HELLO. THERE IS WELL GOOD
MORNING, EVERYBODY AND WELCOME
TODAY'S TO TODAY'S INFORMATIONAL
HEARING ON LOCAL SALES TAX
ALLOCATIONS IN CALIFORNIA. I
WANT TO REMIND EVERYBODY THAT
TESTIMONY AND PUBLIC COMMENT
MUST BE IN PERSON. WE ARE NO
LONGER USING A MODERATED
TELEPHONE SERVICE. THIS HEARING
IS BEING LIVE STREAMED AND I
WANT TO THANK EVERYBODY THAT'S
FLEW DOWN FROM SACRAMENTO WITH
ALL THEIR EQUIPMENT TO HELP
LIVESTREAM. IT WILL BE LIVE
STREAMED ON THE ASSEMBLY WEBSITE
AND A RECORDING WILL ALSO BE
POSTED. SO HOPEFULLY THIS WILL
SERVE AS A RESOURCE THAT CAN BE
REFERRED TO IN THE FUTURE. I
KNOW THAT OUR COMMITTEE MEMBERS
WERE UNABLE TO JOIN US IN PERSON
, BUT A NUMBER OF THEM WILL BE
WATCHING LIVE AND AS WE EXPECT
OTHER STAKEHOLDERS WILL BE DOING
ALSO BEFORE I START I WOULD LIKE
TO THANK THE PANELISTS IN
ATTENDANCE TODAY. AS WE EXAMINE
CALIFORNIA SALES, UH AND USE TAX
LAWS, THEIR ADMINISTRATION. THE
IMPLICATION FOUR CITIES AND
COUNTIES. I WOULD ALSO LIKE TO
THANK THE CITY OF WEST LAKE AND
THEIR STAFF ANTOINETTE FOR
MAKING THEIR COUNCIL CHAMBERS
AVAILABLE FOR THIS HEARING. THIS
HEARING WILL BE A MEMBER
OPPORTUNITY OF FOR THIS
COMMITTEE AND THE PUBLIC TO
DEVELOP A DEEPER UNDERSTANDING
OF HOW BRADLEY BYRNE'S TAX
REVENUES ARE ALLOCATED. AND HOW
LOCAL GOVERNMENTS HAVE RESPONDED
TO A RAPIDLY CHANGING
TECHNOLOGICAL ENVIRONMENT. LIKE
MANY OF MY COLLEAGUES IN THE
LEGISLATURE, I GOT MY START AS
AN ELECTED OFFICIAL AT THE LOCAL
LEVEL. I SERVED ON THE CITY
COUNCIL OF 1000 OAKS. MY SERVICE
AND LOCAL GOVERNMENT MADE IT
CRYSTAL CLEAR THAT CITIES AND
COUNTIES ARE ON THE FRONTLINES
OF CALIFORNIA'S MOST PRESSING
CHALLENGES. FROM HOUSING AND
HOMELESSNESS. TO THE DEADLY
FENTANYL CRISIS. LOCAL OFFICIALS
SEE THE CHALLENGES FACING OUR
RESIDENTS UP CLOSE EVERY DAY,
ALWAYS DISCUSS THESE ISSUES IN
SACRAMENTO AND DEBATE POSSIBLE
SOLUTIONS. WE HEAR CONSTANTLY
THAT CITIES AND COUNTIES ARE
OVERWHELMED. MY COLLEAGUES AND I
DO OUR BEST TO INCORPORATE THESE
PERSPECTIVES INTO OUR DECISIONS
AS WE GRAPPLE WITH THE RESOURCE
CONSTRAINTS THAT DO EXIST.
COMPETITION AMONG LOCAL AGENCIES
CAN LEAD TO AN OVERALL REDUCTION
IN THE TOTAL AMOUNT OF REVENUES
RECEIVED BY THESE AGENCIES. SOME
HAVE DESCRIBED THIS AS A RACE TO
THE BOTTOM. GIVEN THIS CONTEXT,
I DECIDED TO CONVENE THIS
HEARING SO THAT BOTH THE
COMMITTEE AND THE PUBLIC CAN
GAIN A BETTER UNDERSTANDING OF
AN IMPORTANT REVENUE SOURCE FOR
OUR CITIES AND COUNTIES. LOCAL
SALES AND USE TAX. UNDER THE
BRADLEY BYRNE'S UNIFORM, LOCAL
SALES AND USE TAX LOCAL
GOVERNMENTS. LEVY LEVY A 1.25%
RATE ON TAXABLE SALES, OF WHICH
1% IS USED FOR GENERAL PURPOSES,
AND 0.25% IS USED FOR
TRANSPORTATION PURPOSES TO BE
CLEAR. BRADLEY BYRNE'S REVENUES
ARE DISTINCT AND SEPARATE FROM
VOTER APPROVED TRANSACTION AND
USE TAXES THAT VARY BY
JURISDICTION. THIS HEARING WILL
CONSIST OF TWO PANELS. THE FIRST
PANEL WILL FUTURE EXPERTS WHO
WILL EXPLAIN CURRENT LAWS AND
REGULATIONS. AND SOME RECENT
LEGISLATIVE HISTORY TO THIS
DISCUSSION. THE SECOND PANEL
WILL FEATURE LEADERS FROM
SEVERAL CALIFORNIA CITIES WHO
WILL SHARE THEIR PERSPECTIVES,
INCLUDING THE CHALLENGES AND
OPPORTUNITIES THAT CITIES ARE
FACING. FOR EACH PANEL. WE WILL
HAVE AN OPPORTUNITY AFTER EACH
SPEAKER TO ASK QUESTIONS, AND
THEN WE'LL HAVE A Q AND A
PORTION FOR THE ENTIRE PANEL AT
THE VERY END. PANELISTS AFTER
YOU FINISH YOUR PRESENTATION,
PLEASE REMAIN SEATED. IF YOU
DON'T MIND. UM AFTER YOU FINISH
YOUR FIRST PRESENTATION NOW, WE
WILL, UH, WELCOME OUR FIRST
WITNESS FOR THE PANEL, AND
NICOLAS MADURO IS THE DIRECTOR
OF CALIFORNIA DEPARTMENT OF TAX
AND FEE ADMINISTRATION. WE HAVE
ASKED THE DEPARTMENT TO PROVIDE
AN OVERVIEW OF THE STATE'S ROLE
IN ADMINISTERING SALES AND USE
TAXES AS WELL AS HOW BRADLEY
BYRNE'S REVENUES ARE ALLOCATED
TO LOCAL GOVERNMENTS. UM AND
JUST BEFORE YOU BEGIN, I WOULD
LIKE TO REMIND EVERYBODY THAT
THE POWER POINTS AND ADDITIONAL
INFORMATION IS AVAILABLE RIGHT
ON THE TABLE. YOU MAY BEGIN,
DIRECTOR. THANK YOU SO MUCH
CHAIR WHEN OF FOR HAVING US HERE
TODAY. MY NAME IS YOU MENTIONED
HIS NICK MADURO'S I'M THE
DIRECTOR OF THE CALIFORNIA
DEPARTMENT OF TAX AND FEE
ADMINISTRATION, TOGETHER WITH
OUR TEAM OF ABOUT 4000. STATE
EMPLOYEES WE ADMINISTER MORE
THAN 40 TAX AND FEE PROGRAMS FOR
THE STATE. THREE OF THOSE AH TAX
AND FEE PROGRAMS. WE TEND TO
THINK OF THE SALES AND USE TAXES
ONE TAX PROGRAM, BUT IT'S
ACTUALLY THREE AND, UH YOU CAN
SEE IT HERE. THERE'S THE STATE
PORTION, WHICH IS A 6. AH! A TAX
ON PURCHASES OF TANGIBLE
PERSONAL PROPERTY IN THE STATE
OF CALIFORNIA. THE BRADLEY
BYRNE'S ISSUE MENTIONED AS 1.25%
AND THEN THERE ARE THE
TRANSACTION USE TAXES, WHICH AT
THE DEPARTMENT TYPICALLY CALLED
DISTRICT TAXES, AND SO JUST TO
AVOID ANY CONFUSION IF I SAY
DISTRICT TAXES DURING THE
PRESENTATION THAT AS YOU
MENTIONED, THOSE ARE VOTER
APPROVED TAXES ON TOP OF THE
STATEWIDE RATE OF 7.25 LOOKING
AT LAST FISCAL YEAR. THIS STATE
PORTION THE 6% GENERATED $53.8
BILLION IN REVENUE WITH ABOUT
34.8 BILLION OF THAT GOING TO
THE GENERAL FUND, LOCAL THE
LOCAL COMPONENT OF THAT WHICH
GETS SHIPPED BACK TO CITIES
AROUND THE STATE WAS 19 BILLION.
THE BRADLEY BYRNE'S REVENUE WAS
11.8 BILLION, AND THE DISTRICT
TAXES OR T UT REVENUE. WAS 14.4
BILLION LAST FISCAL YEAR. SO THE
STATE SALES TAX DATES BACK NOW.
90 YEARS IT WAS ENACTED IN 1933.
IT'S IMPOSED ON ALL RETAILERS
FOR THE PRIVILEGE OF SELLING
TANGIBLE PERSONAL PROPERTY AT
RETAIL IN THE STATE OF
CALIFORNIA. IT'S BASED ON A
RETAILER'S GROSS RECEIPTS
DERIVED FROM THE RETAIL SALE OF
TPP OR TANGIBLE PERSONAL
PROPERTY. TWO YEARS LATER, THE
STATE ENACTED A USE TAX, WHICH
IS IMPOSED ON THE STORAGE USE OR
OTHER CONSUMPTION OF TPP IN THE
STATE THAT'S PURCHASED FROM
RETAILER. BASICALLY THE LAW SAYS
, WHEN SALES TAX DOESN'T APPLY,
USE TAX APPLIES, UM. THE BRADLEY
BURNS. TAX WHICH WILL BE THE
PRIMARY FOCUS OF MY DISCUSSION
TODAY WAS ENACTED IN 1955 TO
BRING UNIFORMITY TO THE LOCAL
TAX SYSTEM AROUND THE STATE OF
CALIFORNIA. SO WE, THE BOARD OF
EQUALIZATION, AND, UH, SINCE
2017, THE CALIFORNIA DEPARTMENT
OF TAX AND FEE ADMINISTRATION
ADMINISTER UNDER CONTRACT OF
BRADLEY BYRNE'S TAX, UM FOR ALL
OF THE JURISDICTIONS IN THE
STATE. UM AND BY 1962 ALL OF THE
LOCAL JURISDICTIONS HAD. ALIGNED
WITH BEALL. WE FOR
ADMINISTRATION OF THE TAX AND
THEN, UH, THE T U T S THE
DISTRICT TAXES. THERE ARE 412
CURRENTLY VOTER APPROVED TAXES
IMPOSED BY LOCAL JURISDICTIONS.
THOSE BEGAN IN 1969,
PARTICULARLY WITH SOME OF THE
PROPERTY TAX ISSUES AND THE
INABILITY TO GENERATE SUFFICIENT
LOCAL TAX REVENUE. THIS HAS
BECOME AN INCREASINGLY IMPORTANT
SOURCE OF REVENUE FOR
JURISDICTIONS AROUND THE STATE.
IT'S I'M SURE ALL OF YOU ARE ARE
WELL AWARE. UM SO JUST A BIT OF
HOW THIS ALL WORKS AT THE
DEPARTMENT AND HOW IT WORKS FOR
TAXPAYERS. SO THE SALES AND USE
TAX PORTION ON THE RETURN. THERE
ARE VARIOUS SCHEDULES IS
ACTUALLY THE BRADLEY BYRNE'S
COMES INTO EFFECT ON THE
SCHEDULES B AND C. THE DISTRICT
TAXES ON THE SCHEDULED A AND THE
WE RELY ON TAXPAYERS TO TELL US
WHERE THEIR TAX REVENUE SHOULD
BE ALLOCATED WHICH JURISDICTION
UM AND THEN EACH MONTH OUR TEAM
AND THE LOCAL REVENUE BUREAU.
SENDS OUT MONEY TO ALL OF THE
JURISDICTIONS IN THE STATE. THE
BUT AN ADDED COMPLICATION IS
THAT THE RETURNS ARE FILED
QUARTERLY. UM AND SO WE SEND AN
ADVANCE. UH FOR THE FIRST TWO
MONTHS, AND THEN THE THIRD
PAYMENT, WE TRUE UP BASED ON
THEIR RETURNS, AND WE USE PRIOR
ALLOCATIONS FROM THE LIGHT
QUARTER OF THE PREVIOUS YEAR TO
TRY TO MAKE SURE THAT WE'RE
GETTING JURISDICTIONS ABOUT THE
RIGHT AMOUNT, BUT SOMETIMES IF
THERE ARE SIGNIFICANT CHANGES IN
ALLOCATIONS FROM YEAR TO YEAR
BECAUSE OF A BUSINESS CHANGE.
THEN YOU WILL SEE A LARGER TRUE
UP. UM THEN YOU OTHERWISE MIGHT.
SO, AS I MENTIONED, OUR LOCAL
REVENUE BRANCH HANDLES THIS WORK
. THEY ALSO RESPOND TO PETITIONS
FILED BY VARIOUS JURISDICTIONS.
SO EACH MONTH WE TYPICALLY GET
HUNDREDS OF PETITIONS FROM
VARIOUS JURISDICTIONS AROUND THE
STATE. UH SAYING, UH, WE BELIEVE
BECAUSE WE DO SEND, UH, MEDIA TO
EACH JURISDICTION WITH THEIR, UM
TAX ALLOCATION BY TAXPAYER ONLY
FOR THE TAXPAYERS AND THE
REVENUE RELATED TO ACTIVITY IN
THEIR DISTRICT AND SO EITHER ON
THEIR OWN OR WORKING WITH
CONSULTANTS. THE JURISDICTIONS
REVIEW THEIR ALLOCATIONS AND
THEN OFTEN FILED PETITIONS AND
SAY THAT WE BELIEVE ACTUALLY
THIS TAX THIS LOCAL TAX REVENUE
SHOULD HAVE COME TO US. AND THE
LOCAL REVENUE BRANCH IS THE
FIRST STOP IN THAT IN TRYING TO
ADDRESS ANY DISCREPANCIES THAT
MAY ARRIVE ARISE BETWEEN TAX
RETURNS AND THE AFFILIATED
SCHEDULES. AND WHERE
JURISDICTIONS BELIEVE THAT THE
TAX DOLLARS RIGHTFULLY BELONG.
IF LRB DETERMINES THAT THERE ARE
MISALLOCATION THEY NOTIFY THE
JURISDICTIONS, UM OF THE
PROPOSED REALLOCATIONS, AND THEN
THEY REQUEST THAT RETAILERS OR
TAXPAYERS AMEND THEIR RETURNS OR
CORRECT THEIR REPORTING. SO.
NOW, IF I COULD, IT GETS VERY
COMPLICATED. WHICH IS WHY I'M
VERY GLAD TO HAVE THIS
OPPORTUNITY. THERE AREN'T THAT
MANY PEOPLE WHO ARE WILLING TO
SIT AND LISTEN TO AN IN DEPTH
DISCUSSION OF CALIFORNIA SALES
AND USE TAX. SO THIS IS VERY
EXCITING FOR SOMEBODY WHO SPENDS
A LOT OF HIS LIFE DOING SALES
AND USE TAX. SO I'M GONNA NOW
TRY AND WALK YOU THROUGH, UM,
HOW THE LAW APPLIES. AND I WILL
SAY IT GETS EVEN MORE
COMPLICATED, BUT I'M TRYING TO.
I'M HAPPY TO ANSWER ANY
QUESTIONS AROUND ADDITIONAL
NUANCES. BUT I'M TRYING TO GIVE
SORT OF A BASIC OVERVIEW. SO
SALES TAX APPLIES IN THE STATE
OF CALIFORNIA IF THE SALE OCCURS
IN CALIFORNIA. WHICH MEANS THE
TITLE PASSES TO THE CUSTOMER IN
THE STATE TITLE TO THE GOODS,
UM, OCCURS IN THE STATE. AND THE
RETAILERS. PLACE OF BUSINESS IN
CALIFORNIA PARTICIPATES IN THE
TRANSACTION. AND YOU WILL HEAR A
LOT IN MY DISCUSSION TODAY ABOUT
THIS PARTICIPATION IN THE SALE
OR PARTICIPATION IN THE
TRANSACTION. I THINK IT'S A VERY
IMPORTANT DISTINCTION BETWEEN
PARTICIPATION IN THE BUSINESS.
AND PARTICIPATION IN THE
TRANSACTION. UM, THE LAW HINGES.
ON PARTICIPATION IN THE ACTUAL
SALE AT ISSUE THAT GENERATES THE
TAX DOLLARS THAT ARE TO BE
ALLOCATED RATHER THAN A GENERAL
PARTICIPATION IN THE BUSINESS
ENTERPRISE. AND THAT IS INVOLVED
IN THE SALE. IF EITHER OF THOSE
TWO CONDITIONS ARE NOT MET, USE
TAX SUPPLIES. AND AS YOU WILL
SEE, AS WE DISCUSS THIS SALES
TAX AND USE TAX ARE ALLOCATED
DIFFERENTLY UNDER CALIFORNIA
LAW. UM NOT TO MENTION THAT THE
TRANSACTION USE TEXT, WHICH I
WILL NOT DISCUSS. TODAY IS ALSO
ALLOCATED DIFFERENTLY THAN THE
BRADLEY BYRNE'S UNDER CALIFORNIA
LAW, SO. IF YOU COULD JUST GO
BACK TO THAT. SURE SO COULD YOU
JUST GIVE? I KNOW THAT? MOSTLY
IT'S NERDY PEOPLE IN THE
AUDIENCE HERE, BUT NOT ALL. BUT
COULD YOU JUST GIVE EXAMPLES OF
USE TAX? SURE SO USE TAX WOULD
APPLY, AND I'VE GOT SOME
EXAMPLES LATER IN THE
PRESENTATION, BUT USED TAX COULD
APPLY. IF THE ITEM IS SHIPPED
FROM OUT OF STATE UNDER STANDARD
SHIPPING TERMS. UM BECAUSE THE
SALE GENERALLY THE TITLE
TRANSFERS WHEN THE ITEM IS LEFT
WITH THE COMMON CARRIER OR THE
SHIPPER. SO IN THOSE CASES, THE
SALE WOULD NOT OCCUR IN
CALIFORNIA, AND IT WOULD BE A
USE TAX TRANSACTION. SIMILARLY,
IF SOMEBODY IN THE STATE OF
CALIFORNIA BOUGHT SOMETHING AND
DID NOT PAY SALES TAX BUT IS
USING THE ITEM IN THE STATE OF
CALIFORNIA, THEN USE TAX WOULD
APPLY. IN SO THOSE ARE TWO
COMMON SITUATIONS THAT DIRECTLY
RESIDENT WHO BUYS THEIR CAR IN
RENO. YEAH. SO, UM. AS YOU CAN
SEE FROM THE PREVIOUS SLIDE.
THERE'S DISCUSSION OF PLACE OF
BUSINESS. AND THE PLACE OF
BUSINESS IS DEFINED UNDER
CALIFORNIA LAWS AND OFFICE, A
PLACE OF DISTRIBUTION SALES OR
SAMPLE ROOM OR PLACE WHERE HOUSE
STORAGE SPACE OR OTHER PLACE OF
BUSINESS. IT'S A IT'S A BROAD
DEFINITION. UH UM, A. CALIFORNIA
LAW ALSO, AND THIS IS AN
IMPORTANT DISTINCTION TO MAKE
BECAUSE IT IT UNDERLIES. I THINK
SOME OF THE LEGISLATIVE THINKING
OVER THE YEARS AND HOW THE
PROGRAM WAS SET UP. CALIFORNIA
LAW RECOGNIZES THE LEGAL AND
DIFFERENT LEGAL ENTITIES AS
SEPARATE EVEN IF THEY'RE VERY
CLOSELY RELATED. AND, UM IF.
WITH THAT BEING THE CASE. IT
WOULD BE VERY POSSIBLE. IF, UM,
UNDER SOME. ALTERNATE
INTERPRETATIONS OF CALIFORNIA
LAW FOR TAX DOLLARS TO BE VERY
EASILY ALL CONCENTRATED IN
SINGLE JURISDICTIONS. UM WHICH I
. IS NOT HOW IT IS. TYPICALLY
THE LAW HAS BEEN INTERPRETED FOR
DECADES BY BOARD OF EQUALIZATION
ANNOUNCED CBT F A AND I THINK IS
AN IMPORTANT POLICY
CONSIDERATION FOR POLICYMAKERS
TO AS, UM YOU CONSIDER UH, LOCAL
TAX ALLOCATION ISSUES BECAUSE IT
WOULD MAKE A REAL DIFFERENCE IN
TERMS OF HOW HOW THINGS ARE
STRUCTURED. UM ALSO, UM.
MARKETPLACE SELLERS, WHICH ARISE
IN THE WAKE OF THE SUPREME
COURT'S WAYFAIR DECISION. AND
THE LEGISLATION IN CALIFORNIA A
B 147 TO EXTEND SALES AND USE
TAX OBLIGATED COLLECTION
OBLIGATIONS TO OUT OF STATE
RETAILERS WITH ECONOMIC NEXUS IN
THE STATE. ALSO CREATED THIS
NOTION OF MARKETPLACE SELLERS
WHO ARE BASICALLY FACILITATING
THE SALE FOR UM. OTHER RETAILERS
WHO MIGHT SELL THROUGH THEIR
PLATFORMS, FOR INSTANCE, THE
JUST BY WAY, OF EXAMPLE, LIKE
THE FULFILLMENT BY AMAZON
PROCESS SO. UNDER CALIFORNIA
LAW, THOSE THE INDIVIDUAL
OPERATIONS OF THOSE SELLERS IF
THEY'RE SELLING THROUGH
MARKETPLACE, THIS ILLUSTRATOR DO
NOT COUNT AS A PLACE OF BUSINESS
OF THE MARKETPLACE SELLER. UM,
ANYWAY, THIS WILL BECOME MORE
CLEAR. I KNOW IT'S CONFUSING,
BUT I'VE GOT SOME REAL LIFE
EXAMPLES COMING. I PROMISE IF
YOU BEAR WITH ME, UM SO. UNDER
CALIFORNIA LAW, LOCAL SALES TAX
IS ALLOCATED TO THE CITY OR
COUNTY WHERE THE SALE OCCURS. UM
WHEN ONE LOOKS AT THE BRADLEY
BYRNE'S LOCAL TAX LAW. IF ONLY
ONE PLACE OF BUSINESS OF THE
RETAILER PARTICIPATES IN THE
SALE, AND THIS IS SORT OF YOUR
STANDARD SITUATION IF YOU GO TO
A RESTAURANT OR A STORE HERE IN
WESTLAKE VILLAGE, THEN THE SALE
OCCURS AT THAT PLACE OF
BUSINESS, AND IT'S PRETTY
STRAIGHT FORWARD. WE HAVE THE
SALES TAX APPLIES. IF MORE THAN
ONE PLACE OF BUSINESS OF THE
RETAILER PARTICIPATES IN THE
SALE. THEN THE SALE OCCURS AT
THE PLACE OF PRINCIPLE
NEGOTIATION. UM. AND AGAIN, I'LL
HAVE SOME REAL LIFE EXAMPLES OF
THIS, BUT BASICALLY IF YOU GO TO
A STORE HERE AND BARGAIN FOR
SOMETHING AND PAY FOR IT THERE,
BUT IT'S SHIPPED FROM SOMEWHERE
ELSE. THE LOCAL TAX WOULD APPLY
TO WHERE YOU ACTUALLY INTERACTED
WITH THE MERCHANT. AND SO THAT'S
WHAT. WE'RE GETTING OUT WITH THE
PLACE OF PRINCIPLE NEGOTIATION.
AND THEN LOCAL USE TAX IS
ALLOCATED IN A DIFFERENT MANNER.
UH VIA A COUNTYWIDE POOL. TO THE
PLACE WHERE THE PROPERTY IS USED
. AND SO THE COUNTYWIDE POOL IS
ANOTHER. UM ACCOUNTING METHOD
THAT THE BOARD OF EQUALIZATION
DEVELOPED DECADES AGO. THE USE
TAXES ALLOCATED TO THE COUNTY BY
THE TAXPAYER ON THE SCHEDULE B.
AND THEN THOSE TAX DOLLARS ARE
ALLOCATED AMONG ALL OF THE
JURISDICTIONS IN THE COUNTY
BASED ON THE SAME PERCENTAGE OF
THEIR OTHER BRADLEY BYRNE'S
REVENUE. THEIR SALES TAX
REVENUE. SO. NOW WE'LL JUST TALK
BECAUSE THERE HAS BEEN A LOT OF
DISCUSSION ABOUT THIS
PARTICIPATION IN THE TRANSACTION
ISSUE, AND SO I JUST WANTED TO
GO THROUGH A FEW OF OUR
REGULATIONS THAT HAVE BEEN ON
THE BOOKS FOR MANY YEARS AND
SOME OF THE LEGAL OPINIONS OVER
THE PAST DECADES TO TRY TO DIG
DEEPER INTO WHAT ALL OF THIS
MEANS FOR TAXPAYERS AND FOR
LOCAL JURISDICTIONS. SO UNDER
REGULATION 1620. I SEE SALES TAX
APPLIES WHEN THE ORDER FOR
PROPERTY IS SENT BY THE
PURCHASER TO OR DELIVERY OF THE
PROPERTY IS MADE BY A PLACE OF
BUSINESS IN THIS STATE, AND I
THINK IT WHAT'S IMPORTANT IN
THIS FIRST PART OF THIS IS I
THINK WHEN THE REGULATION WAS
MADE, YOU WERE BASICALLY LOOKING
AT SOMEBODY EITHER PLACING THE
ORDER OR THE DELIVERY THAT WAS
SORT OF THE THOSE WERE THE. TWO
BIG THOUGHTS AT THE TIME. IT'S
OBVIOUSLY PREDATES. THE.
INCREDIBLE GROWTH OF ONLINE
SALES THAT WE HAVE SEEN IN THE
OLD DAYS, PLACING AN ORDER. YOU
WOULD ACTUALLY TALK TO SOMEBODY,
EVEN IF THAT RETAILER WAS REMOTE
AND DISTANT RETAILER, YOU KNOW
YOU WOULD PICK UP THE PHONE AND
YOU WOULD CALL AN 800 NUMBER AND
ACTUALLY TALK TO SOMEBODY AT A
LITTLE BEAN OR LILLIAN VERNON.
