday, August 2, 2002). Volunteers were requested to serve as jurors on the
       Helen Putnam Award of Excellence panels.

       Chair Tim Raney announced that it would be his last meeting. Since he will soon be moving
       from the city where he currently serves as council member, he will be resigning his council
       seat before the next meeting. Committee members thanked Raney for his leadership and
       wished him success in his future endeavors.

VII.   Next Meeting
       Friday, August 16, 2002, 1 – 4:00 p.m. – Sacramento Convention Center.

								
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