I'M DATING MYSELF WITH WHATEVER
THE CATALOGS WERE COMING TO MY
HOUSE AS A AS A CHILD. AND THEN
YOU CAN SEE UNDER 1620 AS WELL.
THE PARTICIPATION IN THE
TRANSACTION IN ANY WAY, AND THIS
IS ONE THING THAT AGAIN PEOPLE
HAVE TALKED ABOUT. THE
DIFFICULTY OF WHAT WE
PARTICIPATE IN THE TREND IN THE
TRANSACTION. BUT AS I STARTED IN
MY TESTIMONY TODAY, IT'S NOT THE
PARTICIPATION IN THE BUSINESS.
IT IS THE PARTICIPATION. IN THE
ACTUAL TRANSACTION, AND THAT
PARTICULAR SALE THAT IS REPORTED
ON THE SCHEDULE THAT MATTERS IN
TERMS OF CALIFORNIA LAW FOR TAX
ALLOCATION. THEN IF YOU LOOK TO
REGULATION 1802 TALKS ABOUT
AGAIN. THE RETAILER. FOR THE
PURPOSE OF THE BRADLEY BYRNE'S.
IF RETAILER HAS ONLY ONE PLACE
OF BUSINESS IN THE STATE OF
CALIFORNIA RETAIL SALES OF THAT
RETAILER IN WHICH THAT PLACE OF
BUSINESS PARTICIPATES. SO AGAIN,
IT REQUIRES THE PARTICIPATION IN
THOSE INDIVIDUAL SALES. MM. I
THINK I'VE COVERED SOME OF THIS.
PARTICIPATION IN THE TRANSACTION
IF WE CAN GET JUST THAT THIRD
BULLET POINT MUST SERVE SOME
REAL PURPOSE. WE HAVE HAD CASES
OVER THE YEARS WHERE MANY CASES
WHERE TAXPAYERS HAVE SET UP. UM.
SORT OF SUPERFLUOUS. ACTIVITIES
THAT ONLY APPLY TO CERTAIN SALES
IN CALIFORNIA AND DON'T APPLY
ANYWHERE ELSE OR WHERE. SOMEBODY
JUST, UM MAYBE SITS AT A
COMPUTER AND HITS ENTER. UM IN
ORDER TO CLAIM PARTICIPATION IN
THE SALE IN A LOCAL
JURISDICTION. UM SO. THE LAW HAS
DEVELOPED TO REQUIRE THAT
THERE'S ACTUALLY SOME REAL
PURPOSE. UM BEHIND THE ACTIVITY
MUST HAVE SOME MEANINGFUL EFFECT
IN THE ACTUAL SALES PROCESS. AND
IT MUST INVOLVE SOME GENUINE
PHYSICAL HUMAN INTERACTION WITH
THE TRANSACTION. UM THIS IS
ANOTHER ISSUE THAT HAS COME UP.
UM IT ACTUALLY DATES BACK WELL
BEFORE CTF TO THIS NOTION OF
HUMAN INTERACTION, AND IT STEMS
FROM, I THINK THE THERE WAS A
TIME. MANY YEARS AGO BY. 20
YEARS AGO WHERE THERE WERE
THOUGHTS THAT THE LOCAL TAX
ALLOCATION, SOME PEOPLE THOUGHT
THAT THE LOCAL TAX WOULD BE
ALLOCATED WHERE THE COMPUTER
SERVER EXISTED. AND SO, UH, THIS
NOTION OF HUMAN INTERACTION WAS
DEVELOPED IN ORDER TO
DIFFERENTIATE WHAT CALIFORNIA
LAW ACTUALLY REQUIRES. SO. NOW
RECENT DEVELOPMENTS AND LOCAL
TAX AND THESE AREN'T WILL BE
GOING BACK MANY DECADES HERE, SO
I DON'T KNOW WE CAN CALL THEM
RECENT, BUT I GUESS COMPARED TO
BRADLEY BYRNE'S, WHICH DATES
BACK TO THE FIFTIES. THEY'RE
RELATIVELY RECENT. UM, AS I
MENTIONED, A LOT OF THIS STEMS
FROM THE GROWTH OF INTERNET
SALES, UM AND E COMMERCE AND
AUTOMATED PROCESSES OVER THE
LAST 25 YEARS. MM. THERE HAVE
BEEN DISPUTES OVER THE YEARS AND
I'LL DISCUSS SOME OF THEM IN A
MOMENT. UH AROUND JET FUEL SALES
, MEDICAL SUPPLY, OTHER
REQUIREMENTS CONTRACTS, SO DOES
GO BEYOND INTERNET SALES. BUT A
LOT OF THE SAME ISSUES APPLY AND
THE SAME STANDARDS APPLY, WHICH
IS REALLY IMPORTANT WHEN YOU'RE
TRYING TO ADMINISTER. A VERY
LARGE TAX PROGRAM WHERE YOU'RE
SENDING OUT MONEY, 2000
JURISDICTIONS AND YOU HAVE A
MILLION TAXPAYERS. WE NEED TO
COME UP WITH SORT OF UM, PRETTY
BRIGHT LINE RULES IN ORDER TO
DETERMINE WHERE THE TAXES
PROPERLY ALLOCATED SO THAT
JURISDICTIONS CAN ALSO KNOW WHAT
TAXES THEY CAN EXPECT. WITHOUT
BEING SURPRISED. UM. THE B O E.
AND THEN LATER CDFA HAVE
CONSISTENTLY APPLIED THE LAW TO
THESE NEW SCENARIOS AS THE
MARKETPLACE HAS CHANGED. UM
DATING BACK TO 2006 AND 2007.
THE B O E EXPLICITLY CLARIFIED
THAT PARTICIPATION REQUIREMENT
APPLIES TO ALL TRANSACTIONS. AND
AFFIRMED THAT THE GENERAL
BUSINESS ACTIVITIES OF A
HEADQUARTERS AS I MENTIONED DO
NOT TYPICALLY CONSTITUTE
PARTICIPATION. AND THIS OPINION
IN THE THESE OPINIONS IN 2006
2007 ACTUALLY DATE BACK TO
TRANSACTIONS, UM, TO 2001, SO
WE'RE GOING BACK MORE THAN TWO
DECADES HERE. UM AND THEN
APPEALS BUREAU DECISIONS AT
AGAIN AT THE BOARD OF
EQUALIZATION THAT WERE ADOPTED
BY THE BOARD DEVELOPED A
FRAMEWORK FOR DETERMINING WHEN
AN ACTIVITY THINGS LIKE CREDIT
CHECKS HANDLING OF DOCUMENTS
RELATED TO MONTHLY FUEL ORDERS
AND OTHER THINGS MAY CONSTITUTE
PARTICIPATION. MORE RECENTLY, OR
THESE ARE ACTUALLY MORE RECENTLY
DESSERT. ALSO DATING BACK YEARS.
YOU CAN SEE SOME MEANINGFUL
EFFECT ON THE ACTUAL SALES. UM,
IS A. SORT OF HOME HAS BEEN A
HALLMARK OF THE JURISPRUDENCE AT
THE DEPARTMENT. IN 2014. UH YOU
SEE THE USE OF THE GENUINE
PHYSICAL HUMAN INTERACTION?
STANDARD. AND IN 2015, YOU SEE,
UM THIS EXPLICIT RECOGNITION
THAT YOU NEED TO HAVE SOME
GENUINE UH PHYSICAL HUMAN
INTERACTION HAS TO BE SORT OF
MEANINGFUL. SOME OF THESE
DECISIONS. DATE BACK INTO THE.
2000 PRE 2007 PERIOD, ACTUALLY,
UM AND HAVE MADE IT THEIR WAY
ALL THE WAY THROUGH THE BOARD OF
EQUALIZATION AND TWO INTO THE
COURTS. WHERE THE BOARD'S
POSITION WAS ULTIMATELY UPHELD.
AND THEN THERE ARE STILL TWO
CASES PENDING AT THE OFFICE OF
TAX APPEALS, CURRENTLY THAT DATE
BACK TO 2007 AND 2009 1 FOR
JURISDICTION VERY CLOSE TO HERE
FOR THE CITY OF FILLMORE. UM AND
ONE INVOLVING THE CITY OF
SHAFTER. IN THE CENTRAL VALLEY.
SO HERE'S SOME SPECIFIC EXAMPLES
JUST TO TRY TO AFTER ALL OF
THAT, I HOPE I STAYED WITH ME
THIS LONG. UM SO HERE'S ONE
EXAMPLE OF RELATIVELY SIMPLE
ONES. SO COMPANY A HAS A SINGLE
LOCATION. IT'S LOCATED HERE IN
WESTLAKE VILLAGE.
COINCIDENTALLY, THEY'RE
CALIFORNIA CUSTOMERS PLACE
ORDERS FOR THE SALE OF GOODS
OVER THE INTERNET. WHICH COMPANY
A FULFILLS FROM INVENTORY STORED
AT THEIR LOCATION HERE IN
WESTLAKE VILLAGE. IN THAT CASE
COMPANY A'S SALES TO CALIFORNIA
CUSTOMERS ARE SUBJECT TO SALES
TAX. AND LOCAL SALES TAX IS
ALLOCATED TO IT'S ONE PLACE OF
BUSINESS IN THE STATE THAT
PARTICIPATES IN SALES. THE LOCAL
SALES TAX WOULD BE ALLOCATED
HERE TO WESTLAKE VILLAGE. NOW
AGAIN, THAT'S SORT OF THE
SIMPLEST EXAMPLE WILL GO THROUGH
AN INCREASINGLY COMPLEX HERE'S
EXAMPLE. Tð. COMPANY A HAS A
SALES OFFICE AGAIN.
COINCIDENTALLY IN WESTLAKE
VILLAGE. OUT OF WHICH IT
NEGOTIATES CONTRACTS FOR THE
SALE OF TPP TO CALIFORNIA
CUSTOMERS. AND THEY'RE FULFILLED
. SO THERE'S YOU KNOW THEY'RE
SENT TO THE CUSTOMERS, EITHER
FROM A WAREHOUSE IN SACRAMENTO.
OR THE WESTLAKE VILLAGE BUSINESS
ALSO HAS A WAREHOUSE IN RENO IN
THIS EXAMPLE. SO COMPANIES SALES
TO CALIFORNIA CUSTOMERS
FULFILLED FROM SACRAMENTO. OUR
SALES TAX TRANSACTIONS BECAUSE
THE SALE TITLE TRANSFERS IN THE
STATE OF CALIFORNIA. UM. AND THE
LOCAL SALES TAX, EVEN THOUGH
THERE'S SHIPPED OUT OF
SACRAMENTO IS ALLOCATED TO
WESTLAKE VILLAGE, BECAUSE THAT'S
THE PLACE WHERE THE PRINCIPAL
NEGOTIATIONS TOOK PLACE. THE
SALES FULFILLED FROM RENO. ARE
SUBJECT TO USE TAX BECAUSE THE
SALE TAKES PLACE OUTSIDE THE
STATE OF CALIFORNIA. UNDER
STANDARD SHIPPING TERMS, IT GETS
EVEN MORE COMPLICATED IF THE
GOODS WERE SHIPPED F O B
DESTINATION, THEY'D BE SALES TAX
TRANSACTIONS, BUT IF THEY'RE
SHIPPED UNDER NORMAL SHIPPING
TERMS, UH BY COMMON CARRIER,
THEY'D BE USED TAX TRANSACTION.
THE LOCAL USE TAX. UM WHAT WOULD
BE ALLOCATED OUR TO WHERE THE
CUSTOMER IS LOCATED THROUGH THE
COUNTY WIDE POOL SYSTEM THAT I
MENTIONED EARLIER. HERE'S AN
EXAMPLE THREE. I THINK WE'RE
EVEN GETTING MORE COMPLEX HERE.
COMPANY, A IS AN INTERNET
RETAILER WITH CORPORATE OFFICES.
WITH LOCATIONS IN WESTLAKE
VILLAGE AND AUSTIN, TEXAS.
CALIFORNIA CUSTOMERS PLACE
ORDERS FOR THE SALE OF TPP OVER
THE INTERNET. WHICH ARE
FULFILLED FROM A THIRD PARTIES
INVENTORY STORED AT THE THIRD
PARTIES WAREHOUSE IN SAN DIEGO.
IN THIS CASE COMPANY, A SALES TO
CALIFORNIA CUSTOMERS ARE SUBJECT
TO USE TAX. BECAUSE IF THESE ARE
STANDARD INTERNET ORDERS WHERE
IT'S ALL BASICALLY DONE ON A
COMPUTER. THERE IS NO
PARTICIPATION IN THE TRANSACTION
BY COMPANY, A'S CALIFORNIA PLACE
OF BUSINESS. AND THE LOCAL USE
TAX FOR EACH TRANSACTION IS
ALLOCATED TO THE JURISDICTION
WHERE THE CUSTOMER IS LOCATED.
NOW. THERE ARE MANY VARIATIONS
IN THIS THAT COULD CHANGE THE
FACT PATTERN AND THIS IS WHERE
IT GETS VERY SPECIFIC IN THE
TEAM LOOKS AT ALL OF THESE, UM
VARIOUS PERMUTATIONS OF
TRANSACTION STRUCTURES TO MAKE
SURE THAT SALES TAX IS ALLOCATED
PROPERLY. IF IT WERE THEIR OWN
WAREHOUSE IN SAN DIEGO, THEN
THERE WOULD BE A DIFFERENT
OUTCOME. IF IT WERE A THIRD
PARTY WAREHOUSE WHERE THERE ARE
GOODS WERE SEGREGATED AND KEPT
SEPARATELY. IT WOULD BE A
DIFFERENT OUTCOME. BUT IN THIS
SCENARIO, IT WOULD BE A USE CASE
TRANSACTION. AND THE TAX WOULD
BE ALLOCATED VIA COUNTYWIDE POOL
TO THE LOCATION WHERE THE
CUSTOMER RESIDES. UM SO THOSE
ARE A FEW EXAMPLES, AND I'M
HAPPY TO ANSWER ANY QUESTIONS.
WE DO. WE RECOGNIZE THAT TAXES
ARE VERY COMPLICATED. UM. AND
WE'RE HAPPY TO ADMINISTER THEM
IN ANY WAY THAT, UM POLICYMAKERS
CHOOSE TO STRUCTURE THEM, BUT WE
HAVE ATTEMPTED TO PUT IN SORT OF
PLAIN LANGUAGE AND MAKE THIS AS
SIMPLE AS POSSIBLE. FOR PEOPLE.
THERE ARE RESOURCES THERE ON OUR
WEBSITE FOR TAXPAYERS AND FOR
JURISDICTIONS. UM AND LASTLY, IF
ANYBODY HAS QUESTIONS, THERE'S
MY DIRECT CONTACT INFORMATION. I
WELCOME PEOPLE. UM ANYBODY REACH
OUT IF YOU HAVE QUESTIONS, AND
WE CAN HELP YOU TO MAKE SURE
THAT TAXES ARE ALLOCATED
PROPERLY. THANK YOU FOR THE
TIME. I'M SORRY TO TAKE SO LONG.
NO WE HAVE WE HAVE PLENTY OF
TIME. AND PERHAPS, IF ANYBODY IN
THE AUDIENCE HAS QUESTIONS,
YOU'RE GOING TO BE CAN'T FLY UP
TO SACRAMENTO WILL BE HERE. UM
AND I'M JOINED THAT I SHOULD
HAVE MENTIONED. I'M JOINED BY
ONE OF OUR SENIOR TAX COUNCILS,
WHO HAS FORGOTTEN MORE ABOUT
LOCAL TAX ALLOCATION. AND I HAVE
LEARNED IN MY 6.5 YEARS THE
DEPARTMENT SCOTT CLAREMONT, SO I
JUST WANT TO ANYBODY THAT HAS
QUESTIONS AFTER BUT I DO HAVE
JUST A CLARIFICATION. SO HAVE
THERE BEEN ANY RECENT CHANGES IN
REGULATIONS OR CASE LAW THAT
HAVE PROPOSED THAT PROMPTED THE
DEPARTMENT TO RE EVALUATE SITE
DETERMINATION FOR MAJOR
CALIFORNIA COMPANIES. THERE HAVE
BEEN NO CHANGES THE WE HAVE HAD
A HANDFUL OF ISSUES AND AGAIN WE
HAVE A MILLION TAXPAYERS AND I'D
SAY WE HAVE, UM ISSUES WITH
PROBABLY FEWER THAN FIVE OF THE
MILLION, UM IN TERMS OF LOCAL
TAX ALLOCATION AND PART OF IT,
UM. I THINK THERE ARE A COUPLE
OF THINGS THAT ISSUE. NONE OF IT
IS A NEW LAW OR NEW
INTERPRETATION. NEW REGULATION
WITH COVID. WE DID SEE, UM. A
HUGE RISE IN ONLINE SALES AND A
CLOSING FOR PERIODS OF ALL THE
RETAIL LOCATIONS. AND SO IT
BECAME VERY CLEAR WHEN LOOKING
AT RETURNS. UM, MAYBE HOW PEOPLE
WERE ALLOCATING IMPROPERLY. IN A
WAY THAT WAS NOT VISIBLE OUTSIDE
OF COVID. SO THAT'S ONE THING.
UH TOO. I THINK WE'VE GOT A NEW
COMPUTER SYSTEM OF FEW YEARS
AGO, WHICH IS ALLOWED US TO BE
MORE EFFICIENT AND EFFECTIVE IN
OUR TAX ADMINISTRATION AND TO
TRY TO CATCH SOME OF THESE
THINGS. AND LASTLY, I'D SAY THAT
UM THERE WAS AN ENORMOUS BACKLOG
AT THE B O E OF SOME OF THESE
ALLOCATION PETITION ISSUES
DATING BACK DECADES. AND ONCE WE
CLEARED THAT BACKLOG C D T F A
THE TEAM WAS FREED UP TO TAKE A
DEEPER LOOK AT SOME OF THESE, UM
LOCAL TAX ISSUES, AND WE'VE MADE
MORE OF AN EMPHASIS. WE HAVE PUT
MORE OF AN EMPHASIS ON IT TO
MAKE SURE THAT THE DOLLARS ARE
GOING TO THE RIGHT JURISDICTION.
BUT AGAIN, NONE OF THOSE THINGS
INVOLVE ANY CHANGE IN POLICY.
ALL RIGHT. AND THANK YOU FOR
THAT. AND I KNOW THIS IS NOT
EXACTLY ON TOPIC, BUT ALWAYS, UH
, OF INTEREST TO OUR LOCAL AREA.
THAT DISTRICT TAXES. UM WE HAVE
AN INTERESTING SITUATION HERE
BECAUSE WE HAVE THE CITY OF WEST
LAKE IN L A AND WE HAVE THE CITY
OF WEST LIKE THAT'S PART OF, UM
VENTURA COUNTY. SO THERE, YOU
KNOW, MOST PEOPLE CAN'T TELL THE
DIFFERENCE UNLESS THEY LOOK AT
THEIR, UM WHAT THEIR HOME PHONE
NUMBER IS. AND BUT THE IN
VENTURA COUNTY, EAST VENTURA
COUNTY, MOST OF THE CITIES HAVE
NOT HAVE NOT INCREASED TAXES AT
ALL. SO CITIES ARE AT THE VERY
LOWEST RATE, WHICH IS 7.25. AND
THEN IN WESTLAKE. THEY HAVE, I
THINK. IT'S 9.25. MAYBE SO RIGHT
ACROSS THE STREET. SO
INTERESTING. UM DIFFERENCE WITH
THE TWO CITIES. CERTAINLY IT
HASN'T HEARD HURT THEIR COMMERCE
BECAUSE THEY HAVE ALL THE NICE
HAUTE A LOT OF VERY NICE HOTELS
AND COSTCO. SO THEY'RE DOING
QUITE WELL, BUT I'M KIND OF
CURIOUS. YOU SAID THERE ARE 412
AND AGAIN. I KNOW THIS IS NOT
THE TOPIC OF TODAY. BUT YOU SAID
THERE'S 412 LOCAL, UM TAX
AUGMENTATIONS. AND SO HOW MANY
CITIES AND COUNTIES ARE THAT AND
HOW MANY CITIES ARE LIKE 1000
OAKS, FOR INSTANCE, THAT HAVE AN
AUGMENTED THEIR TAXES AT ALL,
AND THE COUNTY HASN'T EITHER.
HMM I WOULD HAVE TO GET YOU THE
EXACT ANSWER. BUT UM, THE MOST
OF THE POPULATION CENTERS. I
MEAN, IF YOU LOOK AT A MAP OF
THE STATE, THERE ARE BROAD
SWATHS THAT ARE AT 7.25. BUT
TYPICALLY THOSE ARE AREAS WITH
LOWER POPULATIONS. MOST OF THE
POPULATION OF THE STATE LIVES IN
AREAS WITH, UM DISTRICT TAXES,
OR T. U. T S ON TOP OF THE SEVEN
AND A QUARTER PERCENT. SOME OF
THE HIGHEST RATES ARE IN PARTS
OF LOS ANGELES COUNTY. BUT I'D
HAVE TO GET YOU THE EXACT.
POPULATION THAT IS IN PLACES
WITH SEVEN AND A QUARTER STILL,
AND WHAT IS DO YOU HAPPEN TO
KNOW WHAT THE HIGHEST RATE IS
JUST OF INTEREST? 0.75, I THINK
CURRENTLY 10.25, OKAY? ALL
RIGHT. WELL UM IT'S JUST ALWAYS
IT'S AN INTERESTING AREA HERE
WHERE WE MEET WITH L. A COUNTY
AND LOCAL JURISDICTIONS CAN SORT
OF BY RIGHT WITH VOTER APPROVAL.
GO 2% OVER AND TO GO HIGHER THAN
9.25. IT REQUIRES LEGISLATIVE
APPROVAL AND SIGNATURE BY THE
GOVERNOR AND LEGISLATION TO
ALLOW A HIGHER RATE. CERTAINLY
WE'VE CERTAINLY DONE SOME OF
THAT. SO THANK YOU VERY MUCH
AGAIN. APPRECIATE ALL OF YOU
COMING COMING INTO JOINING US
HERE IN BEAUTIFUL WEST LAKE. UM
NOW WE'RE GOING TO HEAR FROM OUR
NEXT PANELIST, DR SETH KIRSTEN
AND ECONOMIST FOR THE
LEGISLATIVE ANALYST'S OFFICE WHO
WILL BE PROVIDING MORE
HISTORICAL CONTEXT AND DATA
RELEVANT TO BRADLEY BYRNE'S
REVENUES. WHENEVER YOU'RE READY.
THANK YOU. YES SETH CHRISTINE,
WITH THE LEGISLATIVE ANALYST'S
OFFICE. WE'VE DISTRIBUTED A HAND
OUT TO ACCOMPANY MY TESTIMONY
AND I'LL, UH PRESENT IN THREE MY
PRESENTATION WILL MORE CONSISTS
OF THREE PARTS. FIRST I'LL
BRIEFLY REVIEW A COUPLE OF
POINTS THAT DIRECTOR MADURO'S
MADE IN HIS TESTIMONY AND SECOND
, I'LL DESCRIBE SOME OF THE
VARIATION OR SPREAD AND BRADLEY
BYRNE'S REVENUE ACROSS CITIES
AND THEN THIRD OH HIGHLIGHT SOME
PAST POLICY PROPOSALS TO THAT
RELATE TO BRADLEY BYRNE'S
REVENUE ALLOCATION. UM SOME OF
THOSE PROPOSALS BECAME THE LAWS
THAT SHAPED THE CURRENT SYSTEM
AND OTHERS REPRESENT ATTEMPTS TO
ADDRESS SOME OF THE PERCEIVED
SHORTCOMINGS OF THAT SYSTEM. SO
I'LL START ON PAGE ONE OF THE
HANDOUT HERE BY BRIEFLY
RECAPPING HOW THE. STATE
ALLOCATES BRADLEY BYRNE'S LOCAL
SALES TAX REVENUE GLOSSING OVER
MANY OF THE NUANCES DISCUSSED
EARLIER. UH REVENUE FROM THE 1.
BRADLEY BYRNE'S, UH, SALES TAX
GOES TO THE CITY OR COUNTY THAT
SERVES AS THE PLACE OF SALE FOR
THE TRANSACTION THAT GENERATED
THAT TAX REVENUE. SOME PEOPLE
REFER TO THIS TYPE OF SYSTEM AS
ORIGIN SOURCING BECAUSE IT SENDS
REVENUE TO THE PLACE WHERE
BROADLY SPEAKING, THE SELLER IS
LOCATED IN CONTRAST TO
DESTINATIONS SOURCING, WHICH,
BROADLY SPEAKING SENDS REVENUE
TO THE PLACE WHERE THE BUYER IS
LOCATED. AND SO THIS GIVES
CITIES OF FISCAL INCENTIVE TO
MAXIMIZE SALES WITHIN THEIR
BOUNDARIES. AND ONE WAY THEY DO
THAT IS TO ENTER INTO REBATE
AGREEMENTS WITH RETAILERS. SO UH
, IN THESE TYPES OF SITUATIONS
THE RETAILER MAKE SALES WITHIN
THE CITY, GENERATING BRADLEY
BYRNE'S REVENUE, SO THAT'S SORT
OF HELPS THE CITY AND THEN THE
CITY AGREES TO REBATE SOME
PORTION OF THE REVENUE BACK TO
THE RETAILER AND SOMETIMES TO
THIRD PARTIES WHO WERE INVOLVED
IN THE NEGOTIATION IN SOME WAY.
SO TAKING A JUST A MINUTE TO
UNPACK THIS PHRASE I USED MAKING
SALES WITHIN THE CITY. THAT CAN
COME IN THE FORM OF ACTUAL
RETAIL DEVELOPMENT OF SOME SORT,
BUT IT COULD ALSO COME IN FORMS
THAT ARE LESS ECONOMICALLY
SUBSTANTIVE. SO FOR EXAMPLE,
SOME BUSINESSES BY FUEL THROUGH
SO CALLED CARD LOCK SYSTEMS,
WHERE THEY PURCHASE LARGE
AMOUNTS OF FUEL IN ADVANCE. AND
EVEN THOUGH THESE PURCHASERS
ACTUALLY FILL UP THEIR TANKS AT
VARIOUS LOCATIONS AROUND THE
STATE, ALL OF THE BRADLEY
BYRNE'S REVENUE UNDER THOSE
AGREEMENTS GOES TO THE ARE SORT
OF UNDER THAT SYSTEM GOES TO THE
CITY WHERE THEY MADE THAT
ADVANCE PURCHASE AGREEMENT. SO
THAT'S SORT OF ONE EXAMPLE OF
HOW HOW THIS CAN OCCUR EVEN IN
WITH REVENUE. REDIRECTION CAN
OCCUR EVEN WHEN THERE'S NOT
REDIRECTION OF SUB SUBSTANTIVE
ECONOMIC ACTIVITY. SO THEN
TURNING TO THE NEXT PAGE OF THE
HANDOUT. OH, SORRY. YEAH COULD
YOU EXPLAIN THAT A LITTLE LIKE
HOW COMMON IS THIS BECAUSE OF
COURSE, AS I'M SURE LOCAL
GOVERNMENTS ARE LOOKING AND
SAYING THAT ALL THE WEAR AND
TEAR IS ON OUR STREETS AND WE
HAVE THE PUMPS IN IN OUR TOWN.
IS THIS COMMONLY DONE AND IT
DOES IT HAVE TO BE DONE THROUGH
LEGISLATION OR HOW DOES THAT
WORK SO UH, THE I'M I'M NOT. I
ACTUALLY AM NOT AWARE OF HOW
COMMON IT IS. I THINK THE NEXT
SPEAKER WILL IS MORE OF AN
EXPERT ON THIS ISSUE THAT I AM.
I THINK, UH, I CAN I KNOW OF ONE
EXAMPLE OF A CITY THAT THAT IS
SORT OF INVOLVED IN THIS, BUT
I'M I'M NOT AWARE OF HOW MANY
OTHERS THERE ARE. THERE ARE, UH
SO I'M NOT I DON'T KNOW,
QUANTITATIVELY HOW PREVALENT
THAT IS JUST SORT OF SELECTED
THAT AS A RELATIVELY INTUITIVE
GRASP, FOR EXAMPLE. UM SO AND
JUST JUST, UH, SO ANYWAY, SO
THAT THAT PRETTY MUCH WAS THE
BRIEF, VERY BRIEF. RECAP OF SORT
OF THE BASIC IDEA. UNDERPINNING
THE, UH, REVENUE ALLOCATION
SYSTEM FOR THE BRADLEY BYRNE
SALES TAX, THEN SORT OF MOVING
ONTO THAT SECOND PART THAT I
MENTIONED ON PAGE TWO OF OUR
HANDOUT. UM. THERE IS QUITE A
BIT OF VARIATION IN, UH BRADLEY
BYRNE'S REVENUE PER RESIDENT
ACROSS CALIFORNIA CITIES, AND SO
THIS IS SORT OF ONE OF THE KEY
FISCAL OUTCOMES THAT WE OBSERVE
UNDER THIS REVENUE ALLOCATION
SYSTEM. SO WE'VE GOT A LITTLE
GRAPH ON THAT PAGE OF THE
HANDOUT. AND I'D SORT OF
DISPLAYING IN A COUPLE DIFFERENT
WAYS. THE RANGE OF REVENUES
ACROSS CITIES JUST FROM SORT OF
A BROAD STATISTICAL STANDPOINT,
UM, THE AVERAGE CALIFORNIA CITY
SORT OF AS OF THE MOST RECENT
DATA WE EXAMINED. GOD WAS
GETTING ABOUT $225 PER RESIDENT
PER YEAR. UM BUT THE TOP 5% OF
CITIES, UH GET MORE THAN $700
PER RESIDENT PER YEAR AND THE
BOTTOM 5% GET LESS THAN $45. AND
SO SORT OF ASIDE FROM THAT BROAD
STATISTICAL CHARACTERIZATION.
THE GRAPH ALSO PROVIDES AH, A
HANDFUL OF EXAMPLES OF CITIES
THAT FALL INTO THOSE DIFFERENT
PARTS OF THE DISTRIBUTIONS. SO
BIG PICTURE OF WHAT WE'RE TRYING
TO ILLUSTRATE WITH THESE
EXAMPLES IS THERE'S MORE THAN
ONE WAY THAT A CITY CAN END UP
WITH HIGH, LOW OR AVERAGE
REVENUES. SO IF YOU LOOK ON THE
LEFT HAND SIDE OF THE GRAPH, FOR
EXAMPLE, UH, SEVERAL OF THESE
CITIES THAT WE'VE HIGHLIGHTED
HAVE WELL PUBLICIZED SALES TAX
REBATE AGREEMENTS WITH MAJOR
RETAILERS, AND PRESUMABLY,
THAT'S THE MAIN REASON WHY THEIR
REVENUES ARE SO HIGH, BUT THE
OTHER HIGH REVENUE EXAMPLE WE'VE
GOT HERE IS THE CITY OF COMMERCE
, WHICH, TRUE TO ITS NAME HAS A
LOT OF COMMERCIAL DEVELOPMENT,
INCLUDING A LARGE OUTLET MALL
AND COMPARISON TO ITS PRETTY
MODEST POPULATION. AND THEN
MOVING OVER TO THE RIGHT HAND
SIDE OF THE GRAPH. WE'VE GOT A
COUPLE EXAMPLES OF CITIES WITH
LOW REVENUES AND CLEARLY THE
THING THESE CITIES HAVE IN
COMMON IS THEY DON'T HAVE MUCH
RETAIL ACTIVITY, BUT WE'VE
CHOSEN TWO EXAMPLES TO HIGHLIGHT
TWO DISTINCT PATHS TOWARDS THAT
OUTCOME. SO ON ONE HAND YOU'VE
GOT SOME CITIES LIKE
HILLSBOROUGH, AFFLUENT SUBURBAN
COMMUNITIES THAT ARE SORT OF
EMBEDDED WITHIN A LARGER METRO
AREAS WHERE THERE IS LOTS OF
RETAIL ACTIVITIES, SORT OF
BROADLY IN THE REGION, BUT THOSE
COMMUNITIES ARE LARGELY
RESIDENTIAL. UM AND THEN, ON THE
OTHER HAND, YOU'VE GOT CITIES
LIKE MCFARLAND, WHICH IS ABOUT
HALF HOUR FROM BAKERSFIELD. AND
HAS MUCH LOWER INCOMES AND
PROPERTY VALUES THAN A PLACE
LIKE HILLSBOROUGH. SO EVEN
THOUGH THEY'RE SORT OF BRADLEY
BYRNE'S REVENUE PER RESIDENT, UM
IS, YOU KNOW THEY'RE BOTH PRETTY
LOW AND KIND OF SIMILAR THE
OVERALL. SORRY ABOUT THAT THE
OVERALL LOCAL TAX BASE MIGHT
LOOK PRETTY DIFFERENT ONCE YOU
ACCOUNT FOR THINGS LIKE PROPERTY
TAXES. UM AND SO MOVING ON, THEN
STARTED. MADAM CHAIR. DID YOU
HAVE A SOMETHING OKAY EQUIPMENT,
LOCAL EQUIVALENT OF, UM
HILLSBOROUGH WOULD BE HIDDEN
HILLS. THANK YOU. YES SORRY. NOT
NOT A LOT OF THAT IS MY DISTRICT
. SO THAT'S OKAY. THANK YOU.
THANK YOU. UM YEAH, SORRY. IT'S
NOT NOT A LOT OF EXAMPLES HERE
IN THIS PARTICULAR REGION AND
THE HANDOUT. SORRY ABOUT THAT,
UM SO THEN, IN THE THIRD AND THE
FINAL PART OF MY PRESENTATION,
I'LL JUST BE DISCUSSING SOME OF
THE KEY POLICY MILESTONES THAT
HAVE SHAPED THIS SYSTEM AS WELL
AS SOME PROPOSALS THAT HAVE BEEN
MADE OVER THE YEARS TO ADDRESS
SOME OF ITS PERCEIVED
SHORTCOMINGS. SO ON ON PAGE
THREE OF THE HANDOUT, WE'VE JUST
NOTED THE TWO MAJOR PILLARS OF
THIS OF THE REVENUE ALLOCATION
SYSTEM. THERE IS THE ORIGINAL
1955 BRADLEY BYRNE'S LAW THAT
DIRECTOR MADURO'S MENTIONED
WHICH WAS FUNDAMENTALLY AN
ATTEMPT TO REPLACE THE PRIOR
HODGEPODGE OF LOCAL SALES TAXES,
WITH A SINGLE, CENTRALLY
ADMINISTERED SALES TAX, WITH A
UNIFORM RATE ACROSS THE STATE.
AND THAT LAW STEP BLISSED, THE
ORIGIN SOURCING SYSTEM THAT WE
STILL HAVE TODAY. AND ABOUT HALF
A CENTURY LATER, PROPOSITION ONE
A OF 2004 ENSHRINED THAT REVENUE
ALLOCATION SYSTEM IN THE STATE
CONSTITUTION. SO THEY CONTEXT
WAS THAT THERE WAS THIS BROADER
EFFORT TO PREVENT THE STATE FROM
REDIRECTING LOCAL REVENUES TO
SOLVE SOME OF ITS OWN BUDGET
PROBLEMS, WHICH HAD SORT OF BEEN
AN ISSUE OVER. A DECADE OR TWO.
PRIOR TO THAT. THEN, ON THE NEXT
PAGE OF THE HANDOUT, WE'VE
LISTED SOME LEGISLATIVE ATTEMPTS
OVER THE YEARS TO LIMIT SALES
TAX REBATES. THESE SORTS OF
AGREEMENTS THAT CITIES ENTER
INTO WITH RETAILERS OR TO GIVE
THE PUBLIC MORE DETAILED OR
TIMELY INFORMATION ABOUT THOSE
AGREEMENTS. SO BROADLY, I'M NOT
NOT GOING TO SORT OF ENUMERATED
EVERYTHING HERE. BUT BROADLY
SPEAKING, WE'VE SEEN PROGRESSION
OVER THE LAST COUPLE OF DECADES
WHERE THE STATE HAS PERIODICALLY
BEEN PLACING ADDITIONAL
RESTRICTIONS. ADDITIONAL
STATUTORY RESTRICTIONS ON THESE
REBATE AGREEMENTS AND, MOST
RECENTLY, SORT OF THE MOST
RECENT DEVELOPMENTS HERE THAT
I'VE HIGHLIGHTED IN THE HANDOUT
ARE TWO BILLS FROM 2019, SO
THERE'S A B 485, WHICH THE
GOVERNOR SIGNED. AND SB 531,
WHICH THE GOVERNOR VETOED. MAYBE
45 CREATED, UM SOME DISCLOSURE
REQUIREMENTS FOR LOCAL SUBSIDIES
SPECIFICALLY FOR WAREHOUSE
DISTRIBUTION CENTERS THAT ARE
MORE EXTENSIVE THAN THE DISCO
DISCLOSURE REQUIREMENTS UNDER
EXISTING LAW THAT APPLIED TO
BUSINESS SUBSIDIES MORE
GENERALLY, UM. SB 531. WHAT IT
WOULD HAVE DONE IS IT WOULD HAVE
ENACTED A PRETTY BROAD
PROHIBITION ON THESE TYPES OF
REBATE AGREEMENTS GOING FORWARD,
ALTHOUGH IT WOULD HAVE ALLOWED
EXISTING AGREEMENTS TO REMAIN IN
PLACE. AND AT LEAST AT THAT
TIME, THE GOVERNOR REGARDED THAT
POLICY IS TOO RESTRICTIVE AND
VETOED IT. UM AND SO THEN
TURNING TO THE FINAL PAGE OF THE
HANDOUT. UM I'LL JUST NOTE SOME
RECENT LEGISLATIVE ATTEMPTS TO
MOVE TO REALLY, UH CHANGE IN A
VERY FUNDAMENTAL WAY. HOW UH,
THIS REVENUE ALLOCATION WORKS
AND TO MOVE TOWARDS MORE OF WHAT
WOULD BE CONSIDERED A
DESTINATION SOURCING SYSTEM. UM
SO THOSE INCLUDED A COUPLE OF
PROPOSED CONSTITUTIONAL
AMENDMENTS THAT WOULD HAVE
ENACTED DESTINATION SOURCING
SPECIFICALLY FOR E COMMERCE. UH
AND SO THOSE THEY WERE PROPOSED.
THEY DID NOT END UP PASSING. UM
WHICH IS SORT OF WHY WE'RE
HAVING THIS DISCUSSION, BUT UH,
THERE ARE ALSO THE OTHER THING
WE HAVE HIGHLIGHTED HERE IS WHAT
RELATIVE TO THOSE PROPOSALS WAS
MUCH MORE INCREMENTAL BILL THAT
DID PASS THE LEGISLATURE, WHICH
WOULD HAVE REQUIRED CERTAIN
ONLINE RETAILERS. SALES TAX
RETURNS TO SPECIFY WHERE THE
GOODS WERE DELIVERED. SO
ESSENTIALLY HAVING TAXPAYERS IN
THE STATE, UH, COLLECT SOME DATA
THAT WOULD COULD INFORM, UH
POTENTIALLY IN A MORE PRECISE
WAY. WHAT A DESTINATION SOURCING
SYSTEM MIGHT LOOK LIKE FOR
BRADLEY BYRNE'S, UM, SO THE
GOVERNOR VETOED THAT BILL,
ARGUING THAT IT WASN'T WORTH THE
ADMINISTRATIVE COST OR THE
HASSLE TO TAXPAYERS TO, UH,
CONDUCT THAT EXERCISE, SO THAT
CONCLUDES MY PREPARED REMARKS,
AND I'D BE HAPPY TO ANSWER
QUESTIONS IF YOU HAVE ANY UH,
SURE. THANK YOU. SO GIVEN THE
CONSTRAINTS ON STATUTORILY
ALTERING THE ALLOCATION RULES,
WHAT ROLE DO YOU ENVISION FOR
THE LEGISLATURE? SURE. I MEAN, I
DID JUST TAKING A STEP. BACK A
BIT. WHEN IT COMES TO CHANGING
LAWS. I MEAN, THE LEGISLATURE
CAN NEVER ACT AS YOU KNOW VERY
WELL, MADAM CHAIR CAN NEVER ACT
COMPLETELY UNILATERALLY. I MEAN,
EITHER. YOU KNOW, IF YOU WANT TO
PASS A TYPICAL STATUTE YOU NEED
YOU NEED THAT GOVERNOR'S
SIGNATURE TO BECOME LAW AND BUT
YOU DON'T NEED THE VOTERS TO
APPROVE IT, AND THEN SORT OF THE
FLIP SIDE. IF YOU SORT OF ARE
GOING THAT ROUTE OF A
CONSTITUTIONAL AMENDMENT. UM,
YOU DO NEED VOTER APPROVAL, AND
THAT IS A VERY SUBSTANTIAL
HURDLE. ON THE OTHER HAND, YOU
DON'T NEED THE GOVERNOR'S
SIGNATURE. THE GOVERNOR ISN'T
DIRECTLY INVOLVED IN THAT
PROCESS. UM SO IF THE
LEGISLATURE'S CONCERNED WITH THE
CURRENT SITUATION THERE ARE MANY
OPTIONS YOU COULD CONSIDER. I
DON'T HAVE AN EXHAUSTIVE LIST.
BUT YOU KNOW SOME BROAD BROADLY
CHARACTERIZED OPTIONS INCLUDE
CERTAINLY STATUTORY CHANGES THAT
THAT COULD FURTHER LIMIT SALES
TAX REBATES, IF THOSE ARE A
PARTICULAR CONCERN, UM,
CERTAINLY I MENTIONED OR JUST A
FEW MINUTES AGO SB 531, WHICH
WAS VERY MUCH ALONG THOSE LINES
WAS VETOED, BUT THAT WAS SEVERAL
YEARS AGO. ON I DON'T I DON'T
PERSONALLY KNOW IF THE GOVERNOR
STILL HAS THAT PERSPECTIVE ON
THAT ISSUE, OR THE LEGISLATURE
COULD, UM. CONSIDER A STATUTE
THAT IS PER, YOU KNOW, PERHAPS,
UH, IN THAT SPIRIT, BUT
SUBSTANTIVELY DIFFERENT FROM SB
531 IN SOME WAY THAT MIGHT
ADDRESS SOME OF THE GOVERNOR'S
CONCERNS. ANOTHER TYPE OF OPTION
COULD BE SOMETHING ALONG THE
LINES OF SB 792. ALTHOUGH AGAIN
THAT WAS THAT WAS ANOTHER ONE.
THAT WAS VETOED, BUT JUST THE
GENERAL IDEA OF ALLOWING THE
STATE TO SOMEHOW GET A BETTER
HANDLE ON WHAT A DATE
DESTINATION SOURCING SYSTEM FOR
BRAD LINE BURNS MIGHT LOOK LIKE
OR, UM SOME OTHER PERHAPS SOME
OTHER TYPE OF CHANGE TO THE
ALLOCATION RULES. THAT WOULDN'T
BE A FULL TRANSITION TO
DESTINATION SOURCING. AND THEN,
OF COURSE, TO THE EXTENT OF THE
LEGISLATURE DID DETERMINE THAT
IT WAS INTERESTED IN MAKING
THESE SORTS OF SWEEPING CHANGES
TO THE REVENUE ALLOCATION SYSTEM
. THERE IS THAT THAT
CONSTITUTIONAL AMENDMENT ROUTE
AND CERTAINLY I THINK AS YOU
YOUR QUESTION WAS SUGGESTING. I
MEAN, THAT'S SOMETHING THAT
REQUIRES VOTER INVOLVEMENT AND
IS, UH AND THAT THAT CERTAINLY
IS A LOT TO GET TO GET DONE. BUT
THAT IS SOMETHING THAT IN MANY
CASES ARE ORIGINATES IN THE
LEGISLATURE. AND SO THAT IS THAT
SOMETHING THAT CAN CERTAINLY
WHERE THE LEGISLATURE COULD BE
INVOLVED. MR MADURO'S. DID YOU
HAVE SOMETHING LIKE THAT? IN
REGARD TO AN ANALYSIS OF WHAT
THE SYSTEM WOULD LOOK LIKE IF IT
WERE DESTINATION BASED VERSUS
ORIGIN BASED USES TERMS. UM, THE
DEPARTMENT. WAS A HAS BEEN ABLE
BOTH THROUGH THE USE OF CREDIT
CARD SALES DATA AND THROUGH THE
USE OF OUR, UM SCHEDULE B
RETURNS, WHICH ARE DESTINATION
BASED AND OUR SCHEDULE A FOR THE
DISTRICT TAXES. TO COME UP WITH
PRETTY GOOD DATA ABOUT WHAT THAT
WOULD MEAN FOR VARIOUS
JURISDICTIONS AROUND THE STATE.
SO WE DO HAVE THAT AND WE WERE
ABLE TO DO IT. I THINK WITHOUT
REQUIRING TAXPAYERS TO FILL OUT
AN ADDITIONAL SCHEDULED BECAUSE
THE CALIFORNIA SALES AND USE TAX
RETURN IS ALREADY VERY
COMPLICATED. THANK YOU, UM. MR
KIRSTEN, WE'VE HEARD ABOUT THESE
REVENUE SHARING AGREEMENTS WITH
CITIES. ARE YOU AWARE OF ANY
COUNTIES THAT HAVE THESE
AGREEMENTS IN PLACE? I'M NOT.
I'M NOT. I'M NOT AWARE OF ANY.
IT'S NOT TO SAY THEY COULDN'T
EXIST. BUT I HAVE I HAVING AH, I
LOOKED INTO THAT. I'M NOT AWARE
OF ANY AGREEMENTS THAT ARE AT
THE COUNTY LEVEL. I MEAN, I
THINK IN TERMS OF INTEREST THAT
COUNTIES MIGHT HAVE IN THIS
ISSUE. I THINK THE MAIN
CONSIDERATION IS JUST THAT, UM
IN INSTANCES WHERE THERE ARE
AGREEMENTS THAT MIGHT DIVERT
SALES, UH TO A PARTICULAR CITY.
YOU KNOW SOME OF THOSE, SOME OF
THOSE REVENUES COULD HAVE BEEN
ALLOCATED TO OTHER CITIES. BUT
IN SOME INSTANCES, MAYBE SOME
MIGHT HAVE BEEN ALLOCATED TO ONE
INCORPORATED AREAS AFFECTED
COUNTY REVENUES THAT WAY. ALL
RIGHT. WELL THANK YOU VERY MUCH,
MR CURSON. AND THEN OUR FINAL
PRESENTER FOR THE PANEL WILL BE
MICHAEL COLON. TO KNOW WHEN TO
KNOW AN ATTORNEY WITH EXTENSIVE
EXPERIENCE REPRESENTING LOCAL
GOVERNMENTS ACROSS CALIFORNIA
WHENEVER YOU'RE READY, THANK YOU
, MADAM CHAIR. I SHOULD START BY
SAYING WHO I AM AND WHO I SPEAK
FOR. I'M CONTRACT CITY ATTORNEY.
UM ONE OF MY CLIENTS IS PROBABLY
IS CALABASAS WHICH I THINK MIGHT
BE IN YOUR DISTRICT, AT LEAST
ADJACENT TO IT. UM AND I HAVE
REPRESENTED LOCAL GOVERNMENTS
CONSISTENTLY SINCE 1989. AND I
DO NOT SPEAK FOR ANY OF THEM
TODAY, UM I'M ACTIVE IN THE
LEAGUE OF CALIFORNIA CITIES AND
POINTEDLY DO NOT SPEAK FOR THEM
TODAY. I DON'T SPEAK FOR ANYBODY
BUT MYSELF. THE DOWNSIDE IS THAT
MEANS I DON'T SPEAK FOR ANYBODY.
THE UPSIDE IS THAT SOME FREEDOM
TO GIVE YOU PERSPECTIVE OF
SOMEBODY WHO LIVES IN THIS
WORLD. I THINK IT MIGHT BE
HELPFUL TO START BY FRAMING WHAT
MAKES RATIONAL TAX POLICY. IF
YOU START FROM THE PERSPECTIVE
OF MAINSTREAM ECONOMICS, AND
ECONOMISTS WOULD TELL YOU THAT
YOU DON'T WANT TO SCREW UP THE
MARKETPLACE YOU DON'T WANT TO
IMPAIR THE ALLOCATED EFFICIENCY
OF A CAPITALIST MARKETPLACE.
THAT MIGHT BE THE WAY THEY PUT
IT. AND YOU DO THAT BY AVOIDING
DISTORTING EFFECTS FROM, UM TAX
POLICY, SO TAXES SHOULD BE
RELATIVELY LOW, AN AMOUNT WIDELY
SPREAD AND EFFICIENTLY
ADMINISTERED. THAT'S THE SORT OF
ECONOMISTS IDEAL SO YOU DON'T
DISTORT THE ECONOMY. I THINK
THERE'S ANOTHER TWO
CONSIDERATIONS THAT ARE WORTH
THINKING ABOUT AS WELL. I THINK
THERE IS VALUE IN LINKING WHO
BENEFITS FROM A TAX STREAM TO
WHO IS BURDENED BY THE ECONOMIC
ACTIVITY THAT CREATES THAT TAX
DREAM. SO AN EXAMPLE MIGHT BE IF
YOU'VE GOT A SAND AND GRAVEL
QUARRY IN YOUR COMMUNITY THAT'S
DOING BUSINESS TO BUSINESS SALES
, AND THOSE TRUCKS ARE GRINDING
UP YOUR STREET AND IRRITATING
YOUR RESIDENTS. RATIONAL TAX
POLICY WOULD HAVE THOSE REVENUES
, SOME OF THEM AT LEAST FLOW TO
THAT JURISDICTION TO BEAR THE
BURDEN THAT MAKES THAT ECONOMIC
ACTIVITY POSSIBLE. A SECOND
POLICY THAT I THINK MAKES A
CERTAIN AMOUNT OF SENSE. UM, IS
THAT, UM HOUSING DOESN'T PAY. IF
YOU ARE A CITY MANAGER, AND YOUR
JOB IS TO BALANCE THE BUDGET,
AND THAT IS CERTAINLY ONE OF
YOUR JOBS. YOU WANT THE HOUSES
IN THE NEIGHBORING COMMUNITY AND
THE RETAIL SALES IN YOUR
COMMUNITY, UM, AND IT'S SORT OF
A BEGGAR THY NEIGHBOR APPROACH
TO MUNICIPAL FINANCE. IF YOU
THINK OF IT IN THAT WAY, IF WE
WANT TO SOLVE CALIFORNIA'S
HOUSING PROBLEMS, AND I'M SURE
WE ALL DO PERHAPS TRYING TO LINK
. INCOME TO HEADS AND BEDS, SO
TO SPEAK TO RESIDENTS WHO DEMAND
SERVICES, UM, WOULD BE
CONSTRUCTIVE AS WELL. UM AND THE
POOLS DO THAT, TO A BETTER
EXTENT THAN THE SCIENTIST DOES,
BUT THEY DON'T DO IT PERFECTLY
WELL, SO IF YOU TAKE A CITY LIKE
HIDDEN HILLS, THOSE FOLKS ARE
GENERATING A FAIR AMOUNT OF
SALES TAX. THEY NEED POLICE
SERVICES, BUT VERY FEW SALES
TAXES COME BACK TO THEIR
COMMUNITY. THEY HELP YOU KNOW
IT'S PEOPLE BY THEIR ALPHA
ROMEOS IN CALABASAS, NOT IN
HIDDEN HILLS. UM MY NEXT POINT
IS THAT THE SALES TAX WAS
WRITTEN DURING THE GREAT
DEPRESSION. FOR A VASTLY
DIFFERENT ECONOMY THAN WE HAVE
TODAY. IT IS ABOUT TANGIBLE
THINGS NOT ABOUT SERVICES AND
SERVICES ARE A GROWING PORTION
OF OUR ECONOMY. SO IT'S OVERLY
SIMPLISTIC TO SAY THAT THE SALES
TAX IS A DECLINING BECOMING
ANTIQUATED REVENUE STREAM. IT'S
NOT. IT'S STILL BILLIONS OF
DOLLARS, BUT IT IS NOT CHANGING
AS RAPIDLY AND IT IS NOT GROWING
AS RAPIDLY AS THE ECONOMY AS A
WHOLE. SENATOR HEADS BURG
HERZBERG KHÎI, COMMONLY REFERRED
TO AS THE INTREPID SENATOR
HATTIESBURG AS HE TAKES ON SOME
OF THE TOUGHEST PROBLEMS LOOKED
AT EXTENDING THE TAX TO SALES
THAT IS ITS OWN POLITICAL
THICKET. BUT THAT ERODING TAX
BASED IS, UM, IS RELEVANT TO
THIS DISCUSSION. MY NEXT
QUESTION IS, WHY ARE SALES TAX
SCIENTISTS AGREEMENTS OR SALES
TAX REBATES? AGREEMENT COMMON
AND WHY ARE THEY CONTROVERSIAL?
THEY ARE COMMON BECAUSE FROM A
BUSINESS PERSPECTIVE THERE AN
OPPORTUNITY TO CUT YOUR SALES
TAX LIABILITY AND THEREFORE
EITHER INCREASE YOUR PROFITS BY
KEEPING THE MONEY THAT YOUR
CUSTOMERS WERE WILLING TO SPEND
OR LOWERING THE PRICE OF YOUR
SERVICES, EFFECTIVE LEADER
CUSTOMERS SELLING MORE OF THEM.
SO FROM THE BUSINESSES
PERSPECTIVE, IT'S A GOOD THING.
FROM THE HOST. COMMUNITIES
PERSPECTIVE, YOU CAN DRAW INTO
YOUR COMMUNITY AN AWFUL LOT OF
REVENUE WITHOUT PUTTING OUT
ANYTHING IN SERVICES AND
THEREFORE YOU'RE WILLING TO CUT
I DEAL WITH THE BUSINESS TO KICK
SOME OF IT BACK TO THEM. SO FOR
A RELATIVELY SMALL COMMUNITY
WITH A CARD LOCK OPERATOR,
BRINGING IN A RELATIVELY LARGE
AMOUNT OF DOLLARS, IT IS VERY,
VERY TEMPTING. WHY ARE THEY
CONTROVERSIAL? THEIR
CONTROVERSIAL BECAUSE THEY
REDISTRIBUTE INCOME AWAY FROM
PEOPLE WHO ARE HOSTING THE
PHYSICAL ASSETS AND BEARING THE
BURDENS. SO THE CARD LOCK
DISPUTE THE POSTER CHILD FOR
THAT DISPUTE IS THE CITY OF
SOUTH VERMONT AND THE IN THE SAN
GABRIEL VALLEY, WHICH IS IT'S
RIGHT OFF THE 10 FREEWAY. IT'S A
TRACKING LOCATION. THEY'VE GOT
THOSE INTERSECTIONS THAT ARE
WIDE ENOUGH FOR TRIPLE TRAILERS.
THEY'VE GOT LOTS OF CARD LOCK
OPERATORS IN THEIR CITY AND ONE
OF THEIR BIG SALES TAX OPERATORS
WENT AWAY OVERNIGHT WHEN A CITY
SIGNED ONE OF THESE CONTRACTS
AND SO SOUTH OF MONTE AND THEIR
LOBBYISTS WERE VERY PRESENT IN
YOUR COMMITTEE HEARINGS FOR A
TIME. UM SOME CASES ARE LESS
CONTROVERSIAL, AND I THINK
THEY'RE WORTH HAVING ON THE
TABLE. UM SO, FOR EXAMPLE, THE
CITY OF VENETIA, RELATIVELY
SMALL CITY HOSTED THE
RECONSTRUCTION OF THE BURNISHING
MARTINEZ BRIDGE ACROSS THE
CARTOONIST STRAIGHT ONE OF THE
LARGEST PUBLIC WORKS PROGRESS,
THE PROJECTS THAT YOU'RE GOING
TO SEE, AND THAT WAS VERY
DISRUPTIVE TO THE LIFE OF THAT
CITY. ONE OF THE THINGS THEY DID
WAS THEY CUT A DEAL WITH THE
GENERAL CONTRACTOR. YOU WILL
ESTABLISH A SALES OFFICE IN OUR
CITY AND THEREFORE ROUTE AS MUCH
OF THE SALES TAX ON THE BUSINESS
TO BUSINESS SUPPLY PURCHASES FOR
YOUR PROJECT TO OUR CITY AS YOU
CAN. AND THAT DEAL HELPED FINISH
A BEAR THE BURDEN OF
CONSTRUCTION AND IT WENT AWAY
WHEN CONSTRUCTION WENT AWAY, AND
IT'S HARD TO PIN DOWN EXACTLY
WHO THE DONORS FOR THAT
TRANSACTION WERE. IT WOULD BE A
VERY HARD QUESTION TO SORT OF. I
DON'T KNOW. WE HAVE THE DATA TO
FIGURE OUT WHERE THAT MONEY WAS
COMING, TOO. BUT I THINK THAT'S
A VERY DIFFERENT CASE THAN THE
SOUTH AMOUNTED CASE. ANOTHER
EXAMPLE IS THE SAND AND GRAVEL
OPERATION. IF YOU'VE GOT THE
SAND AND GRAVEL OPERATION IN
YOUR TOWN, AND THERE'S A WHOLE
LOT OF BUSINESS TO BUSINESS
TRANSACTIONS THERE, AND YOU ARE,
IN FACT SPENDING A LOT OF MONEY
TO MAKE THE ROADS PASSABLE. UM
IT MAKES SENSE TO HAVE IT MIGHT
MAKE VERY GOOD SENSE TO ALLOW AN
ARRANGEMENT BETWEEN THE QUARRY
OPERATOR AND THE COMMUNITY TO
REDIRECT SALES TAXES. THE NEXT
QUESTION YOUR STAFF ASKED ME TO
THINK ABOUT WAS, ARE THERE SOME
INDUSTRIES IN WHICH THESE
AGREEMENTS ARE MORE COMMON THAN
IN OTHERS? I THINK THE ANSWER IS
YES. WE DON'T HAVE VERY GOOD
DATA BECAUSE THE EVERYBODY HAD
AN INCENTIVE TO BE QUITE
SECRETIVE ABOUT THESE AGREEMENTS
BECAUSE THEY COULD BE
CONTROVERSIAL. THE LOSERS MIGHT
CHALLENGE YOU. YOU MIGHT INVITE
LITIGATION. THE BUSINESSES
DIDN'T WANT TO, UM COMPROMISE
THEIR COMPETITIVE POSITION BY
TIPPING THEIR HAND TO THEIR
COMPETITORS. THERE WAS A LOT OF
SECRECY AROUND THESE AGREEMENTS,
AND SO WE DON'T KNOW AS MUCH
ABOUT THEM AS WE WOULD LIKE, UM,
BUT WE CAN OBSERVE ANECDOTALLY
WHAT'S GOING ON IN THE WORLD?
WHAT ARE THE CONDITIONS THAT
MAKE FOR, UM, RAPID UPTAKE OF
THIS OPPORTUNITY? ONE IS A
MARKET THAT IS VERY SALES TAX
PRICE SENSITIVE. WHERE THAT ONE
PENNY OR 10 PENNY ON THE
TRANSACTION MAKES A BIG
DIFFERENCE. GASOLINE IS A
PERFECT EXAMPLE. OUT OF THE CAR
BLOCK OPERATION WHEN YOU TALK
ABOUT T U. T S LATHROP, BUT
ANOTHER LOGISTICS TOWN ADJACENT,
TRACY ADOPTED A T U T OF 1%
STOCKED AND DIDN'T AND THE LOCAL
TRUCKSTOP OPERATORS WERE UP IN
ARMS, BECAUSE IF YOU WERE AN
INDEPENDENT HALL AIR STOPPING
FOR FUEL, YOU'RE JUST GOING TO
CONTINUE ON TO STOCKTON AND
AVOID THAT ONE CENT PER GALLON
BECAUSE YOU'RE BUYING 500
GALLONS. SO GASSES PRICE IS
SALES TAX SENSITIVE AND THE CARD
LOCK OPERATORS ARE IN A POSITION
TO ROUTE ALL OF THEIR
CONTRACTING TO ONE LOCATION.
LOGISTICS IS ANOTHER GOOD
EXAMPLE. IF YOU'RE A WAREHOUSE
OPERATOR, AND YOU'RE IN A
POSITION TO TAKE YOUR CALIFORNIA
WIDE SALES AND PUT YOUR POINT OF
SALES IN A WAREHOUSE OR TWO
WAREHOUSES YOU HAVE THAT
OPPORTUNITY, SO I WAS INVOLVED
IN DISPUTE AND WHICH COMPANY
THAT PROVIDES MEDICAL SUPPLIES
THROUGHOUT CALIFORNIA FROM THREE
LOCATIONS AND LATHROP, FONTANA
AND SAN BERNARDINO CUT A DEAL
WITH ONTARIO TO MOVE THEIR SALES
OFFICE TO ONTARIO AND NOTHING
ELSE. SO FROM LATHROP
PERSPECTIVE, WE'RE STILL SEEING
THE TRUCKS COMING AND GOING
SERVING SUPPLIES THE HOSPITALS
ALL AROUND THE BAY AREA, BUT NOW
THE SALES TAXES ARE GOING TO
ONTARIO, WHICH HAS NOTHING BUT A
SALES OFFICE AND NO OTHER
PHYSICAL SERVICES REQUIRED FOR
THE TRANSACTION. I SHOULD TELL
YOU AND I MEANT TO SAY THIS AT
THE BEGINNING. I HAVE CLIENTS ON
BOTH SIDES OF THIS PROBLEM. UM,
AND I AM NOT TRYING TO TAKE
SIDES ON THIS PROBLEM AND TRYING
TO BE AS NEUTRAL AS I CAN BE
WHILE ALSO BEING FRANK TO THE
EXTENT I HAVE BIASES BECAUSE MY
CLIENTS ARE MOSTLY CITIES, AND I
OWN THAT BOSS. UM SO YEAH, I
THINK THEY ARE COMMON. I WOULD
BE SURPRISED IF THERE IS A CARD
LOCK OPERATOR IN CALIFORNIA.
THAT DOESN'T HAVE ONE OF THESE
DEALS. IT WOULD BE NEGLIGENT ON
THE PART OF THEIR MANAGEMENT NOT
TO HAVE GOTTEN ONE OF THESE
DEALS. YOU CAN'T DO THEM NOW, SO
MAYBE THERE'S SOME NEW ENTRANTS
INTO THE MARKET PLACE, BUT
THEY'RE ACCEPTING A HANDICAP IN
THEIR INDUSTRY, SO I WOULD
EXPECT THEY ALL HAVE THEM. IT'S
GOTTEN VERY POPULAR IN THE
LOGISTICS SPACE, AND IT'S GOTTEN
VERY POPULAR IN THE INTERNET
RESELLER SPACE BECAUSE OF THE
WAYFAIR DECISION AND ITS IMPACT
ON INTERNET RESELLERS. SAN JOSE
BEING A BIG CITY WITH
SOPHISTICATED STAFF IN THE
MIDDLE OF SILICON VALLEY, CUT A
COUPLE OF VERY HIGH PROFILE AND
VERY CONTROVERSIAL DEALS TO
REALLOCATE SALES TAXES, AND THAT
GOT MUCH DISCUSSED. UM. THERE
ARE CONSTITUTIONAL CONSTRAINTS.
I LIST THEM IN THE NOTES THAT I
PROVIDED THEY COME OUT OF A
LITTLE PUSH PULL BETWEEN THE
STATE AND LOCAL GOVERNMENTS, UM,
AT THE BALLOT BOX OVER THE YEARS
, I DON'T INTEND TO DWELL ON
THEM. UM COUPLE LAST POINTS. ONE
IS THAT BECAUSE CITIES ARE
WINNERS AND LOSERS ON THIS
ISSUE, BECAUSE IT'S A
DISTRIBUTIONAL ISSUE AMONG
CITIES, THE CITY MANAGER'S
DEPARTMENT OF THE LEAGUE HAS
FOSTERED A PRETTY THOROUGH
DIALOGUE, TRYING TO ARRIVE AT
POLICY THAT THE LEAGUE OF
CALIFORNIA CITIES COULD SUPPORT
NOTWITHSTANDING THE FACT THAT
ITS MEMBERS HAVE DISPARATE
INTERESTS. SO THEY'VE COME UP
WITH SOME PROPOSALS THAT I THINK
ARE WORTHY OF ATTENTION. THE
SECOND THING I WOULD SAY IS YOU
ASKED MR KIRSTEIN, WHAT KINDS OF
THINGS YOU COULD DO, AND I THINK
AT THE RISK OF SOUNDING SOME OF
MY CLIENTS. EVERYTHING I SAID
TODAY IS THE RISK OF OFFENDING
SOME OF THEM. UM PROBABLY MORE
GUARDRAILS TO MANAGE THE RACE TO
THE BOTTOM. THINGS LIKE A CAP ON
HOW MUCH SALES TAX COULD BE
GIVEN AWAY. A CAP ON HOW LONG
THE DEAL COME LAST. SOMETHING
MORE THAN PUTTING IT ON YOUR
WEBSITE. MAYBE SENDING IT TO MR
LABRADORS AND HIS STAFF TO LET
THEM LOOK AT IT MAYBE EXPRESS AN
OPINION AS TO WHETHER IT'S
CONSISTENT WITH THE RESTRICTIONS
THAT THE LAW ALREADY APPLIES.
THESE KINDS OF THINGS COULD
MANAGE THE EXISTING STATUS QUO
PROBABLY WOULDN'T CHANGE MUCH,
BUT WOULD MAKE SURE THE EXISTING
CHOICES THE LEGISLATURE HAS MADE
ARE BETTER ENFORCED BECAUSE IT
PRESENTS IN ORDER FOR YOUR
STATUTES TO BE ENFORCED.
SOMEBODY HAS TO KNOW AND
SOMEBODY HAS TO SUE. AND
THEREFORE PEOPLE WORK VERY HARD
TO MAKE SURE THAT NOBODY KNOWS
AND THEN SOMEBODY'S GOT TO HAVE
THE INCENTIVE TO SUE. AND THAT'S
COMMONLY NOT THE CASE BECAUSE
THE BURDEN IS DISPARATE AND THE
WINNING IS CONCENTRATED. THAT'S
ALL I'VE GOT, UNLESS YOUR
QUESTIONS. YEAH THAT WAS THAT
WAS GREAT. NOW I GUESS JUST
GOING BACK TO WHETHER THERE'S
OTHER COMMENTS ON HOW HOW COULD
WE? WHAT COULD BE A MECHANISM A
CLEARINGHOUSE TO GET THIS TYPE
OF INFORMATION OUT BECAUSE I
THINK OFTEN CITIES DON'T REALIZE
THAT THESE AGREEMENTS HAVE BEEN
MADE UNTIL THEY SEE THEIR
REVENUE. GO GOING DOWN. SO WHO
WOULD BE THE APPROPRIATE
AUTHORITY FOR THAT TYPE OF
INFORMATION, AND, UM, DO WE
THINK IT'S POSSIBLE TO GET IT?
WELL WE ALSO TYPICALLY DON'T
KNOW. SO WE LOOK IN, YOU KNOW,
WE SEE IT IN THE RETURNS AND SEE
THE SHIFTS IN REVENUE AND THEN
TRY TO INVESTIGATE AND WE HAVE
BEEN MORE ACTIVE. I WILL SAY, UM
I CAN'T GO INTO ANY SPECIFIC
CASES. BUT DO NOT. WAIT FOR
OTHER JURISDICTIONS TOO SOON,
NECESSARILY. WE'VE TRIED OF OUR
OWN INITIATIVE TO MAKE SURE THAT
THE TAX DOLLARS ARE PROPERLY
ALLOCATED. BUT I DO THINK THAT'S
A DECENT SUGGESTION. I THINK
MORE SUNLIGHT HERE CERTAINLY
COULDN'T HURT AND. IN THE
EARLIER THE BETTER IN THE
PROCESS, BECAUSE WE HAVE NO IDEA
AS A STATE HOW MANY OF THESE
REVENUE SHARING AGREEMENTS
THERE, ALRIGHT, THEY HAVE TO BE
MADE PUBLIC. I BELIEVE, BUT IT'S
HARD. BUT YOU ON THE WEBSITE,
WHICH MEANS YOU NEED TO ARRANGE
YOUR NEEDLES IN HAYSTACKS AND
THE RIGHT PLACE. SO SHOULD THERE
BE SHOULD THERE BE A
CLEARINGHOUSE WHERE IT'S
REPORTED, AND WE'RE TRANSPARENT
ABOUT WHAT'S GOING ON. SOMETHING
LIKE CLIENTS WILL HATE THIS IDEA
. BUT WHAT I WILL TELL YOU IS IF
YOU DO THAT YOU WILL CREATE MORE
TRANSPARENCY THAT THERE NOW
EXISTS. AND WE'RE ALL PUBLIC
AGENCIES WERE ALL HERE DOING THE
PUBLIC'S BUSINESS AND WE SHOULD
NOT RELY ON SECRECY TO SERVE OUR
PUBLIC WEALTH. SO IT WOULD BE
WOULD SEE THE T F A B THE
APPROPRIATE AUTHORITY. IT'S
SOMETHING LIKE THAT WAS PURSUED.
I MEAN, AGAIN, WE WILL DO
WHATEVER POLICYMAKERS CHOOSE,
BUT BUT I THINK IT WOULD MAKE
YOU KNOW THERE AREN'T TOO MANY
OTHER PEOPLE IN CALIFORNIA. I
BELIEVE WE PROBABLY HAVE THE
LARGEST SALES AND USE TAX STAFF
IN THE WORLD. AND. YOU KNOW, AT
LEAST FOR TRANSPARENCY OR JUST
PUBLIC. I THINK THAT WOULD MY
HUNCH IS THAT WOULD BE THE
PROPER PLACE. I THINK THE OTHER
THING, WHICH MICHAEL MENTIONED
WHICH IS AN IMPORTANT
CONSIDERATION AND AGAIN WE WILL
ADMINISTER THE LAW HARBOR. IT'S
WRITTEN. UM THERE IS THE
POTENTIAL GIVEN UH UM. THE.
CALIFORNIA LAW FOR VERY. FOR
ENORMOUS. UM CONCENTRATIONS OF
REVENUE, DEPENDING ON HOW THE
TRANSACTIONS, AND THE
CORPORATIONS ARE STRUCTURED FOR
ENORMOUS CONCENTRATIONS OF LOCAL
BRADLEY BURNS TO GO TO VERY
SMALL JURISDICTIONS WITHOUT A
TON OF ACTUAL UM YEAH. WITH
PARTICIPATION UNDER CALIFORNIA
LAW, BUT IT'S IT. MIGHT NOT BE
AS MUCH AS YOU WOULD THINK, IN
ORDER TO GET THAT REVENUE THERE,
AND I THINK IT'S A REAL
CONSIDERATION FOR POLICY MAKERS.
AS WE SEE THIS PROGRESS, SO I
THINK MORE TRANSPARENCY. UM
AGAIN LOOKING AT WHAT LEVELS OF
REVENUE SHARING BECAUSE FOR. I
THINK THERE WAS MENTIONS OF, YOU
KNOW SOME REVENUE GOING TO
COMPANIES, SOME GOING TO
CONSULTANTS. YOU COULD IMAGINE
WITH A VERY LARGE TAXPAYER. UM
IF SOME OTHER ALLOCATION
THEORIES ARE ACCEPTED THAT YOU
KNOW, JURISDICTION WOULD GIVE
BACK 95% OF THE TAX REVENUE.
BECAUSE EVEN 5% OF BILLIONS OF
DOLLARS IS A LOT OF MONEY. SO
THE KIND OF GUARDRAILS YOU WERE
TALKING ABOUT. NONE OF THEM ARE
IN PLACE. THERE IS NO LIMITS ON
THESE AGREEMENTS. UH, TIME WISE.
I'M NOT AWARE OF ANY ONE THING
OR LEVEL OR NOPE, IT'S UP TO
WHAT THESE. THESE AGREEMENTS
HAVE TO BE APPROVED THAT PUBLIC
MEETING OF THE CITY COUNCIL AND
THEY HAD TO BE ON YOUR WEBSITE
AND YOU'RE GOING TO HAVE TO
RESPOND TO YOUR LOCAL MEDIA. IF
YOU HAVE A LOCAL MEDIA AND ONE
OF THE THINGS THAT WENT WRONG IN
BELLA'S, THEY DIDN'T HAVE A
LOCAL MEDIA. UM BUT SO SUNLIGHT
IS HELPFUL, BUT ONLY IF
SOMEBODY'S LOOKING ONE POINT I
SHOULD ADD, IS THAT, UM, THE
REVENUE PORTFOLIOS OF LOCAL
GOVERNMENTS VERY WIDELY. THERE
ARE SOME LOCAL GOVERNMENTS THAT
ARE VERY DEPENDENT ON SALES TAX,
SO A MODEST CHANGE IN STATE
POLICY COULD BANKRUPT SOME OF
THEM. SO IF YOU ACTUALLY CHANGE
ECONOMIC SUBSTANCE, WHICH IS TO
SAY, LIMIT HOW MUCH THE REFUND
CAN BE LIMIT, HOW LONG THE
CONTRACT AND LAST RATHER THAN
JUST ADDRESSING TRANSPARENCY BE
AWARE FOR THAT. FROM MY
PERSPECTIVE, YOU NEED TO ALLOW
GRADUALISM IN THE CHANGE.
BECAUSE IF YOU DO ANYTHING TO
DISRUPTIVE, YOU'RE GOING TO GET
SOME CHAPTER NINE FILINGS OUT OF
THE CITY OR TWO. AND KIND OF
ALONG THOSE LINES. IS THERE A
DISTINCTION TO BE DRAWN? BECAUSE
I LOOK AT SOME OF THE VETOES
FROM THE GOVERNOR? UM IS THERE A
DISTINCTION TO BE DRAWN WITH THE
CITIES THAT ARE ECONOMICALLY
DISADVANTAGED AND THE WEALTHY
MUNICIPALITIES? DO YOU THINK
THERE SHOULD BE ONE SET OF RULES
FOR EVERYBODY. OR THAT
DISTINCTION. WELL I LIVE IN A
RURAL COUNTY AND FREQUENTLY
AWARE THAT MOST LEGISLATORS
DON'T, UM, SO THAT'S A HARD
ANSWER IS SUCH A DIVERSE STATE
THAT LEGISLATING FOR IT IS
CHALLENGING. I GUESS WHAT I
WOULD SAY IS THAT BECAUSE WE'RE
TALKING ABOUT ALLOCATING THE
TAXES ON ECONOMIC ACTIVITY THAT
OCCURS THROUGHOUT THE STATE.
THERE REALLY DOES NEED TO BE A
COMMON SET OF RULES. OTHERWISE
YOU'LL GET ECONOMICALLY
DISTORTING EFFECTS THAT MAY BE
PROBLEMATIC IN THEIR OWN RIGHT.
AND MET HIM. SURE, I WOULD SAY
SORT OF THIS ISSUE. YOU BRING UP
TIES INTO THE DISCUSSION EARLIER
ABOUT TRANSPARENCY. IN SO FAR
AS, UM. RIGHT NOW, WHEN YOU WERE
ASKING ABOUT TRANSPARENCY,
DIRECTOR MADURO'S MENTIONED THAT
THERE ARE OPPORTUNITIES IN
LOOKING AT TAX RETURN DATA,
POTENTIALLY TO OBSERVE SHIFTS
THAT CAN OCCUR AS A RESULT OF
SOME OF THESE AGREEMENTS, BUT
SORT OF ONE OF THE THINGS THAT
YOU MIGHT HAVE NOTICED, AND IN
THE GRAPH I WAS SHOWING EARLIER
WAS THE AH! THAT THIS SORT OF
OUTLIERS THAT I HAVE EXAMPLES
THAT I HAD IN THE TOP 5% IN
BOTTOM, 5% TENDED TO BE SMALL TO
MIDSIZE CITIES. WHO SIMPLY DON'T
HAVE THE ECONOMIES THAT ARE IN
TAX BASES THAT ARE QUITE AS
ROBUST AND DIVERSIFIED AS LARGER
CITIES. AND SO IF YOU SORT OF
TAKE THE SORT OF, UM UH, CASE BY
CASE INVESTIGATE THROUGH THE
DATA APPROACH, THESE THINGS WILL
BE MUCH LESS TRANSPARENT WHEN
IT'S A LARGE CITY ENTERING INTO
THE AGREEMENT VERSUS A SMALLER
TO MIDSIZE CITY AND SO 11 WAY TO
THINK ABOUT POTENTIAL CHANGES
THAT COULD INCREASE TRANSPARENCY
IS THAT THEY COULD, UH, IN SOME
WAYS, MAKE THAT TRANSPARENCY
MORE CONSISTENT BECAUSE
OTHERWISE IF YOU'RE JUST TRYING
TO BACK IT OUT OF REVENUE DATA
THAN IN FOR LARGE CITIES AND
MIGHT BE VERY, VERY DIFFICULT.
JUST A COUPLE OF POINTS ONE. I
THINK IT IT IS IMPORTANT TO
MENTION I DIDN'T AND I DIDN'T
KNOW IF ANYBODY ELSE WOULD
MENTION THAT THERE IS A
GOVERNMENT CODE PROVISIONS THAT
DOES NOT INVOLVE CDT F A THAT
PROHIBITS REVENUE SHARING
AGREEMENTS IF THAT REVENUE WAS
PREVIOUSLY REPORTED IN ANOTHER
JURISDICTION SO YOU CAN'T MOVE
SOMETHING. THERE IT IS UNCLEAR
WHAT THE ENFORCEMENT MECHANISM
FOR THAT IS CURRENTLY BUT THERE
IS A SECTION THERE THAT'S
OUTSIDE THE REVENUE AND TAXATION
CODE THAT DOES PROVIDE FOR THAT.
I JUST WANT TO THAT IS THAT THAT
HAS TO BE CITY VERSUS CITY. DO
YOU THINK IF YOU'RE SAYING IT'S
UNCLEAR, UM WHO HAS BEEN
ENFORCING IT. I DON'T KNOW THAT
ANYONE HAS DON'T KNOW THAT IT'S
BEEN ENFORCED. YOU KNOW, THIS IS
GONNA SOUND LIKE A REALLY
TRIVIAL SUGGESTION BUT MOVING IT
TO THE REVENUE TAX CODE TO THE
OTHER SALES TAX STATUTES SO THAT
IT WON'T GET LOST. IT'S PROBABLY
NOT A BAD THING TO DO. TECHNICAL
OF A LOT OF NOTES ON THIS AND I
THINK IT'S INTERESTING YOU CAN'T
YOU? YOU TALKED WHEN YOU STARTED
ABOUT HOW WE SHOULD REALLY
ALLOCATE TAXES TO CREATE THE
RIGHT TYPE OF BEHAVIOR, BUT YOU
KNOW, WE'RE AT THIS POINT. UM WE
HAD, WE WOULD BE TWISTING
OURSELVES INTO A PRETZEL TO TRY
TO FIX A LOT OF THE ISSUES THAT
WE CURRENTLY HAVE, AND IT'S
ALMOST LIKE WE REALLY SHOULD BE
STARTING FROM SCRATCH. BUT WE
CAN'T DO THAT. YOU SPOKE ABOUT
SENATOR HERTZBERG'S SALES TAX
BILL, AND, UM IT DOESN'T GO
ANYWHERE BECAUSE THERE'S SO MANY
INTERESTS THAT ARE BENEFITING
FROM THE CURRENT STATUS QUO. SO
UM, SO WE DO THE BEST WE CAN.
BUT IF IT YOU KNOW, TALKING
ABOUT THE DIFFERENT
CIRCUMSTANCES, WE ARE GOING TO
LET THE THREE OF YOU GO.
EXCELLENT DISCUSSION. UM AND NOW
WE'LL HEAR FROM FROM THE LOCALS
AND THE DIFFERENT SITUATIONS
THAT THERE UM UM CITIES ARE
FACING AND I REALLY APPRECIATE
ALL THREE OF YOU. CAN WE GIVE
HIM A ROUND OF APPLAUSE, PLEASE?
AND THIS IS A GOOD TIME TO ASK
QUESTIONS IF YOU CAN CATCH ONE
OF THOSE THREE, SO WE'RE GONNA
BE MOVING NOW ONTO THE SECOND
PANEL HIGHLIGHTING VARIOUS
PERSPECTIVES FROM MUNICIPAL
LEADERS FROM ACROSS THE STATE
FOR THIS PANEL, EACH WITNESS
WILL HAVE UP TO SEVEN MINUTES TO
PRESENT AND WE'LL HAVE A
OPPORTUNITY FOR Q AND A AFTER
EACH SPEAKER AND THEN AN ALL
PANEL Q AND A AT THE END, SO IF
WE COULD HAVE OUR THREE
SPEAKERS, PLEASE JOIN US. THANK
YOU VERY MUCH AND FIRST UP.
WE'RE GOING TO HAVE COUNCIL
MEMBER MIGUEL ARIAS, WHO
REPRESENTS DISTRICT THREE AND
FRESNO. AH COUNCIL MEMBER. THANK
YOU SO MUCH FOR MAKING THE TRIP
TO BE WITH US TODAY, YOU
PROBABLY HAD THE LONGEST DRIVE.
I THINK EVERYBODY ELSE HOPPED ON
A PLANE. THAT'S RIGHT. SECOND
LATE NIGHT DRIVE TO BE HERE
TODAY, SO THANK YOU FOR HAVING
ME. WELL THANK YOU, CHAIRMAN AND
THANK YOU AGAIN FOR ALLOWING OUR
CITY TO PARTICIPATE IN THIS
CRITICAL HEARING. WHY DID I JUST
GIVE YOU SOME CONTEXT ON THE
CITY OF FRESNO? AS YOU MAY KNOW
WHERE THEIR FAITH LARGEST CITY
IN THE STATE OF CALIFORNIA AND
WE ARE THE ACCOUNT GNOMIC ENGINE
THAT LEADS THE CENTRAL VALLEYS
CRITICAL ROLE AS A PROVIDER OF
THE NATION'S FOOD SUPPLY CHAIN
SYSTEM. RECENTLY PRESIDENT WAS
NAMED ONE OF THE FASTEST
RECOVERY CITIES FROM THE
PANDEMIC INDUCED ECONOMIC
SLOWDOWN ACROSS THE COUNTRY. THE
TRUTH IS, WE DIDN'T RECOVER
FASTER THAN ANYONE. THE FACT IS
THAT WE NEVER SAT DOWN. UM. SEE
YOU CANNOT HARVEST FIELDS THAT
FOR THE GROCERY STORE SHELVES.
UPBRINGING, POETRY PLANT OR
DELIVER HEALTH PRODUCTS THAT
AMAZON DELIVERS VIA ZOOM. CAN'T
SIMPLY DO THAT. ENSURE THE VAST
MAJORITY OF OUR ECONOMY WAS
DECLARED ESSENTIAL AND AS A
RESULT WE'RE NOT ONLY OPERATE
DURING THE PANDEMIC, BUT THE
ASSEMBLY LINES AND CHICKEN
PLANTS, THE AMAZON DISTRIBUTION
CENTERS. THE HARVEST FIELDS WERE
DOUBLED. TO ENSURE THAT THE
NATIONAL FOOD AND ESSENTIAL
PRODUCT SUPPLY CHAIN DIDN'T
FAIL. THIS OF COURSE, LED TO THE
DEATHS OF THOUSANDS OF OUR CITY
ESSENTIAL WORKERS. WHO LIVE IN
THE POOREST ZIP CODES AND
DIRTIEST AIR BASE IN THE
COUNTRY. WE KNOW THAT WE HAD AN
UPHILL BATTLE WITH AN ECONOMY
THAT PRIMARILY RELIES ON
AGRICULTURE SO YEARS AGO. THE
CITY CHOSE TO TRYING TO ENGAGE
IN DEVICE DEVELOPMENT.
DIVERSIFYING OUR ECONOMY. AND
ENGAGED IN THE GROWTH OF E
COMMERCE IN DOING SO. WE SET OUT
TO ATTRACT THESE RETAILERS
BECAUSE THE INFRASTRUCTURE THAT
WE HAD BUILT OVER GENERATIONS TO
GIVE FOOD PRODUCTS ACROSS THE
COUNTRY ALLOWED US TO ENGAGE IN
THE SAME DAY DELIVERY. FROM THE
CANADIAN BOARD TO MEXICAN
BORDER. AH A GEOGRAPHIC, UM,
ADVANTAGE AND ONE THAT HAD A
SYSTEM OF FREEWAYS AND
INFRASTRUCTURE BUILT FOR EXACTLY
THAT MODEL. AS THIS INCURRED OUR
CITY GAVE THE RESIDENTS ONE
BASIC PROMISE. AND THE PROMISE
WAS THAT THESE CENTERS WOULD
GENERATE A HUGE AMOUNT OF TAX
REVENUE THAT TAX REVENUE WOULD
GO BACK AND BE REINVESTED IN
THOSE NEIGHBORHOODS.
NEIGHBORHOODS THAT HAVE BEEN
REDLINED THROUGH POLICIES FOR
GENERATIONS NEIGHBORHOODS THAT
HAVE THE DIRTIEST AIR BASE IN
THE COUNTRY, THE HIGHEST
CONCENTRATION OF POVERTY IN THE
COUNTRY. AND THE ZIP CODES THAT
IN THE DISTRICT THAT I REPRESENT
AH, THE LIFE EXPECTANCY IS 20
YEARS LESS IN THE DISTRICT FROM
MY NORTHERN NEIGHBORS IN THE
SAME CITY. THAT'S THE HEALTH AND
ENVIRONMENTAL CONSEQUENCE OF A
SYSTEM OF INFRASTRUCTURE THAT
MOVES THROUGH, UH, THOUSANDS OF
TRUCK TRIPS A DAY. AND THIS THIS
APPEAL TRUCKS, UM SO WHEN THESE
AGREEMENTS TOOK PLACE PRIOR TO
MY TENURE, THAT WAS A PROMISE
THAT WAS MADE AND THESE
DISTRIBUTION TERMS OF COURSE,
ESTABLISHED AND COMMUNITIES AND
NEIGHBORHOODS OF THE BLACK AND
BROWN COMMUNITIES, UH AND EVEN
WHEN THEY OPPOSED THEM, THEY
WERE STILL LOCATED THERE ON THE
RATIONALE THAT IT WAS HEAVY
INDUSTRIAL USES. THERE WAS
NOTHING THERE. AND A SIMPLE
DISTRIBUTION CENTER THAT USED TO
BE NECK, UM, IN THE PLACE OF AG
FIELDS. ONCE THIS CEMENTED AND
IS BUILT AND NOW HAS THOUSANDS
OF TRUCKS TRIP TODAY ACTUALLY
INCREASES THE TEMPERATURE OF THE
NEIGHBORHOOD BY 10 DEGREES. AND
FORCES US TO GO FROM EVAPORATIVE
COOLING. HOMES TO AIR
CONDITIONING HOMES ON FOCUS ON
FIXED INCOMES WHO DON'T HAVE THE
MEANS TO SUPPORT THAT, AS A
RESULT. THE CITY GOT SUED THE
CITY HAD TO MITIGATE THAT
IMPACT. SO HE HAD TO USE THE
REVENUE THAT IS GENERATED FROM
THIS DISTRIBUTION THEORISTS TO
MITIGATE THE IMPACT TO THE
NEIGHBORHOOD. NOW SAYS MY TENURE
IN 2019, THE CITY HAS TAKEN A
DRAMATICALLY DIFFERENT APPROACH
AND INVESTED MILLIONS OF DOLLARS
TO REBUILDING THOSE
NEIGHBORHOODS. REBUILDING THEIR
STREETS. UM THAT WERE NEVER
BUILT OUT FOR THE DISTRIBUTION
CENTERS BECAUSE THEY WERE GIVEN
WAIVERS OF IMPACT FEES. WAIVERS
OF DEVELOPMENT FEES, WAIVERS OF
INFRASTRUCTURE IMPROVEMENTS. SO
WE WENT BACK AND REBUILD THE
STAMPER HOODS. BUILDS A PROCESS.
SCHOOLS BUILD NEW PARKS ARE IN
THE PROCESS OF TRYING TO REBUILD
THE INFRASTRUCTURE. BUT DOING SO
REQUIRES THAT REVENUE THAT
REVENUE THAT WE ALL COUNTED ON
TO REDIRECT THEIR AS A CITY. WE
ALSO FIND OURSELVES WITH THE
LOWEST STAFF OF OUR DEPARTMENT
IN THE COUNTRY. WITH THE LOWEST
PAID POLICE OFFICERS AND I
WOULDN'T WANT DISPATCHERS. IN
THE REGION. AND IT'S SIMPLE. OUR
ECONOMY BASED ON AGRICULTURE
DOESN'T GENERATE THE GENERAL
FIND. THAT OUR NEIGHBOR IN LONG
BEACH LONG BEACH IS THIS SEVENTH
LARGEST CITY IN THE STATE, WHERE
THE FIFTH WE HAVE 100,000 MORE
RESIDENTS. THEIR BUDGET IS $1.4
BILLION LARGER THEIR GENERAL
FUND IS FOUR TIMES OUR SIZE. THE
SAME GENERAL FUND THAT WE RELY
TO PAY FOR POLICE, FIRE PARKS
AND CITY STREETS. UM AND SO AS
WE TOOK THIS APPROACH OF
REINVESTING BACK INTO THE CITIES
, WE'VE NOW FOUND OURSELVES IN A
PLACE OF HAVING TO DEFEND
DISAGREEMENTS AGREEMENTS,
FRANKLY, THAT I WOULD HAVE NOT
SIGNED AS A CITY COUNCIL MEMBER
AT THAT TIME. UM AND I WAS GOING
TO THE RECOMMENDATIONS IN A
BEAR. BUT REVENUE, UM, THAT WE
NEED TO MITIGATE THE
ENVIRONMENTAL THE
INFRASTRUCTURE. AND THE HEALTH
IMPACTS OF THESE DISTRIBUTION
CENTERS HAVE GENERATED AND JUST
TO GIVE YOU FOR THE CONTEXT OF
THE ECONOMY, ECONOMICS OF OUR
CITY. THE AVERAGE FAMILY IN OUR
CITY IS ABOUT $55,000 OF ANNUAL
INCOME. DECEMBER THAT WE SHARE A
BORDER WITH THEIR ANNUAL INCOME
IS $95,000. OUR AVERAGE HOMES.
PRICE IS 250,000. THERE IS JUST
500,000. AS YOU KNOW, AS A
FORMER COUNCIL MEMBER, YOU
ESSENTIALLY HAVE A COUPLE OF
SOURCES OF REVENUE TOP OF YOUR
CITY. PROPERTY TAX BASED ON
PROPERTY VALUES SALES TAX WHOLE
BUNCH OF CONFIGURATIONS ON HOW
PANIC COMES BACK. AND THEN, OF
COURSE, ANY GOVERNMENT FUNDING
THAT YOU MAKE IT TO COME YOUR
WAY. AND AS A CITY WHERE LIMITED
TO THOSE, YOU KNOW, REVENUE
SOURCES. SO, UM. THIS WAS
SUPPOSED TO BE THAT OPPORTUNITY
FOR US TO RECAPTURE RETAIL
REVENUE. UM THAT WE WERE NOT
CAPTURING THE PAST AND TO
REINVEST IT BACK IN THOSE
NEIGHBORHOODS. UH I RECOGNIZE
THAT THERE NEEDS TO BE SOME
ADJUSTMENTS. UM YOU KNOW, MY
CITY JUST LAST WEEK WE ANNOUNCED
ORDINANCE TO REGULATE SMOKE
SHOPS THEY DIDN'T EXIST IN
MAGNITUDE THREE YEARS AGO. NOW
THEY DO. UM, E COMMERCE WASN'T
AS LARGE AS NOW, AS IT WAS FIVE
YEARS AGO. IT'S ALSO WASN'T AS
ESSENTIAL. BUT I WOULD I WOULD
ALSO ARGUE IS THAT WE HAVE TO
LOOK AT A MORE COMPLETE PICTURE.
JUST TODAY. I SAID YOU NEARBY
HOTEL AND I GOT MY BILL.
INCLUDED IS A TOURISM TEXT. AND
THE LOCAL TEXT. UM THAT I'M SURE
THE REVENUE GOES TO ADDRESS THE
IMPACTS THAT FOLKS THAT ARE
ATTRACTED TO THE HOTEL'S JANUARY
FOR IT. UH A LOT OF REGIONAL
ECONOMIC PROJECTS WERE BUILT ON
THAT NOTION. THE DISNEYLAND'S IS
SIX FLAGS, NATIONAL PARKS
BEACHES. THEY WERE BUILT ON THE
NOTION THAT IF YOU CREATED A
REGIONAL OR STATEWIDE ATTRACTION
THEN YOU KEEP YOUR REVENUE.
BECAUSE YOUR RESIDENTS IN YOUR
NEIGHBORHOODS YOUR CITY IS ALSO
HAVING TO DEAL WITH THE IMPACT
THAT THAT ACTIVITY GARDENERS. UM
AND SO IF WE'RE GOING TO CHANGED
THE PROCESS FOR HOW WE
REDISTRIBUTE REVENUE FROM THESE
FULFILLMENT CENTERS. I THINK WE
HAVE TO LOOK AT THE BROADER
PICTURE AS WELL. UM BECAUSE IF
NOT, WE'RE SIMPLY GOING TO TAKE
FROM THE POOREST. COMMUNITIES.
REDISTRIBUTE THAT WEALTH TO THE
WEALTHIEST COMMUNITIES, AT LEAST
IN MY REGION. UM. SO THAT WE CAN
CONTINUE THIS EXPECTATION THAT
YOU GIVE FRIENDS OR SAME DAY
SERVICE. WITHOUT THAT 1000
DIESEL TRUCKS DURING
NEIGHBORHOOD GOING BY UM AND
THAT SIMPLY IS UNFAIR. AND I
THINK NOW THE INTENT OF THE
TAXATION SYSTEM ENCLOSED IN WHAT
I WOULD RECOMMEND. GOING FORWARD
IS THAT TRANSPARENCY IS CLEARLY
SOMETHING THAT NEEDS TO OCCUR AT
A BROADER APPROACH. AS A CHARTER
OFFICER TO MY CITY. I DO NOT
HAVE THE RIGHT TO THE TAX
INFORMATION. FROM THESE
AGREEMENTS THAT WERE SIGNED PART
TO MY TENURE. BECAUSE IN THESE
AGREEMENTS THE REVENUE, UM THAT
THEY GENERATE THE SALES TAX OF
THEIR GENERATE. THEY HAVE THE
CLASSIFIED AS PREPARED TORREY
INFORMATION. THAT WE HAVE
STARTED. OPPOSITES DON'T HAVE
THE RIGHT TO SO I CAN'T TELL YOU
UM AS A CHARTER OFFICER, HOW
MUCH REVENUE AND AMAZON
FULFILLMENT CENTER IN MY
DISTRICT THAT EMPLOYS 5000
INDIVIDUALS GENERATES FOR THE
CITY. IT'S PROPRIETARY. I CANNOT
TELL YOU EXACTLY HOW MANY PEOPLE
THEY EMPLOY. UM I CANNOT TELL
YOU, UM, SIGNIFICANT DETAILS OF
THE AGREEMENTS, ALTHOUGH THEY
WERE REQUIRED TO MAKE THE
CONTRACT PUBLIC. THE PROVISION
OF THE CONTRACT. CLASSIFIED
QUITE A BIT OF INFORMATION,
PREPARED, TORREY. THE RATIONALE
IS THEY DON'T WANT AMAZON TO
KNOW THEY DON'T WANT WALMART. TO
KNOW. AMAZON DOES AND WHAT
WALMART WALMART DOESN'T WANT.
AMAZON TARGET DOESN'T WANT
WALMART TO KNOW TAXES ARE
SOMEWHAT PERSONAL IN NATURE. UM,
BUT I WOULD ALSO ASK THAT
TRANSPARENCY ALSO APPLIED TO ANY
AGREEMENTS. THAT NIGHT. JUST
PROVIDE YOU A REFUND OF SALES
TAX OR CREDIT FOR HOW MANY
VIGILS EMPLOYEE BUT ALSO WHAT
IMPACT FEES. THE JURISDICTION IS
WAVY. IN OUR CASE, WE LIVE WITH
MILLIONS OF DOLLARS WORTH OF
DEVELOPMENT IMPACT. THESE THAT
WOULD HAVE BUILT OUT ROADS, UH,
INSTALLED INTERSECTION, LIGHTS,
CROSSWALKS AND BIKE LANES. THE
SAME EXACT REQUIREMENTS THAT WE
HAVE FOR EVERY SMALL BUSINESS IN
THE CITY. AND NOW HAVING TO
REBUILD THAT INFRASTRUCTURE. IS
SIGNIFICANTLY MORE COSTLIER AND
IT COMES AT THE EXPENSE OF THE
TAXPAYERS, UM, AND OTHER PARTIES
THAT WE WOULD OTHERWISE ENGAGING
AND JUST TO GIVE AN EXAMPLE
BUILDING ONE SAFE ROUTES TO
SCHOOL. IT'S ABOUT $5 MILLION IN
ABOUT FOUR YEAR PROCESS. WHEN
INTERNET SECTION LIKE NOW IT'S
COSTING US $2 MILLION. BUILT
REPAVING A STREET IS A MULTI
MILLION DOLLAR COST, BECAUSE
ONCE WE BUILT THEM AS A CITY. UM
A LOT OF THESE THINGS WERE BUILT
IN THE FRENCH IS OF THE
COMMUNITY AND, YOU KNOW,
FORMALLY COUNTY AREAS. AS YOU
KNOW, ONCE WE TAKE THEM OVER, WE
GOTTA BUILD THEM TO CITY
STANDARDS. WATER SEWER LINES,
CURBS AND GUTTERS, SIDEWALKS.
STREETLIGHTS BY CLINGS THAT
CAUSES AN INTENSIVE MILLIONS OF
DOLLARS. AND IF IT WAS ANY OTHER
BUSINESS MOM AND POP ICE CREAM
SHOP. THEY WOULD HAVE BEEN
REQUIRED TO PAY THEIR FAIR SHARE
OF COST. FOR THE IMPACT THAT ARE
GENERATING, BUT IN THIS RACE OF
BOTTOM, WE'RE ALL TRYING TO
ATTRACT THIS REGIONAL, UM,
ECONOMIC ENGINE. WE GAVE UP THE
HOUSE THAT WE'RE NOW HAVING TO
REBUILT. UM AND SO THAT I WOULD
ASK THAT YOU'RE GOING FORWARD.
THE TRANSPARENCY BE APPLIED MUCH
BROADER THAN SIMPLY ARE YOU
SHARING YOUR SALES TAX REVENUE
WITH THE CORPORATION? IT SHOULD
APPLY TO ANY WAY OF FEES THAT
OTHERWISE WOULD HAVE TO BE
PICKED UP BY ANOTHER BUSINESS.
OR THE JURISDICTION ITSELF, UM,
IN CLOSING. YOU'RE ABSOLUTELY
RIGHT CHAIR THAT WE MAY NOT HAVE
CREATED THIS SITUATION. AND IT'S
EXTREMELY COMPLICATED BASED ON
THE TESTIMONY OF THE TAX
EXPERTS. BUT IT'S ALSO
FUNDAMENTALLY FLAWED. AND THE
SOLUTION CANNOT BE WORSE THAN
THE ACTUAL DISEASE. AND IN THIS
CASE, I THINK THE SOLUTION FOR
SOME IS TO SIMPLY GO BACK TO AN
ORIGINATION OR DESTINATION. THAT
HAS SIGNIFICANT CONSEQUENCES.
AND IF WE'RE GOING TO OPEN THAT
DOOR NOT ONLY IS THIS SLIPPERY
SLOPE, BUT I THINK EVERYTHING
SHOULD BE AT THE TABLE. YOU KNOW
WHEN I GO TO SACRAMENTO? I
SHOULD EXPECT THE REFUND CHECK
FOR THE EXTRA TAXES THAT I PAID
SINCE MY DESTINATION, QUOTE
UNQUOTE EX PRESIDENT THANK YOU.
THANK YOU VERY MUCH. I UM YOU
KNOW, BEING HERE ON LOCAL
GOVERNMENT, WE DID HAVE A
RETAILER THAT WANTED TO COME TO
TOWN, BUT THEY WANTED A FULL
SALES TAX REBATE FOR THE FIRST
EIGHT YEARS, AND THAT WAS WHAT
WE WERE LOOKING AT. WHO'S GOING
TO PAY FOR THE LIGHTS AND THE
ROAD? IT'S NOT LIKE THE JOBS ARE
THAT GREAT THAT YOU'RE BRINGING.
SO I CERTAINLY UNDERSTAND WHAT
YOU'RE SAYING. BUT I'M TRYING TO
GET A LITTLE CLARITY THE AT WAS
IT. YOU SAID IN 2018 THAT THAT
HOW DID THAT CHANGE? COME ABOUT?
HOW DID WHAT HOW DID YOU DECIDE
THAT? YOU WANTED TO MAKE SURE
THAT THESE COMPANIES THAT WERE
COMING IN? WE'RE PAYING THEIR
THEIR FULL COSTS IN 2018, THE
PREVIOUS COUNSEL AND
ADMINISTRATION APPROVED THREE
SPECIFIC AGREEMENTS FOR REVENUE
SHARING. ALTER GAB AND AMAZON.
UM SINCE 2018. WE HAVE NOT
APPROVED ANY NEW ONES. AND WE
HAVE ALSO ELIMINATED ALL WAVING
OF DEVELOPMENT IMPACT FEES FOR
THE PURPOSE OF ATTRACTION
BUSINESSES. WHAT WE'VE
CONCLUDED, IS THAT OUR ADVANTAGE
IS OUR GEOGRAPHIC LOCATION. YOU
CAN GET THE SAME DAY DELIVERY.
IN ESSENTIALLY THREE COUNTRIES.
AND WE'VE HAVE A FULLY BUILT OUT
FREEWAY SYSTEM AND LUCKILY FOR
US, AND OUR FREEWAY SYSTEM IS
NOT AS IMPACT IN CALIFORNIA. SO
IT'S PRETTY, UH, NICE FLOW OF
TRAFFIC. AND WE HAVE AN
ABUNDANCE OF STRONG WORKFORCE.
THAT'S WHAT'S BEEN OPERATING OUR
AGRICULTURE INDUSTRY AND THE
WORKERS THAT HAVE TOLD IN THE
FIELDS OF AGRICULTURE HAVE MADE
A SEAMLESS TRANSITION TO
DISTRIBUTION CENTER. SO WE HAVE
THE WORKFORCE. WE HAVE THE
PUBLIC INFRASTRUCTURE AND WE
HAVE A GREAT LOCATION, SO THERE
WAS NO NEED FOR US TO ENGAGE IN
GIVING AWAY THE FUTURE HOUSE
ANYMORE FOR SHORT TERM GAIN
EMPLOYMENT THAT WAS GOING TO
COME NATURALLY TO EITHER WAY.
COUNCIL MEMBER. THANK YOU SO
MUCH FOR JOINING US TODAY AND
NEXT, WE ARE GOING TO GO TO, UM
BRIAN GABLER, THE CITY MANAGER
FOR THE CITY OF SIMI VALLEY.
ANOTHER ONE OF MY CONSTITUENTS.
MR GABLER, WHENEVER YOU'RE
READY, THANK YOU VERY MUCH. GOOD
MORNING. I WANT TO THANK YOU FOR
THE OPPORTUNITY TO ADDRESS THE
COMMITTEE REGARDING SALES TAX
DISTRIBUTION. UM THIS IS A
MULTIFACETED TOPIC, BUT I'LL
SHARE WITH YOU SOME OF THE
THOUGHTS ON HOW THE CURRENT
DISTRIBUTION OF SALES TAX
AFFECTS SEMI VALLEY. A LITTLE
BIT OF BACKGROUND LOCATED IN THE
SOUTHEAST CORNER OF INSURE A
COUNTY CITY OF SIMI VALLEY, WAS
INCORPORATED IN OCTOBER OF 1969.
WITH A POPULATION OF JUST OVER
126,000, THE CITY'S A TRUE
VALLEY AND HOME TO THE RONALD
REAGAN PRESIDENTIAL LIBRARY AND
MUSEUM. THERE ARE OVER 5500
BUSINESSES IN OUR COMMUNITY FROM
LARGE MANUFACTURERS AND SERVICE
SECTOR BUSINESSES SUCH AS HEROIN
ENVIRONMENT MILL GUARD IN BANK
OF AMERICA. TWO RETAILERS SUCH
AS COSTCO, HOME DEPOT, LOWE'S
AND THOUSANDS OF SMALL, HOME
BASED BUSINESSES. THE CITY
PRIDES ITSELF ON BEING BUSINESS
FRIENDLY, ENCOURAGING ALL
BUSINESSES TO LOCATE TO OUR
COMMUNITY. THIS PHILOSOPHY HAS
RESULTED IN A DIVERSE EMPLOYMENT
BASE WHERE SEMI VALLEY IS NOT
DEPENDENT UPON ANY ONE
PARTICULAR BUSINESS SECTOR FOR
MAJOR EMPLOYMENT OF OUR
RESIDENTS. WE ENJOY A LOW
VACANCY RATE FOR INDUSTRIAL AND
COMMERCIAL BUILDINGS BECAUSE WE
BELIEVE AS A CITY WE SHOULD GET
OUT OF THE WAY OF BUSINESS AND
LET THEM DO WHAT THEY DO BEST,
AND THAT'S RUN THEIR BUSINESS.
CITIES IN CALIFORNIA RELY UPON
VARIOUS NUMBER OF REVENUE
SOURCES TO MANAGE OPERATIONS OF
THE CITY AND PROVIDE SERVICES TO
BUSINESSES AND RESIDENTS.
WITHOUT A DOUBT. THE TOP TWO ARE
, UM TOP TO LOCAL GOVERNMENT
REVENUE SOURCES OR PROPERTY TAX
REVENUE AND SALES TAX REVENUE.
ENSURING A CONSISTENT FLOW OF
THESE REVENUE. SOURCES ALLOW
CITIES TO BUDGET SEVERAL YEARS
INTO THE FUTURE WITH SOME LEVEL
OF CERTAINTY. HUGE SWINGS IN
THESE RESOURCES ARE UNCOMMON.
WHEN CITY COUNCILS AND CITY
MANAGER STAY INFORMED. CITIES
GENERALLY ARE ABLE TO PREDICT
REVENUE SOURCES. CHANGES IN THE
ECONOMY WILL INCREASE OR
DECREASE BOTH SALES AND PROPERTY
TAX COLLECTIONS. BUT AFTER THE
ECONOMY AFTER ECONOMIC
DOWNTURNS, CONDITIONS APPROVE
SALES TAX COLLECTIONS WILL
GENERALLY WERE RETURNED TO PRIOR
LEVELS UNLESS THE RETAIL PICTURE
HAS CHANGED. HOWEVER LARGE
SWINGS OR UNPREDICTABLE CHANGES
IN IT WILL IN TURN TURNED THE
CITY'S BUDGET UPSIDE DOWN. FOR
EXAMPLE, IN 2019 CHANGES TO THE
DISTRIBUTION OF ONLINE SALES,
WHICH REDIRECTED CERTAIN SALES
TAX COLLECTIONS FROM THE COUNTY
POOL TO THE COMMUNITY WITH WITH
A FULFILLMENT CENTER WAS HEAVILY
FELT BY OUR COMMUNITY AND OTHER
COMMUNITIES IN CALIFORNIA. THIS
CHANGE PERMANENTLY IMPACTED SEMI
VALLEY INITIALLY BY OVER
$300,000 WITH THAT NUMBER
GROWING ANNUALLY. IN 2007. THE
CITY WAS APPROACHED BY A GEORGIA
COMPANY TO DISCUSS A LOCAL
BUSINESS. THIS COMPANY STATED
THAT THEY REPRESENTED THE
BUSINESS AND SIMI VALLEY THAT IS
IN THE CONSTRUCTION INDUSTRY.
AND GENERATE SALES TAX REVENUE
FOR OUR CITY. THEY WILL NOT
DISCLOSE ANY MORE INFORMATION
REGARDING THE SALES TAX
REGARDING THE SALES TAX OR THE
SEMI VALLEY COMPANY THAT THEY
REPRESENTED. WE WERE TOLD THAT
THIS CONSTRUCTION COMPANY WAS
WORKING WITH THIS GEORGIA
COMPANY TO REVIEW OPTIONS
REGARDING THEIR OPERATIONS,
WHICH WOULD AFFECT THE
DISTRIBUTION OF SALES TAX. WE
WERE INFORMED THAT THIS IF THE
CITY WERE TO ENTER INTO AN
AGREEMENT WITH THE GEORGIA
COMPANY, THEN THE SEMI VALLEY
CONSTRUCTION COMPANY WOULD NOT
MAKE ANY CHANGES OR CONSIDER A
RELOCATION. THAT PROPOSED
AGREEMENT WOULD REQUIRE THE CITY
TO SHARE SALES TAX PRODUCED. BY
THE SEMI VALLEY COMPANY WITH THE
CONSTRUCTION COMPANY AND THE
GEORGIA COMPANY WITHOUT ANY
FURTHER AGREEMENT, DETAILS. OR
THE NAME OF THE CONSTRUCTION
COMPANY, THE CITY THANK THEM FOR
THEIR OFFER. MX IS A GLOBAL
BUILDING MATERIALS COMPANY
PROVIDING CONCRETE AND AGGREGATE
THROUGH 50 AGGREGATE QUARRIES
AND 280 READY MIXED CONCRETE
BATCH PLANTS ACROSS THE UNITED
STATES. MX HAS OPERATED A READY
MIX CONCRETE FACILITY ON WEST
LOS ANGELES AVENUE SEMI VALLEY
SINCE 2003. AFTER HAVING
ACQUIRED A PREVIOUS OPERATOR AT
THAT LOCATION. FROM 2003 TO 2008
. THE CITY RECEIVES SALES TAX
REVENUE FROM ORDERS FILLED AT
THE SEMI VALLEY LOCATION.
BEGINNING IN 2009 SALES TAX
COLLECTIONS THAT THE CITY
RECEIVED FROM SIMEX OPERATIONS
DROPPED BY OVER 95. IN 2008 CMX
OPENED THE REGIONAL FACILITY IN
THE CITY OF SHAFTER, CALIFORNIA.
THIS REGIONAL FACILITY IS NOT A
CONCRETE BATCH PLANT. SANDBOX
MOVED INTO AN 8000 SQUARE FOOT
OFFICE BUILDING WHERE THEY
PROCESS ORDERS FOR SEVERAL OF IT
. IT'S READY MIXED CONCRETE
PLANTS AROUND CALIFORNIA. MANY
YEARS LATER, THE CITY OF
ONTARIO, CALIFORNIA. SIMEX
OPENED A SIMILAR OFFICE FOR
FURTHERING READY MIXED CONCRETE
ORDER OPERATIONS. TRAFFIC IMPACT
STUDY WILL SHOW THAT A CONCRETE
BATCH PLANT WILL HAVE OVER 90
DAILY TRIPS OF THREE AXLE
CONCRETE TRUCKS. THESE CONCRETE
TRUCKS WEIGH OVER £60,000 LOADED
OVER £25,000 EMPTY. IN CONTRAST,
THE AVERAGE AUTOMOBILE WEIGHS
JUST OVER £4000. IN ADDITION TO
THESE CONCRETE TRUCKS, THE SAME
FACILITY WILL HAVE OVER 50 TRIPS
A DAY OF LARGE TRACTOR TRAILER
VEHICLES DELIVERING CEMENT, SAND
, AGGREGATE AND OTHER CHEMICAL
ADDITIVES THAT MAKE UP CONCRETE.
THESE THIS USE OF CITY STREETS
DAY IN AND DAY OUT BY TRUCKS
CARRYING EXTREMELY HEAVY LOADS
ACCELERATES THE DEGRADATION OF
THE ROAD SURFACE. A NORMAL
ROADWAY IN A CITY WILL LAST
ABOUT 20 YEARS. WEST LOS ANGELES
AVENUE, WHERE CEMEX IS LOCATED,
HAS EXPERIENCED CONSTANT HEAVY
TRUCK TRAFFIC CARRYING EXTREMELY
HEAVY LOADS, SPEEDING UP THE
DETERIORATION OF THE STREET. IN
THE LAST 10 YEARS, THE CITY HAS
INVESTED OVER $7 MILLION TO
REHABILITATE AND IMPROVE THE
ROAD SERVICE TO COMBAT THE
DEGRADATION OF THAT STREET. IN
ADDITION TO THE ADDED INVESTMENT
INTO THE CITY'S INFRASTRUCTURE,
THAT SEMI VALLEY COMMUNITY MUST
DEAL WITH THE NOISE CREATED AT
THE PLANT, DUST AND PARTICULATES
THAT ARE CARRIED IN THE AIR FROM
THE SAND, AGGREGATE AND CEMENT
MATERIAL. THERE REMAINS A
CONSTANT TRAIL OF DIRT IN THE
STREET, LEAVING THE SITE. IT'S
CLEAR THAT THE CITY IS IMPACTED
BOTH FINANCIALLY AND
ENVIRONMENTALLY BY THE
OPERATIONS OF THE SEMITES
FACILITY. SO THE SETBACKS HAVE A
CONCRETE BATCH PLANT IN THE CITY
OF SHAFTER OR ONTARIO,
CALIFORNIA. NO. THEY JUST HAVE
AN OFFICE OPERATION. THE SHAFTER
OR ONTARIO DEAL WITH THE SAME
IMPACT AS SEMI VALLEY FROM
CEMEX'S PRESENCE IN AMERICA,
MUNITY NO. VALLEY WOULD GLADLY
TAKE THE IMPACT OF A SMALL
OFFICE BUILDING OVER THE IMPACTS
OF 140 DAILY TRUCK TRIPS. AND A
CONCRETE BATCH PLANT. DOES THE
CITY RECEIVE SALES TAXES. THE
CITY VALLEY RECEIVED SALES TAX
FROM THE OPERATIONS OF CEMEX TO
OFFSET THESE IMPACTS. NO. WHAT
WE RECEIVE IS A DROP OF WATER IN
THE OCEAN. STATE LAW PRECLUDES
MY ABILITY TO INFORM THE
COMMITTEE ON THE AMOUNT OF SALES
TAX REVENUE. THE CITY RECEIVES
HIMSELF CMAX IN SEMI VALLEY.
HOWEVER I CAN TELL YOU THAT THE
CUMULATIVE AMOUNT OF SALES TAX
REVENUE RECEIVED BY THE CITY
FROM 2008 TO THE PRESENT
REPRESENTS LESS THAN 3. THE
TOTAL SALES TAX REVENUE THE CITY
RECEIVED FROM THIS FACILITY FROM
THE TIME PERIOD OF 2003. WHEN
SIMEX BN UP BEGAN OPERATING IN
SEMI VALLEY THROUGH 2008. WHEN
THEY REDIRECTED THEIR SALES TAX
TO ANOTHER COMMUNITY.
UNFORTUNATELY THE DISTRIBUTION
OF SALES TAX IN CALIFORNIA
STEEPED IN HAVES AND HAVE NOTS.
THE HAVES ARE CITIES WITH
AUDIBLE AUTOMOTIVE DEALERS.
MAJOR RETAILERS SUCH AS COSTCO,
WALMART AND LOWE'S REGIONAL
MALLS, TRUCK STOPS AND FUEL
DEPOTS, ONLINE FULFILLMENT
CENTERS. AND APPARENTLY ORDER
DESKS. WITH RESPECT TO THE ORDER
DESK FOR SANDBAGS, SEMI VALLEY
IS NOT ALONE. CEMEX HAS 22
CONCRETE BATCH PLANTS IN
SOUTHERN CALIFORNIA. WELL, I
HAVE NOT QUERIED ALL 22. I KNOW
SEVERAL THAT ARE NOT RECEIVING
ANY SALES TAX REVENUE AT THE
RATE THAT'S COMMENSURATE WITH
THE SELL TAX BATCH PLANT
OPERATION. SIMEX WITH CEMEX. YOU
HAVE TWO CITIES THAT ARE ON THE
RECEIVING END OF SALES TAX
REVENUE GENERATED OUTSIDE THEIR
COMMUNITY. AND 22 CITIES THAT
ARE LOSING SALES TAX REVENUE.
YOU HAVE TO ENDURE THE NOISE
ARTICULATES AND THE
INFRASTRUCTURE DETERIORATION IN
THEIR COMMUNITY. THIS IS NOT A
NEW ISSUE. IN JANUARY OF 2007 IN
A JANUARY 27TH REPORT. THE
CALIFORNIA LEGISLATIVE ANALYST'S
OFFICE REVIEWED THE ALLOCATION
OF LOCAL SALES, TAX SALES, TAX
SHARING AGREEMENTS AND THE
INEQUITY ISSUES ENTRENCHED IN
THE DISTRIBUTION OF SALES TAX.
IN THAT REPORT. THE L. A S
OFFICE LOOKED DIRECTLY AT
CONCRETE BATCH PLANTS. BUT NOT
WITH CEMEX AND SEMI VALLEY AS
THE EXAMPLE. BUT WITH
ROBERTSON'S READY MIX AND THE
CITY OF CORONA IN THIS EXAMPLE,
THE CITY OF CORONA RECEIVED
SALES TAX FROM 20 ROBERTSON
BATCH PLANTS LOCATED IN
NEIGHBORING COMMUNITIES.
ACCORDING TO THE REPORT. SEVERAL
LEGISLATIVE MEASURES WERE
INTRODUCED. THAT WOULD HAVE
ALLOCATED THE SALES TAX BACK TO
THE LOCATION OF THE BATCH PLANTS
FROM WHICH THE CONCRETE
DELIVERIES WERE MADE.
UNFORTUNATELY NONE OF THE
LEGISLATIVE MEASURES PASSED. I
NOTED EARLIER THAT THERE WERE 22
CITIES, LOSING SALES TAX AND TWO
CITIES RECEIVING SALES TAX AND
SOUTHERN CALIFORNIA WITH REGARD
TO SEE MAX WHEN YOU LOOK
STATEWIDE AND CONSIDER ALL THE
BATCH PLANS THERE ARE FAR MORE
CITIES LOSING SALES TAX REVENUE
FROM BATCH PLANTS IN THEIR
COMMUNITIES THAN THERE ARE
CITIES RECEIVING SALES TAX
REVENUE. CEMEX HAS OVER 40 BATCH
PLANTS IN CALIFORNIA.
ROBERTSON'S HAS ALMOST 60. BOTH
COMPANIES HAVE PLANTS IN SEMI
VALLEY. WE DO UNDERSTAND CDT FAA
REGULATIONS. WE ALSO UNDERSTAND
THAT THE CITY RECEIVING THE
SALES TAX FROM OUR BATCH PLANTS
ARE PLAYING BY THE RULES. SO
WHAT IS OUR ASK? WE BELIEVE THAT
THE WHERE THE COMMUNITY IS BEING
NEGATIVELY IMPACTED BY THE
OPERATIONS OF A SALES TAX
PRODUCING BUSINESS, SUCH AS A
CONCRETE BATCH PLANT. THE SALES
TAX FROM THAT BUSINESS SHOULD BE
DISTRIBUTED TO THE COMMUNITY
WHERE IT IS LOCATED. WE ARE
ASKING FOR A LEGISLATIVE CHANGE.
WE'RE ASKING THE LEGISLATURE TO
REVISIT THIS ISSUE. AS AN OFFSET
TO THE ENVIRONMENTAL
INFRASTRUCTURE AND PUBLIC
SERVICE IMPACTS UPON OUR
COMMUNITY. WE'RE A BATCH PLANT
IS LOCATED, ALL SALES SHOULD BE
DIRECTED TO THE COMMUNITY WHERE
THE BOT BATCH PLANT IS LOCATED.
ON BEHALF OF THE CITY, SIMI
VALLEY AND THE OTHER IMPACTED
COMMUNITIES. I WANT TO THANK THE
COMMITTEE FOR YOUR TIME. AND
THIS AND THIS OPPORTUNITY TO
ADDRESS THE ISSUE AND WE HOPE
THAT THE LEGISLATURE LOOKS AT A
CHANGE. THANK YOU. THANK YOU.
WELL UH, MR GABLER, AS YOU'VE
HEARD WE DID LOOK AT A CHANGE IN
THE GOVERNOR VETOED. UM, SO IT'S
A IT'S A WHOLE PROCESS WE HAVE
TO GET THROUGH. DO YOU HAVE AN
IDEA WHAT HAPPENED WITH THE
PREVIOUS BILLS AND 2009? MY
UNDERSTANDING IS THAT THEY'RE
JUST THERE WAS A DIFFICULTY
DEALING WITH THE HAVES AND HAVE
NOTS AND THE WINNERS AND LOSERS
AND THAT WAS PART OF THE AMONG
THEM. MAJOR CONCERN. I DON'T
WANT TO SPEAK FOR THE
LEGISLATURE, BUT I THINK THAT
WAS PART OF THE MAJOR CONCERN.
AND THEN JUST TO BE CLEAR, YOU
SAID YOUR SALES TAX REVENUE
DROPPED 95% ONCE THESE
AGREEMENTS WERE IN PLACE, AND
YOU HAVE SPENT $8 MILLION ON
ROADS SINCE THAT TIME IS THAT
CORRECT? UM, HAVE YOU. I KNOW
THAT THERE IS AN EFFORT RIGHT
NOW FOR THE LEAGUE TO, UM, TRY
TO ADDRESS SOME OF THESE ISSUES.
OBVIOUSLY THERE ARE CITIES ON
BOTH SIDES OF EVERY ISSUE, BUT
CERTAINLY I HAVE A LOT OF
SYMPATHY FOR THESE CITIES THAT
HAVE. I MEAN, THIS SEEMS SORT OF
OBVIOUS YOU WANNA WANT TO
ADDRESS THE THESE BIG IMPACTS TO
CITIES? HAVE YOU BEEN IN
DISCUSSIONS WITH THE LEAGUE? AND
DO YOU HAVE SOME IDEA ON WHAT
THEY'RE WHAT? THEY'RE HOW
THEY'RE ADDRESSING OR PROPOSED
TO ADDRESS THIS ISSUE HAD
CONVERSATIONS WITH THE CITY
MANAGER FROM VENTURA COUNTY
THAT'S REPRESENTING US ON THE ON
THE LEAGUE'S COMMITTEE AND HAD
THAT CONVERSATION WITH HIM, AND
HE'S AWARE OF WHAT OUR ISSUE IS.
AND I TRUST THESE BROUGHT IT
BEFORE BEFORE THE COMMITTEE.
OKAY, AND WE ARE GOING TO HAVE
PUBLIC SPEAKERS. UM AFTER OUR
OUR LAST SPEAKER, AND AFTER WE
GET THROUGH ALL THE QUESTIONS, I
KNOW WE HAVE A REPRESENTATIVE
HERE FROM THE LEAGUE AND, UM, WE
HAVE. I'M HOPING THAT EVERYBODY
HAS SOMETHING TO, UH EVERYBODY
THAT'S HERE. THAT HAS SOMETHING
TO SAY. AND KNOWS ABOUT THIS
ISSUE. MAYBE YOU CAN ADDRESS IT.
BUT OBVIOUSLY KNOWS WHAT THE
FIRST TWO SPEAKERS VERY
COMPLICATED ISSUE. AND, UM,
THANK YOU REALLY APPRECIATE
AGAIN YOUR TIME. AND FINALLY, WE
ARE GOING TO HEAR FROM DAMIAN, A
RULER, THE CITY MANAGER OF THE
CITY OF PLACENTA. THANK YOU FOR
JOINING US. YES GOOD MORNING,
AND THANK YOU. HONORABLE CHAIR
IRWIN AND MEMBERS OF THE
COMMITTEE WHO ARE ALSO
PARTICIPATING, REMOTELY AND
STAFF. UM, AS YOU INDICATED. MY
NAME IS DAMIAN. A RULE AND I
HAVE THE HONOR OF REPRESENTING
THE CITY OF PLACENTIA, LOCATED
IN ORANGE COUNTY. I WAS ASKED TO
COME AND SPEAK WITH YOU TODAY BY
YOUR STAFF AND THE LEGAL
CALIFORNIA CITIES TO OFFER SOME
INSIGHT AND COMMENTS RELATED TO
THE CHALLENGING AND OFTEN
COMPLICATED ISSUES SURROUNDING
BRADLEY BYRNE'S LOCAL SALES AND
USE TAX OR AS WE REFER TO IT S U
T. AND HOW IT MAY BE IMPACTING
PLACENTA AND OTHER COMMUNITIES
THROUGHOUT THE STATE. IN
PREPARATION FOR TODAY AND TO
UNDERSTAND THE VARIOUS ARGUMENTS
ON SALES TAX AGREEMENTS FROM
MULTIPLE PERSPECTIVES. I SPOKEN
WITH SEVERAL OF THE CITY
MANAGERS THAT REPRESENT THE CITY
MANAGER SALES TAX WORKING GROUP.
THAT HAS COME UP WITH SOME
POLICY RECOMMENDATIONS. THESE
ARE FROM LARGE TO MEDIUM SIZED
CITIES AND SMALLER WITH LITTLE
TO NO RETAIL. SO I BELIEVE I'VE
HEARD ALL THE PROS AND CONS ON
THE ARGUMENTS RELATED TO THE
SUBJECT. BEFORE I COMMENT ON
SALES AND USE TAX. I BELIEVE
IT'S IMPORTANT, THOUGH, TO OFFER
A LITTLE BIT OF BACKGROUND ON
PLACENTA AND SIMILAR SIZED
CITIES IN RELATION TO THE
SUBJECT MATTER. AS YOU MAY KNOW,
THERE ARE 482 MUNICIPALITIES IN
CALIFORNIA SPREAD ACROSS 58
DIFFERENT COUNTIES OF THOSE
CITIES 305 OR OVER 63% OR SOME
WOULD SAY NEARLY TWO THIRDS HAVE
A POPULATION OF APPROXIMATELY
50,000 OR LESS. PLACENTAS
POPULATION IS APPROXIMATELY
50,000 AND WE ARE ONE OF THE
OLDEST CITIES IN ORANGE COUNTY.
WE'RE ABOUT TO CELEBRATE OUR
CENTENNIAL AND ALSO NEARLY BUILT
OUT WITH LIMITED OPPORTUNITIES
FOR INDUSTRIAL AND RETAIL
GROWTH. LIKE MANY CITIES, WE ARE
PRIMARILY A BEDROOM COMMUNITY
WITH LIMITED COMMERCIAL, RETAIL,
INDUSTRIAL AND HOTEL USES. WELL,
WE HAVE COMMERCIAL RETAIL. THESE
AREAS ARE RELATIVELY SMALL
RETAIL CENTERS LIKE MOST
COMMUNITIES, AND WE DON'T HAVE
WHAT I REFERRED TO AS A RETAIL
DESTINATION DRIVER, SUCH AS A
MALL OR OUTDOOR SHOPPING
DISTRICT THAT CAN DRAW A LARGE
AMOUNT OF RETAIL SALES FROM
SURROUNDING CITIES, RESIDENTS. I
WOULD ALSO LIKE TO POINT OUT
THAT WE ARE A FULL SERVICE CITY
WITH THEIR OWN POLICE FIRE AND
FULL SUITE OF OTHER CITY
DEPARTMENTS DESIGNED TO ADDRESS
OUR COMMUNITIES NEEDS, WHICH CAN
BE DIFFICULT TO PROVIDE A
NORDSTROM LEVEL OF CUSTOMER
SERVICE BASED UPON THE CURRENT
SALES TAX LANDSCAPE. I SHARE ALL
THIS WITH YOU TO SIMPLY INDICATE
THAT I BELIEVE PLACENTA IS A
GOOD REPRESENTATION AND
BAROMETER OF MANY COMMUNITIES
THROUGHOUT CALIFORNIA, WHO MAY
NOT HAVE A LARGE RETAIL
DESTINATION, HOTELS OR OTHER
USES THAT MAY GENERATE
ADDITIONAL REVENUE THROUGH THE
PURPOSEFUL FISCAL IZATION OF
LAND USE, AND THE SAME TIME HAS
VERY LIMITED OPPORTUNITY TO TAKE
ADVANTAGE OF FUTURE LAND USE
OPPORTUNITIES. THERE ARE TWO
AREAS THAT I BELIEVE ARE
IMPORTANT TO REFERENCE WHEN IT
COMES TO SALES AND USE TAXES AND
WHY I BELIEVE TODAY YOU HAVE
HEARD BOTH SIDES OF THE COIN. I
HOPE TO OFFER A BALANCED
PERSPECTIVE IN VARIOUS AREAS
THAT WILL HOPEFULLY BECOME SALES
TAX REFORM SOMEDAY. I DON'T
THINK THAT ANYONE WHO ARGUE THAT
THE CURRENT SYSTEM OF ALLOCATION
TYPICALLY FAVORS LESS DEVELOPED
CITIES WHO HAVE ROOM TO ADD
LARGE WAREHOUSES OR DISTRIBUTION
CENTERS OR IN SOME CASES, AS YOU
HEARD FROM THE PRIOR SPEAKER,
SALES SALES OFFICES. OFTEN THESE
CITIES HAVE INCORPORATED OTHER
FUNDING MECHANISMS INTO MASTER
PLANNING FOR THESE DEVELOPMENTS,
SUCH AS DEVELOPER IMPACT FEES,
MULTIPLE COMMUNITY FACILITIES
DISTRICTS, WHICH ARE DESIGNED TO
BUILD AND MAINTAIN THE
INFRASTRUCTURE FROM ITS
INCEPTION AND SUPPORT OPERATING
EXPENSES FOR THAT INFRASTRUCTURE
THAT COMES WITH THESE NEW
DEVELOPMENTS, WHEREAS OLDER,
MORE ESTABLISHED COMMUNITIES
LIKE OURS DON'T HAVE THE ABILITY
TO PAY FOR A LARGE DEVELOPMENTS.
TO PAY TO MAINTAIN
INFRASTRUCTURE, LEAVING THEM
MORE RELY UPON BASIC SALES TAX
AND THE CURRENT LANDSCAPE. AND
AS WE'VE HEARD FROM SOME
SPEAKERS STAY SALES TAX CAN BE
TAKEN AWAY FROM MY COMMUNITY
WITHOUT THE CITY, EVEN KNOWING
IT OR HOW THEY MAY BE NEGATIVELY
AFFECTED BY SUCH AN AGREEMENT.
OFTEN THE ONLY ROBUST REPORTING
THAT OCCURS IS HOW SUCH AN
AGREEMENT WILL AFFECT THE LOCAL
AGENCY ENTERING INTO ONE VIA
JOBS, PROPERTY TAX INCREASES
SALES TAX INCREASES, ETCETERA.
AS A CITY. WE ARE ABSOLUTELY
IMPACTED BY SALES TAX
AGREEMENTS. HOWEVER WE OFTEN
KNOW WE'RE HERE VERY LITTLE
ABOUT THEM AS THEY ARE NOT VERY
WELL PUBLISHED OR NOTICED,
THEREFORE, ATTEMPTS TO PUBLICIZE
THESE TYPES OF TRANSACTIONS WE
BELIEVE ARE IMPORTANT TO ENSURE
THAT THERE IS MORE TRANSPARENCY
IN THIS ARENA. ONE CONSIDERATION
THAT MAYBE TO CREATE AN IMPACT
REPORT THAT WOULD BE PREPARED BY
CDT ESTÁ THAT WOULD DEMONSTRATE
HOW THE AGREEMENT WOULD IMPACT
CITIES THROUGHOUT CALIFORNIA AND
NOTIFY THOSE CITIES IN ADVANCE
OF ENTERING INTO SUCH AN
AGREEMENT AND ESTABLISHING A
WAITING PERIOD. I RECOGNIZE THAT
THESE POLICY REFORMS MAY NOT BE
POPULAR EVEN WITH SOME OF MY
COLLEAGUES BUT MAY BE WORTH
CONSIDERING. SIMILAR TYPES OF
FEATURES CAN OFTEN BE FOUND IN
SEQUEL LAW TODAY WHEN IT
DEVELOPMENT MAY HAVE AN IMPACT
TO AN ADJACENT LAND USE OR A
CITY AND HOW, IN SOME CASES,
DEPENDING ON THE IMPACT, OTHER
PARTIES ARE LEGALLY OBLIGATED TO
BE NOTIFIED. THIS IS EVEN MORE
NOTABLE WHEN CONSIDERING THAT
THESE TYPES OF AGREEMENTS MADE
DISPROPORTIONATELY BENEFIT MAYBE
30 TO 40 COMMUNITIES OR, IN
OTHER WORDS, 8% OF THE TOTAL
CITIES THROUGHOUT THE STATE OF
CALIFORNIA, NOT TO MENTION THE
PRIVATE SECTOR BENEFICIARIES.
AND WHILE PLACENTA BELIEVES THAT
CERTAINLY WE LIVE IN A
CAPITALIST SOCIETY CAPITALISM
WITHOUT RULES OR CHECKS AND
BALANCES CAN BE JUST AS
PROBLEMATIC AND THEREFORE WE
BELIEVE REASONABLE CAPITALISM
SHOULD ALWAYS BE THE PREFERRED
APPROACH. ULTIMATELY PLACENTA
DOES SUPPORT ARGUMENTS ON BOTH
SIDES. HOWEVER POLICY REFORM IS
DEFINITIVELY NEEDED TO
ACKNOWLEDGE AND PROTECT CITIES
THAT WOULD BE AFFECTED BOTH
POSITIVELY AND NEGATIVELY FROM
FUTURE SALES TAX AGREEMENTS. NOW
THAT I'VE SHARED SOME GENERAL
THOUGHTS ON SALES TAX
AGREEMENTS, I WOULD LIKE I WOULD
LIKE TO POINT OUT SOMETHING THAT
HASN'T BEEN REALLY STATED TODAY
THAT COMPOUNDS THE SITUATION
FURTHER TO CITIES SUCH AS OURS,
AND THAT IS IN RELATION TO THE
USE TAX PORTION OF BRADLEY BURNS
WHEN IT COMES TO THESE
AGREEMENTS. PLACENTA BELIEVES
THAT GRANTING CERTAIN AGENCIES
CREDIT IN THE COUNTY POOL FOR
DIRECT ALLOCATIONS THAT ARE THEN
REBATED BACK TO PRIVATE
COMPANIES CREATES AN UNFAIR
PLAYING FIELD FOR AGENCIES
WITHOUT THE SALES TAX
AGREEMENTS. IT DOES THIS BY
OVERSTATING THE AMOUNT OF NET
SALES TAX CITIES WITH AGREEMENTS
ARE RECEIVING, THUS SUPER
INFLATING THEIR PROGRAM TO SHARE
OF THE POOL AND EARNING THEM
ADDITIONAL DOLLARS AT THE
EXPENSE OF OTHER AGENCIES WITHIN
THAT POOL. AND AS YOU MAY KNOW,
SMALLER BEDROOM COMMUNITIES ARE
ALREADY PENALIZED BY THE COUNTY.
POOR METHODOLOGY OF DISTRIBUTION
MORE TO COME ON THAT IN A
MOMENT, BUT WHEN YOU FACTOR IN
THESE AGREEMENTS USING THOSE
TRANSACTIONS TO ESSENTIALLY
DOUBLED DOWN THE SALES TAX FOR A
CITY THAT ALREADY BENEFITS FROM
THE ECONOMIC IMPACTS THESE
AGREEMENTS INITIALLY CREATE IS,
AS SOME WOULD SAY, TRULY
PROBLEMATIC. I WILL NOT GO ANY
FURTHER INTO THE PROS AND CONS.
ARGUMENTS RELATED TO SALES TAX
AGREEMENTS. AS MUCH OF THOSE
ARGUMENTS HAVE BEEN SHARED. I
WILL SIMPLY STATE THAT WHILE
PLACENTA GENERALLY DOESN'T LIKE
THESE AGREEMENTS WE DO
UNDERSTAND THAT THERE IS A NEED
FOR SOME CITIES TO HAVE AN
ECONOMIC DEVELOPMENT TOOL TO
INCENTIVIZE LARGER BUSINESSES TO
COME TO THEIR COMMUNITY, THUS
CREATING A REVENUE STREAM JOBS
AND DISTRIBUTION CENTERS NEEDED
TO SUPPORT ONLINE SALES.
THEREFORE IT SHOULD BE NOTED
THAT PLACENTA SUPPORTS THE
EQUITY STATEMENT AND SERIES OF
POLICY RECOMMENDATIONS ON SALES
TAX AGREEMENTS PUT FORTH BY THE
BIPARTISAN CITY MANAGER SALES
TAX WORKING GROUP. WHILE WE
SUPPORT THE CITY MANAGER,
WORKING GROUPS, BIPARTISAN
RECOMMENDATIONS ON SALES TAX
AGREEMENTS, PLACENTA AND I WOULD
IMAGINE MANY CITIES THAT ARE
SIMILAR TO OURS BELIEVE THAT
EVEN MORE REFORM IS NEEDED TO
ADDRESS THE COUNTY POOL. SALES
TAX DISTRIBUTION SYSTEM, WHICH
WE BELIEVE IS A MUCH LARGER
PROBLEM. AS YOU MAY KNOW THE
COUNTY POOL METHODOLOGY OF
ALLOCATING COMMUNITIES ONLINE
SALES TAX SIGNIFICANTLY AND
NEGATIVELY AFFECTS MANY
COMMUNITIES LIKE PLACENTA
THROUGHOUT THE STATE. THIS WAS
SHOWN, IN EXAMPLE THREE THAT
DIRECTOR MADURO'S MENTIONED
EARLIER. THIS EXAMPLE IS THE
LARGEST GROWING SITUATION FACING
CITIES IN OUR STATE, AS WE HAVE
HAD A MULTIBILLION DOLLAR GROWTH
IN E COMMERCE SALES AND POST
COVID CONSUMERS HABITS HAVE
CONTINUED TO ACCELERATE THIS
TYPE OF SITUATION FACING CITIES.
I WOULD ALSO INDICATE THAT THE
ARGUMENTS THAT SUPPORT SALES TAX
AGREEMENTS, IN MY OPINION DO NOT
NECESSARILY SUPPORT THE SAME
ARGUMENTS BEING MADE FOR KEEPING
THE ANTIQUATED SYSTEM OF THE
COUNTY POOL. AS A PERFECT
EXAMPLE MANY WEALTHY CITIES IN
ORANGE COUNTY THAT HAVE A
VARIETY OF DESTINATIONS AND
ALTERNATIVE REVENUE SOURCES ARE
RECEIVING WHAT WOULD NORMALLY BE
PLACENTAS ONLINE SALES AND USE
TAX. AND PLACENTIA. WE HAVE HAD
TO EDUCATE OUR COMMUNITY ABOUT
THE COUNTY POOL AND HOW
DYSFUNCTIONAL AND ANTIQUATED WE
BELIEVE THE SYSTEM IS. WE HAVE
HAD ALSO ILLUSTRATE HOW THE
COUNTY PULL FORMULA INHERENTLY
DISCRIMINATES AGAINST SMALLER
AND MEDIUM SIZED BEDROOM
COMMUNITIES THAT MAKE UP A LARGE
PORTION OF CITIES THROUGHOUT THE
STATE. I'VE HAD TO PRESENT MANY
EXAMPLES OVER THE YEARS THAT
HAVE DEMONSTRATED THAT DESPITE
OUR RESIDENTS, PURCHASING ITEMS
ONLINE AND THAT ONLINE PURCHASE,
OUR PURCHASES ARE GROWING
SIGNIFICANTLY. WE ARE NOT
BENEFITING LIKE ONE WOULD THINK
WHEN THE RESIDENTS BELIEVE THEY
ARE QUOTE STILL SPENDING IN THE
CITY. THE CURRENT COUNTY POOL
SYSTEM DISPROPORTIONATELY
BENEFITS THOSE CITIES THAT HAVE
LARGE SCALE RETAIL DESTINATIONS,
THE RACK UP A LARGER TOTAL
NUMBER OF PROPERTY TRANSACTIONS
WITHIN A PARTICULAR COUNTY,
WHICH IN TURN AS DIRECTOR
MADURO'S HAS INDICATED IS
FACTORED IN ON HOW ONLINE SALES
AND USE TAXES DISTRIBUTED. MANY
IF NOT ALL OF THESE DESTINATIONS
HAVE BEEN DEVELOPED USING
UTILIZING THOSE CITIES, FORMER
REDEVELOPMENT AGENCIES WHILE
RETAIL DESTINATIONS ARE NEEDED
AND WILL CONTINUE TO BE SO
SOMETHING MUST BE CHANGED WITH
REGARD TO THE IDEA THAT NEARLY
ALL OR A LARGE PORTION OF
PLACENTAS ONLINE SALES TAX IS
GOING TO A MUCH WEALTHIER
COMMUNITY THAT MAY NOT HAVE TO
SERVE A DISADVANTAGED PORTION OF
THEIR COMMUNITY LIKE WE DO.
THEREFORE WE BELIEVE THAT REFORM
IS NEEDED IN THE AREA OF THE
COUNTY POOL, BOTH FOR ONLINE
SALES WITHIN THE STATE AND
ONLINE SALES THAT ARE BEING
DELIVERED FROM OUT OF STATE.
THERE ARE A VARIETY OF IDEAS OUT
THERE THAT WOULD FIX THIS
EQUATION TO REMOVE A LARGE
PORTION OF EVERY ONLINE SALES
TAX DOLLARS GOING TO ONE
COMMUNITY OVER ANOTHER. THE AGE
OLD SAYING THAT TIME HEALS ALL
WOUNDS IS APPROPRIATELY
REFERENCED HERE AS AN EXAMPLE.
ONE POLICY CONSIDERATION. MAYBE
WHERE IN THE FORMULA COULD BE
CHANGED PROSPECTIVELY TO A 9010
THAN A SUBSEQUENT YEAR? 85 1580
20 SO ON THAT THIS WOULD
EVENTUALLY ALLOCATE THE
APPROPRIATE AMOUNT OF ONLINE
SALES TO THE LOCATION IN WHICH
IS BEING DELIVERED AND WOULD
EVEN THE PLAYING FIELD IN THIS
AREA AND ACKNOWLEDGE THAT THESE
LARGE TRUCKS MAKING LAST MILE
DELIVERIES AND OUR BEDROOM
COMMUNITIES ARE CREATING AN
IMPACT. HOWEVER WITH THESE
CHANGES, WE WOULD NOW HAVE A
SUSTAINABLE REVENUE SOURCE TO
ADDRESS THOSE THOSE ROAD IMPACTS
AS WELL AS OTHER IMPACTS AS IT
STANDS TODAY. WE DON'T HAVE
THOSE REVENUES. AND IT CERTAINLY
CREATES AN IMPACT AND PLACENTAS
CASE WE HAD AT ONE POINT IN
TIME. UNTIL WE MADE SOME
CHANGES. WE HAD THE SECOND WORST
ROADS IN THE COUNTY, SO TO
SPEAK. AND SO, UM, THAT WAS
COMPOUNDED BY THE FACT OF THESE
ONLINE SALES. NOW YOU MAY ASK
RATHER THAN JUST COMPLAIN. WHAT
DOES THE CITY DONE WITH IT
WITHIN ITS CONTROL TO ADDRESS
THESE IMPACTS FROM THIS
ANTIQUATED BRADLEY BYRNE SALES
TAX ALLOCATION. WE HAVE DONE A
LOT TO CREATE OUR OWN DESTINY,
AND THESE ACTIONS INCLUDE
PASSING A 1. TRANSACTIONS AND
USE TAX THAT'S REFERRED TO AS
MEASURE VIEW IN NOVEMBER, 2018.
WHILE IT IS ESSENTIALLY THE SAME
1% AS THE BRADLEY BYRNE SALES,
TAX, THE ALLOCATION OF
TRANSACTIONS AND USE TAXES ARE
VASTLY DIFFERENT IN CALIFORNIA
AND ARE MORE FAVORABLE FOR
BEDROOM CITIES LIKE PLACENTA AS
THE ENTIRE 1% IS ALLOCATED TO
THE CITY OF PLACENTA AND IS NOT
DISTRIBUTED TO OTHER AGENCIES
VIA THE COUNTY OR STATE POOL. IN
ADDITION, AUTOMOBILES PURCHASED
BY PLACENTAS RESIDENTS WE ONLY
HAVE TWO CAR DEALERSHIPS FOR
CONTACTS THAT ARE PURCHASED
OUTSIDE THE CITY ARE SUBJECT TO
THE 1% TRANSACTIONS TAX AT THE
TIME OF PURCHASE, REGARDLESS OF
WHERE THE VEHICLES PURCHASED
FROM THE CITY WHERE THE
DEALERSHIP RESIDES, COLLECTS THE
BRADLEY BYRNE'S TAX, BUT
PLACENTA RECOVERS THE FULL 1%
TRANSACTION TO USE TAX. FOR
REFERENCE 25% OF PLACENTAS
MEASURED YOU. REVENUE COMES FROM
THE SALE OF AUTOMOBILES DESPITE
ONLY HAVING TWO DEALERSHIPS IN
THE CITY. THIS TO YOU. T
LITERALLY SAVED THE CITY DURING
THE PANDEMIC, WHERE WE SAW ALL
TIME INCREASE IN ONLINE
PURCHASES AND WERE CONSEQUENTLY
ABLE TO RECEIVE THE FULL
ADDITIONAL 1% HAD WE NOT PAST IT
IN 2018 AND SUBSEQUENTLY DEALT
WITH THE PANDEMIC. I AM NOT
CERTAIN WHERE THE CITY WOULD BE
FISCALLY TODAY. IN ADDITION, THE
CITY HAS BEEN PROACTIVE IN
DEVELOPING SEE FDS DEVELOPER
IMPACT. THESE UH, CREATING A
VARIETY OF NEW MASTER PLANNING
AREAS. AND WE HAVE COMPLETED
OTHER CREATIVE ECONOMIC
DEVELOPMENT PROJECTS SUCH AS
PARTNERING ON ELECTRONIC
BILLBOARDS ENTERING INTO GAS
STATION SALES AGREEMENTS. NOT
SALES TAX SHARING AGREEMENTS FOR
THE RECORD, SIMPLY GETTING A
PORTION OF THE SALE THAT OCCURS
AS WELL AS CREATING AND
ESTABLISHING THE FIRST ENHANCED
INFRASTRUCTURE FINANCING
DISTRICT IN THE STATE BETWEEN
THE COUNTY AND THE CITY. WHILE
ALL OF THESE THINGS HAVE REAPED
DIVIDENDS AND HAVE PUT US IN A
MUCH BETTER FINANCIAL POSITION,
THESE MECHANISMS, PARTICULARLY
TRANSACTIONS USE TAX ARE NO
MAGIC BULLET. NOT EVERY
COMMUNITY HAS TO POLITICAL
FORTITUDE, PEDIGREE AND ABILITY
TO EDUCATE A LARGE PORTION OF
ITS COMMUNITY TO PASS A TWO BY
50% MARGIN. THIS PROCESS, HAVING
GONE THROUGH IT, AND AT LEAST
NOW TWO CITIES IS ARDUOUS AND
DIFFICULT, PARTICULARLY IN
COMMUNITIES THAT ARE MORE
CONSERVATIVE. JUST BEFORE IT
CLOSED. I WOULD LIKE TO POINT
OUT ONE THING THAT IS NOT OFTEN
THOUGHT ABOUT IN THESE
CONVERSATIONS AND YOU HEARD CITY
ATTORNEY COLON TO TOUCH UPON IT.
BRIEFLY AS YOU MAY KNOW, STATE
HCG, THE LEGISLATURE AND THE
GOVERNOR'S OFFICE ARE ALL
PUSHING FOR MORE HOUSING IN THE
STATE OF CALIFORNIA. WELL, NO
ONE IS TALKING ABOUT, HOWEVER,
IS THAT IF YOU HAVE SOME POLICY
REFORM AND HOW SALES TAXES
ALLOCATED AND APPROPRIATED IN
THE FUTURE TO THE LOCATION OF
HOMES, APARTMENTS OR ANY OTHER
TYPE OF HOUSING UNIT. AS OPPOSED
TO THE COUNTY POOL. YOU MAY SEE
LESS OF AN INCENTIVE FOR CITIES
TO PUSH FOR SO MUCH COMMERCIAL,
RETAIL OR FISCAL IZATION OF LAND
USE. IN OTHER WORDS, AS ONLINE
SALES CONTINUE TO INCREASE, AND
IF THERE IS A CHANGE IN THE LAW
OR AN ADMINISTRATIVE FIX TO THE
CURRENT COUNTY POOL TO APPLY
SALES TAX TO THE DESTINATION
EXACTLY THE SAME WAY TO PLACE
FROM A TRANSACTIONS AND USE TAX,
YOU WOULD HAVE MORE CITIES
INTERESTED IN CREATING MORE
HOUSING AS THEY WOULDN'T BE
IMPACTED AS MUCH AND YOU CAN
ESSENTIALLY APPLY THE OLD ADAGE
OF KILLING TWO BIRDS WITH ONE
STONE SIMPLY VIA SALES TAX
REFORM. TO WRAP UP. I WOULD SAY
THAT BIPARTISAN IMPROVEMENT IS
DEFINITELY NEEDED ON SALES TAX
AGREEMENTS, AND WE SUPPORT THE
COMMENTS AND POLICY
RECOMMENDATIONS FROM THE CITY
MANAGER WORKING GROUP. IN
ADDITION, WE BELIEVE THAT REFORM
IS ABSOLUTELY NEEDED ON THE
COUNTY POOL. BASED UPON ALL THE
ARGUMENTS MENTIONED EARLIER AND
TO NOT DISPROPORTIONATELY
BENEFIT COMMUNITIES THAT ARE
RECEIVING OTHER COMMUNITIES,
SALES AND USE TAX SIMPLY BECAUSE
THE PURCHASE WAS MADE ONLINE. IN
CLOSING. I THANK YOU FOR ALL OF
YOUR TIME AND EFFORTS TO LOOK
INTO THESE VERY IMPORTANT
MATTERS AND OUR CITY AND MANY
OTHERS THROUGHOUT THE STATE.
HOPEFULLY ONE DAY WE'LL SEE SOME
REFORMS THAT WILL STAND TO
BENEFIT EVERYONE AND A MORE
REASONABLE AND BALANCED
APPROACH. THANK YOU. WELL, THAT
WAS VERY COMPREHENSIVE. THANK
YOU. CAN YOU FIRST TALK A LITTLE
BIT ABOUT HOW YOU WERE ABLE TO
CONVINCE YOUR RESIDENTS TO PASS?
THEY MØT. YES SO WE ESTABLISHED
A, UH, CITIZENS FISCAL
SUSTAINABILITY TASK FORCE
COMPRISED OF RESIDENTS THAT
REALLY KIND OF SPAN THE FULL
SPECTRUM IN OUR COMMUNITY FROM
THOSE THAT WERE VERY
CONSERVATIVE TO THOSE THAT WERE
MAYBE NOT SO CONSERVATIVE. AND
UM, REALLY TOOK ABOUT TWO YEARS
TO EDUCATE THEM HAD A SERIES OF
BROWN ACT MEETINGS WERE
REPUBLISHED AND NOTICED, AND WE
HAD SOME COMMITTEE MEMBERS SHOW
UP AND DURING ULTIMATELY, AT THE
END OF THAT TWO YEAR PROCESS BY
GOING THROUGH THAT, WHICH WAS A
LOT OF WORK BY STAFF ON TOP OF
OUR COUNCIL MEETINGS AND OTHER
COMMISSION COMMITTEE MEETINGS
THAT WE'RE OBLIGATED TO DO, WE
WERE ABLE TO ULTIMATELY RECEIVE
A RECOMMENDATION FROM THEM TO
THE CITY COUNCIL TO UNANIMOUSLY
SUPPORT PLACING THE MEASURE ON
THE BALLOT FOR 2018. YOU WERE
TALKING ABOUT REFORM OF THE
COUNTY POOL. AND WE'VE HEARD YOU
KNOW, WITH WITH EVERYTHING THAT
WE'RE TALKING ABOUT. THERE'S
OBVIOUSLY WINNERS AND LOSERS. UM
ARE YOU PART OF THAT CITY
MANAGERS WORKING GROUP AND HAS
THERE BEEN SPECIFICALLY A
DISCUSSION ABOUT REFORMING HOW
THAT COUNTY PULLS ALLOCATED? I
AM NOT PART OF THE GROUP. I HAVE
SPOKEN WITH THE CHAIR AND SOME
OF THE LEADERSHIP FROM THAT
GROUP ON BOTH SIDES OF THE COIN.
BOTH MY COLLEAGUE SCOTT ECHO THE
CITY OF ONTARIO, AS WELL AS JOHN
GILSON OUT OF RANCHO CUCAMONGA.
AND UM THERE OF COURSE. TO
ORANGE-COUNTY-REGISTER-TOO-SOON-COUNTY-VOTE-CENTERS
. THEY HAVE NOT YET ADDRESSED
THE COUNTY POOL. AND THE COUNTY
POOL. THEY'VE A FEW OF THEM HAVE
PREVIEWED TO ME WILL BE A VERY
DIFFICULT CONVERSATION. I THINK
FOR ALL OF THEM AS WELL, UH, AS
AS SOME THAT HAVE THOSE THOSE
RETAIL DESTINATION STAND TO
BENEFIT. UM AND SOME OTHERS
OBVIOUSLY LOSE QUITE A BIT. OKAY
AND THEN I'M I WAS TRYING TO
UNDERSTAND WHEN YOU WERE TALKING
ABOUT THE REFORM THE GOING FROM
90 1080 20. WHAT EXACTLY WAS
EACH SIDE OF THAT? SO
ESSENTIALLY WHEN YOU HAVE A
SITUATION WHERE A USE TAXES
ALLOCATED AND DETERMINED TO BE
ALLOCATED UNDER THE CURRENT
FORMULA CURRENT LAW. FROM AN
ONLINE SALE GOES INTO THE COUNTY
POOL AND IS DISTRIBUTED ONE WAY
TO MAYBE LOOK AT THAT. UNPACK
THAT A LITTLE BIT MORE IS TO
SAY. WELL, IF WE CAN DETERMINE
THIS FORMULA AND MAYBE REDUCE
IT. IT'S DIFFICULT CHANGES BY BY
BY QUARTER. BY MONTH, EVEN BUT
IF THERE'S A WAY TO UNPACK THAT
A LITTLE BIT MORE SO THAT THOSE
COMMUNITIES THAT MAY CHALLENGE
REFORM BECAUSE THEY'RE
DISPROPORTIONATELY BEING
BENEFITED BY THE COUNTY POOL,
NOT JUST THE SALES TAX THEY'RE
GETTING FROM THEIR DESTINATION,
BUT ALSO NOW THE COUNTY POOL. UM
THEN MAYBE YOU HAVE A SLOW
UNWIND WITH RESPECT TO THAT.
THAT WOULD REQUIRE A LOT OF
ANALYSIS WITH CTF A, BUT I
BELIEVE THERE IS A WAY TO DO IT.
AND IF YOU DO IT OVER A PERIOD
OF TIME CITIES CAN ADAPT AND
BUDGET APPROPRIATELY, JUST AS
THEY DID WHEN OUR DA'S WERE
DISSOLVED. ALL RIGHT. AND THEN
MAYBE FOR THE FOR EVERYBODY. YOU
YOU DID MENTION THAT THE CURRENT
, UM, TAX ENVIRONMENT DOESN'T
FAVOR RESIDENTIAL. UM DO YOU
HAVE SUGGESTIONS ON ON REFORMS
AND DO EITHER OF THE TWO OF YOU
HAVE SUGGESTIONS ON REFORMS AND
THAT AREA BECAUSE WE'VE BEEN
SAYING THAT FOR YEARS, THERE'S
ALWAYS A BENEFIT TO DEVELOPING
THESE BIG BOX STORES, AND
THERE'S NEVER BEEN THAT MUCH OF
AN INCENTIVE TO DEVELOP HOUSING
SO IF I'M A CHAIR, YOU KNOW WHAT
ONE THING TO CONSIDER IS? WELL,
WE FIND OURSELVES IS THAT THERE
IS QUITE A BIT OF INCENTIVE
BASED ON HOW THE PROPERTY TAXES
ARE ALSO I'VE SPLIT THAT WE FIND
EVERY DEVELOPER WANTS TO DEVELOP
SINGLE FAMILY MARKET RATE
HOUSING. AND YOU KNOW, GET THE
BIGGEST, YOU KNOW, BANG FOR
THEIR BUCK OF INVESTMENT, BUT
NONE OF THEM WANT TO DEVELOP
MULTI FAMILY HOUSING. THAT'S
HIGH DENSITY THAT IS ACTUALLY
AFFORDABLE FOR THE WORKING CLASS
. AND THAT'S BEEN FAMILIAR
BECAUSE CHALLENGES THAT
EVERYBODY WANTS TO PUSH UP THE
PROPERTY VALUES TO BE ABLE, THEN
PASSED A PROPERTY ASSESSMENT. OR
ATTACKS TO GENERATE MORE REVENUE
, AND IT HAS BEEN INDICATED WHAT
WE'VE LEARNED IN FRESNO. UM THE
HARD WAY IS THAT'S BRA DOESN'T
PAY FOR ITSELF IS EXTREMELY
COSTLY. WE DON'T HAVE THE
RESOURCES TO EXTEND THE STREETS.
ANOTHER FEW MILES EXTENT, FIRE
AND POLICE SERVICES ANOTHER FEW
MILES AND EVERY DEVELOPMENT THAT
COMES FORWARD. THEY WANT AN
INCENTIVE. UH, WAIVING OF FEES,
SO WE WELL, I SEE THESE, UM,
DEVELOPMENT OF SINGLE FAMILY
SUBDIVISION SUBURBS IN THE SAME
WAY AS I SEE THESE, YOU KNOW,
INDUSTRIAL DEVELOPMENT. UM
THERE'S A MARKET FOR IT. BUT
THAT MARKET IS EXTREMELY
SUBSIDIZED BY THE REST OF THE
TAXPAYERS, AND THEY HAD TO PAY
FOR THEMSELVES. THE LOGISTICS
ARE MAKERS. WE RECOGNIZE THAT
THERE IS AN IMPACT FOR ALL AREAS
WHEN YOU DO FRONT OR DELIVERY.
YOU KNOW YOUR RESIDENTIAL ROADS
GET USED MORE. BUT THEY ARE
BEING USED BY YOU KNOW YOUR
BANDS THAT THEY WERE DESIGNED
FOR YOUR PASSENGER VEHICLES.
WHERE WE SEE THE SIGNIFICANT
IMPACT IS THESE HUGE DIESEL
TRUCKS, YOU KNOW TWO OR 32 OR
THREE TRAILERS AT A TIME THAT
ARE NOW GOING THROUGH THESE
RESIDENTIAL ROADS THAT THEY WERE
NOT DESIGNED FOR. AS A RESULT,
WE ARE NOW SPENDING MILLIONS OF
DOLLARS. CONDUCTING THE CITYWIDE
TRUCK STUDY. UH, MILLIONS OF
MORE DOLLARS CONDUCTING A SOUTH
INDUSTRIAL SPECIFIC PLAN TO, UH.
TO ACCOUNT FOR THE ENVIRONMENTAL
AND INFRASTRUCTURE IMPACT. AND
BE ABLE TO LEVY THOSE FEES TO
THOSE INDUSTRIES, SOMETHING THAT
SHOULD HAVE BEEN DONE IN THE
FRONT END. BUT I THINK WE WERE
ALL CAUGHT OFF WITH THE GROWTH
OF E COMMERCE HAVE BEEN SO
QUICKLY AND THEN, OF COURSE,
BEING PUT ON STAIRWAYS BY THE
PANDEMIC. MR GABLER. I THINK
WHAT'S IMPORTANT TO UNDERSTAND
IS THAT HOUSING COSTS MONEY AND
THE SALES TAX GENERATORS
GENERALLY DON'T THERE'S A VERY
BIG COST DIFFERENTIAL IN WHAT IT
TAKES TO PROVIDE SERVICES TO
RESIDENTIAL VERSUS COMMERCIAL
INDUSTRIAL CITY MANAGER RUELAS
POINT IS THAT YOU'VE WE'RE ALL
MOVING MORE TOWARDS A COUNTY
POOL TYPE OF SYSTEM. BECAUSE
YOU'RE RUNNING OUT OF LAND JUST
AS SEMI VALLEY IS AND HE
MENTIONED PLUS IN. SHE IS AS
WELL, YOU'RE LOOKING, YOU'RE
FINDING LESS OPPORTUNITIES TO
CREATE SALE SECTION GENERATING
OPPORTUNITIES. SO AND WHEN YOU
HAVE THE STATE THAT IS PUSHING
MORE TOWARDS MORE HOUSING. AND
ACTUALLY TAKING AWAY COMMERCIAL
ALLOWING DEVELOPMENT OF HOUSING
INTO COMMERCIAL ZONES NOW AND
NOW YOU'RE SHIRKING THAT EVEN
QUICKER, SO I THINK IN THE LONG
RUN, THE STATE IS GOING TO HAVE
TO ADDRESS THE DISTRIBUTION OF
MORE EQUITABLE DISTRIBUTION OF
ONLINE SALES, AS OPPOSED TO THE
SYSTEM THAT'S IN PLACE NOW
BECAUSE THAT'S WHERE THE
MAJORITY OF SALES TAX IS GOING
TO BE HEADED. ALL RIGHT. WELL,
UM. I REALLY APPRECIATE OUR
PANELISTS TODAY AGAIN APPRECIATE
EVERYBODY THAT JOINED US. BUT I
WILL SAY, I, UM. THE STATE WILL
TRY TO FIX THESE PROBLEMS AND
FITS AND STARTS. THE GOVERNOR
WILL VETO MEMBERS WILL FIGHT
WITH EACH OTHER CITY MANAGERS
WILL CALL UP THEIR SENATORS AND
THEIR ASSEMBLYMEMBER'S, AND THEN
WE KILL BILLS ON THE FLOOR. IF
WE REALLY WANT A SOLUTION THAT
WHERE EVERYBODY FEELS A LITTLE
BIT UNCOMFORTABLE, BUT IT MOVES
US FORWARD TO A MORE FAIR
SITUATION WHERE YOU'RE DEALING
WITH THE IMPACTS ON ON YOUR
CITIES. YOU KNOW, THIS IS THE
BEST OPPORTUNITY HAVING THAT
CITY MANAGERS GROUP. GET INPUT
FROM EVERYBODY AND THEN COME TO
THE LEGISLATURE AND SAY WE HAVE
FOUND THE HARD SOLUTION. BUT WE
THINK IT'S THE RIGHT ONE FOR THE
YOU KNOW FOR THE MAJORITY. SO UM
, I WOULD ENCOURAGE THAT PROCESS
TO CONTINUE AND MAYBE MAKE SURE
THAT IT DOESN'T TAKE YEARS AND
YEARS. UH BUT BUT FOR US, THAT'S
THE WAY WE YOU KNOW, THAT'S THE
EASIEST WAY FOR US TO DO THINGS
BECAUSE AS YOU SEE WITH HOUSING
WHEN THE LEGISLATURE STARTS TO
PASS BILLS. UH, NOBODY'S HAPPY.
RIGHT. AND SO WE DON'T WANT THE
SAME SITUATION TO HAPPEN WITH
THIS, SO I'M VERY OPTIMISTIC. I
HOPE THAT WE HEAR THAT FROM OUR
SPEAKERS TODAY. THAT'S UM YOU'RE
ALL GOING TO COME UP WITH A
SOLUTION THAT ADDRESSES A LOT OF
THE ISSUES THAT WE WERE TALKING
ABOUT TODAY. SO THANK YOU VERY
MUCH. AND WITH THAT, UM, MEMBERS
OF THE PUBLIC THAT WOULD LIKE TO
ADDRESS US TO PROVIDE COMMENTS,
UM I'M NOT SURE HOW MANY OF YOU
THERE ARE, BUT, UH, YOU KNOW, I
WILL LIMIT IT TO THREE OR FOUR
MINUTES. UM, SO WE JUST WANT TO
MAKE SURE THAT EVERYBODY HAS AN
OPPORTUNITY TO THAT WOULD LIKE
TO, UM, TO SPEAK, ESPECIALLY
THOSE OF YOU THAT FLEW DOWN OR
FLEW UP. OR DROVE A LONG WAY
PAST THE 10. WHICH IS BURNED,
BURNED. THROUGH THE TRAFFIC.
OKAY. AND THE MIGRANT AND THE
MICROPHONE IS IN THE CENTER, SO
JUST COME RIGHT UP AND LOOKING
FORWARD TO YOUR COMMENTS. AND
PLEASE STATE YOUR NAME AND
AFFILIATION. THANK YOU, MADAM
CHAIR AND THE OPPORTUNITY TO
SPEAK. MY NAME IS KAREN
SCHNEIDER AND THE ASSISTANT CITY
MANAGER FOR THE CITY OF TRACY A
LITTLE BIT OF MY BACKGROUND
BECAUSE I'M SEEING THAT IT ADDS
SOME CONTEXT MIGHT HAVE OVER 20
YEARS OF EXPERIENCE IN LOCAL
GOVERNMENTS. MOST OF THAT OVER
TWO THIRDS OF THOSE THE FINANCE
DIRECTOR BEFORE PROMOTING IT AS
THE ASSISTANCE THE MANAGER I
HAVE EXPERIENCE WORKING IN
CITIES AS SMALL AS 40,100. SO I
HAVE A IN AS MY CAREER AS A
FINANCE DIRECTOR. SO I HAVE DONE
BUDGETS FOR EVERYTHING I'VE BEEN
IN POLICY CITIES WHERE THOSE THE
COUNCIL SAID TARGETS NOT IN MY
NEIGHBORHOOD. IT'S NOT NOT THE
RIGHT FIT. IT WILL GO ON THE
NEIGHBOR AND CITY AND MY
CONSTITUENTS WILL SHOP THERE. SO
NOW I'M IN THE CITY OF TRACY,
WHERE E COMMERCE IS VERY STRONG
AND VERY PROMINENT. WE HAVE, UM,
DEDICATED OVER 2000 ACRES TO
JUST WAREHOUSING AS OUR ECONOMIC
PLATFORM, AND IT'S IMPORTANT TO
KNOW THAT IT IS PART OF ITS 100
YEAR HISTORY AS A CITY BACK WHEN
IT WAS AGRICULTURE AS WE HEARD
WITH THE CITY OF FRESNO. AND
THERE WAS RAILROADS MOVING GOODS
AROUND TO EISENHOWER IN THE 19
FIFTIES WHO BUILT THE FREEWAY
SYSTEMS AND A SYSTEM OF
DISTRIBUTION FOR THE ARMY TO US,
BRINGING IN THE FIRST YELLOW
FREIGHT, WHICH IS NOW GONE, AND
WE HAVE A 19 EIGHTIES FACILITY
THAT WE'RE GOING TO NEED TO
FIGURE OUT HOW TO BRING ECONOMIC
DIVERSITY IN THERE WHEN I HAVE
LAND RIGHT NEXT TO IT, AND NO
ONE'S GONNA WANT TO BUILD ON. SO
I HAVE A LOT OF EXPERIENCE IN
THIS. I ALSO I'M NOT SPEAKING
TODAY, BUT I DO HAVE EXPERIENCE.
I AM ONE OF THE REPRESENTATIVES
FOR SAN JUAN KING COUNTY ON THE
CITY MANAGER'S WORKING GROUP AND
HAVE THAT HONOR OF WORKING WITH
THEM. I WANT TO SPEAK AND SAY
THAT THEY ARE DOING GREAT WORK.
YOU'RE CARRYING SOME OF THE
POLICIES THEY'RE DOING. I AM NOT
SPEAKING ON THEIR BEHALF, BUT
SOME OF THE GOOD POLICIES THAT
YOU'RE HEARING IS POLICIES WE'RE
GOING TO BRING FORWARD ON, UM
SALES, TAX SHARING, AND THE
OTHER GREAT POLICY THAT THEY
BROUGHT FORWARD IS EQUITY,
MEANING THAT THERE'S GOT TO BE
SOME BALANCE. WE CAN'T DO A
WINNER AND LOSER SITUATION. I
THINK, MADAM CHAIR YOU SAID IT
BEST WHEN YOU SAID MAYBE THERE'S
A LITTLE PAIN ON BOTH SIDES OF
THE POLICY THINGS I FEEL FROM A
PROFESSIONAL REPRESENTING MYSELF
HERE IS SAYING THAT IT IS A VERY
ANTIQUATED SYSTEM AND NO BASIS
AND TAX LAW ON WHY THERE'S
ACCOUNTING POOL. IT'S REALLY
IMPORTANT TO UNDERSTAND THAT IT
WAS A PROCESS THAT GOT WAS OUT.
BUILT OUT OF CONVENIENCE. AND IF
WE'RE TALKING ABOUT REFORMING A
60 YEAR OLD 70 YEAR OLD TAX LAW,
START WITH SOME OF THE THINGS
THAT HAVE JUST HAPPENED OUT OF
AN ASSESS ITTY NOT OUT OF AN
ACTUAL TAX LAW. YOU WILL NOT BE
ABLE TO POINT TO ANYWHERE WHERE
THE COUNTY POOL SYSTEM IS BEING
GENERATED. SECONDLY THAT'S YOUR
VERY FIRST AREA OF DIRECT
DISTRIBUTION TO SOMEONE'S HOUSE,
WHETHER IT IS US POSTAL SERVICES
ARE AN AMAZON TRUCK, WHICH IS
WHAT WE ALL THINK IN OUR HEAD,
BUT IT'S ALL OF THOSE TRUCKS
COMING UP AND DOWN OUR STREETS.
THE STUFF COMING FROM OUT OF THE
STATE IS GOING INTO THE COUNTY
POOL, AND WE HAVE NO BASIS FOR
THAT. SO MY 10,000 CITY
POPULATION THAT I ONCE
REPRESENTED WHO DOESN'T HAVE A
STRONG SALES TAX BASE? THAT
MIGHT BE BUYING FROM THAT.
YOU'RE RIGHT. THEY'RE NOT
GETTING THE EQUAL DISTRIBUTION
AND THE CITY LIKE AMAZON
WAREHOUSE CITIES ARE GOING TO
FIND A LARGER DISTRIBUTION OF
THAT. SO YES, THERE IS
DEFINITELY A BASIS FOR THAT. BUT
THERE'S WINNERS AND LOSERS EVEN
IN CHANGING THAT I HEARD FROM
ONE OF OUR PARTNERS IN THE PLAN
IS THAT'S DEATH BY 1000 CUTS. WE
JUST KEEP CHANGING. WE REALLY
NEED TO LOOK AT THIS
HOLISTICALLY AND I CAN TELL YOU
THE WORKING GROUP IS DOING THAT.
UM I DO WANT TO SPEAK ON BEHALF
OF WHAT IT MEANS TO DEDICATE
YOUR ENTIRE ECONOMIC PLATFORM.
WE WILL BE ONE OF THE CITY'S
FILING CHAPTER BANKRUPTCIES. WE
HAVE AN ESTIMATED BUILT OF A 16
MILLION TO A $50 MILLION LOSS
DEPENDING ON HOW YOU STRUCTURE
THIS OUT OF 100 AND $30 MILLION
GENERAL FUND. IT WON'T BE JUST
SMALL CHANGE, SO. WHEN I SPEAK
ON BEHALF OF THE CITY OF TRACY
AND MY MAYOR IS HERE AND SHE'S
GOING TO SPEAK AFTER ME. IT
MEANS SIGNIFICANT CHANGES, AND
WE REALLY HAVE TO THINK ABOUT
ARE WE REALLY JUST TRYING TO
REDISTRIBUTE MONEY TO OTHER
CITIES AND WHAT IS THE
CONSEQUENCE TO IT? FRESNO SAID
IT VERY, VERY WELL WHEN THEY'RE
TALKING ABOUT DEDICATING YOUR
ECONOMIC PLATFORM AND TRYING TO
DIVERSIFY. WELL, PEOPLE COME.
BUSINESSES COME TO TRACY BECAUSE
OF THE FREEWAY SYSTEMS THAT HAVE
BEEN AROUND FOR THAT SAME 70
YEARS THAT THIS TAX LAW AND WE
HAVE WAITED A REALLY LONG TIME
FOR IT TO GENERATE SALES TAX.
YELLOW FREIGHT NEVER GENERATED
SALES TAX OUR WAREHOUSE THAT'S
ALSO GONE IN EMPTY AND NO ONE
WANTS TO USE. IS THERE THE ROADS
THAT ARE BEING BUILT IN THE
INFRASTRUCTURE AND THE 2000
ACRES? THEY NEED A REVENUE
SOURCE TO MAINTAIN THEM. AND
THEN I'LL HAVE THE MAYOR. SPEAK
TO SOME OF THE MORE IMPACTS.
THANK YOU. THANK YOU. BUT
QUICKLY. GOOD MORNING. UM STILL
WANT TO RIGHT NOW? AFTERNOON NOW
, MY NAME IS NANCY YOUNG, THE
MAYOR FOR THE CITY OF TRACY AND
THANK YOU FOR ALLOWING US TO
COME AND JUST GIVE SOME INPUT
HERE, AND I JUST WANT TO MAKE
MENTION THAT FOR THE LAST COUPLE
OF YEARS, I DID SERVE ON THE
STATE BOARD FOR LEAGUE OF
CALIFORNIA CITIES AS WELL. SO
I'VE BEEN IN THOSE QUITE
INVIGORATING CONVERSATIONS
REGARDING THIS ON BOTH SIDES.
AND SO, AS YOU KNOW, TRACY IS
ONE OF THE CITIES THAT IS, UM,
DEEPLY AFFECTED BY THIS, AND WE
HAVE BEEN KNOWN FOR MANY YEARS
TO AS A BEDROOM COMMUNITY, SO WE
PURPOSELY TRIED TO DIVERSIFY
SOME OF OUR INVESTMENTS AND
THINGS THAT WE LOOK TO BE ABLE
TO NOT ONLY HELP OUR COMMUNITY
BUT THE SURROUNDING COMMUNITIES.
UM I HAVE SOME THINGS WRITTEN,
SO I KIND OF STAY ON TRACK, SO
I'M NOT LONG WINDED. I STAY
WITHIN YOUR TIME FRAME, SO WE
UNDERSTAND THE GROWING
DEPENDENCE ON ONLINE AND REMOTE
TRANSACTIONS INTRODUCES A UNIQUE
CHANGE TO EXISTING LOCAL TAX
STRUCTURES AND TAX REVENUE
OPPORTUNITIES. HOWEVER WE
BELIEVE THAT ANY ATTEMPT TO
REDIRECT BRADLEY BYRNE SALES TAX
THREATENS THE VITALITY OF
COMMUNITIES LIKE OURS THAT HAVE
WORKED HARD TO ATTRACT AND
RETAIN THESE TYPES OF
BUSINESSES. AS FAIR
CONSIDERATIONS, BALANCE BETWEEN
COMMUNITIES, SACRIFICES AND
ECONOMIC INVESTMENT, AND SO LET
ME JUST SKIP OVER HERE, IT SAYS
SO. THE CITY OF TRACY. LIKE I
LOOK, COMMUNITIES HAVE MADE
SIGNIFICANT INVESTMENTS IN THESE
TYPE OF BUSINESS IS DEVELOPING A
THRIVING AND GROWING COMMUNITY.
THAT IS NOT ONLY BENEFITED OUR
OUR CITY, BUT OUR ENTIRE REGION
AND BRINGING JOBS TO OUR
COMMUNITY AND BUSINESS
OPPORTUNITIES AND SUSTAINABLE
GROWTH MEASURES. THESE
BUSINESSES SERVE AS CRITICALLY
NEEDED INDUSTRIES DURING ITS
SERVED CRITICALLY DURING COVID
19. AND AS HAS BEEN HEARD TODAY,
YOU KNOW, HAS THRIVED IN THE E
COMMERCE SECTOR. AND SO NOW
THERE ARE SOME OTHER ONES THAT
ARE CHALLENGED. AND IT'S SAD
BECAUSE OUR OUR BALL IS DYING BY
1000 CUTS TO AND SO AND I'M THE
IN PERSON SHOPPER, SO IT'S
HURTFUL FOR ME. BUT FOR OTHERS,
YOU KNOW IT'S NOW. WE SHOULDN'T
BE PENALIZED NOW AS A CITY THAT
HAS ACTUALLY INVESTED INTO
LOGISTICS AND TO BRING IN THESE
E COMMERCE INTO OUR COMMUNITIES
BECAUSE NOW OTHERS ARE IMPACTED
BY THIS AND SO THE ECONOMIC
BENEFITS THAT ARE GENERATED
THROUGH POTENTIAL BRADLEY BYRNE
SALES TAX DO NOT SERVE AS A
WINDFALL FOR THE CITY BECAUSE
THAT'S WHAT SOME PEOPLE WOULD
SAY IT'S JUST A BIG WINDFALL FOR
YOU, BUT INSTEAD, THEY ARE VITAL
TO OFFSET THE DIRECT IMPACTS
GENERATED BY THE ECONOMIC
ACTIVITY. THESE INCLUDE THIS
INCLUDES ACCOMMODATING INCREASED
TRUCK TRAFFIC. BY PROVIDING NEW
ROADS, TRUCK ROUTES AND
OVERPASSES AS WELL AS THE
NECESSARY ONGOING MAINTENANCE
FOR THIS INFRASTRUCTURE AND AS
HAS ALREADY BEEN MENTIONED HERE
EARLIER. IT'S MILLIONS OF
DOLLARS OF INFRASTRUCTURE A LOT
OF THINGS THAT WE WERE EXPECTING
TO COME IN. THAT DID NOT COME IN
FOR MANY YEARS AND THEN WITH THE
RESTRUCTURING WERE FINALLY ABLE
TO CATCH UP WITH AND BEGAN TO
CATCH UP WITH SOME OF THIS
INFRASTRUCTURE, BUT THE ONGOING
MAINTENANCE IT'S JUST REALLY OUT
OF HAND. AND SO IT'S GOING TO BE
A REAL HARDSHIP FOR US. NOT ONLY
IN THE REALITY OF WHAT WE DEAL
WITH. BUT AS LEGISLATORS, YOU
KNOW THAT WE HEAR FROM OUR
CONSTITUENTS AND ALL THE TIME
THEY ARE COMPLAINING ABOUT, NOT
ONLY THE INFRASTRUCTURE OF OUR
ROADS, BUT ALSO, UM, FOR THE
IMPACTS OUR QUALITY OF LIFE IN
AN AIR QUALITY AND ALL THE MANY
THINGS THAT WE HEAR DAY IN AND
DAY OUT EVERY WEEK. I'M
DIFFERENT ONES ARE BRINGING
THESE THINGS TO OUR ATTENTION.
SO UM, WITH THE LOSS OF SALES
TAX REVENUE TO OUR CITY, IT HAS.
IT WILL HAVE A DIRECT IMPACT ON
THE SERVICES THAT WE CAN PROVIDE
FOR OUR COMMUNITY AND S WAS
ALREADY STATED BY ASSISTANT CITY
MANAGER THAT IT WILL ACTUALLY
LEAD US INTO THAT BANKRUPTCY. IT
WILL TAKE IT WILL BE VERY
DEVASTATING FOR US FINANCIALLY
AND SO FURTHER AS I CONCLUDE AND
AS A AND AS A MINISTER, I'VE
HEARD THE SECOND CONCLUSION
EARLIER SOMEONE AND MAKE SURE IT
MIGHT CONCLUSION ONE TIME OUR
COMMUNITIES TEND TO BE WORKING
CLASS, LOWER INCOME AND
DISPROPORTIONATELY SHARE IN
BOTH. THE BENEFITS AND THE
BURDENS OF WORKING AND LIVING IN
AREAS WHERE WE'RE HAS ALS AND
DISTRIBUTION CENTERS CONSTITUTE
THE LARGEST PARTS OF THE LOCAL
ECONOMY. SO THIS IS REPRESENTED.
ALSO IN OUR CYCLE. SIX RINA
NUMBERS AND WE HAVE ALREADY
TRYING TO ADDRESS THIS BY WITH
ALLOCATIONS THAT WE HAVE
RECEIVED A SUBSTANTIAL INCREASE
IN OUR LOW AND EXTREMELY LOW
INCOME HOUSING. REQUIREMENTS AND
SO THE STATE HAS REPEATEDLY
PUSHED THESE ON US AND SO
WITHOUT HAVING A FUNDING SOURCE
SHIFTING SALES TAX DESIGNATION
BASED COMMUNITIES CONTINUES TO
LIMIT OUR COMMUNITY'S ABILITY TO
RESPOND TO THE STATE MANDATES.
AND WE LOVE OUR STATE OF
CALIFORNIA HAVE GROWN UP IN
CALIFORNIA AND LIVED HERE ALL MY
LIFE, AND SO WE WANT TO SEE SOME
GREAT THINGS AND I KNOW AS IT
WAS SAID BY ASSEMBLY. UM, WOMAN
HERE THAT IT IS UNCOMFORTABLE,
UNCOMFORTABLE SITUATION AND EVEN
LOOKING AT THINGS THAT MAY SEEM
FAIR FOR ME. I WOULD JUST SAY,
LEAVE THE POLICY ALONE AND LET
US YOU KNOW THAT DIFFERENT ONES
WERE ABLE TO THRIVE WITHIN THEIR
OWN COMMUNITIES. THE BURDENS
THAT WE BEAR FOR THE THINGS THAT
WE ATTRACT AND WE INVEST IN, BUT
IF WE MUST NEED COMES TO SOME
OTHER SOLUTIONS, POSSIBLE
SOLUTIONS, AS WE SAID EARLIER
THAT THE THINK OF CALIFORNIA
CITIES HAS REALLY PUT FORTH
TOGETHER SOME VERY THOUGHTFUL
THINGS. IT'S IT'S A ROPE FOR ME
IN SOME AREAS, BUT, UM, I AGREE
THAT IF WE'RE GOING TO DO
SOMETHING TO LOOK AT SOMETHING
THAT'S MOST FAIR. AND SO WE'RE
ON AN OTHERWISE AS I THINK MAYBE
IT WAS THE COUNCIL MEMBER AND
FRESNO THAT IF WE'RE GOING TO
LOOK AT THINGS THAT ARE GOING TO
AFFECT THE FUTURE OF ANY OF OUR
CITIES, AND WE NEED TO PUT
EVERYTHING ON THE TABLE AND ALL
FAIRNESS, AND THAT'S WHAT IT'S
ALL ABOUT WHEN WE'RE LEADING OUR
COMMUNITIES TO BE FAIR, BUT
THANK YOU FOR YOUR TIME. I
APPRECIATE IT. THANK YOU. WE
HAVE ANOTHER SPEAKER. SNEAKING
UP. GOOD AFTERNOON, MADAM CHAIR,
BEN. TRIPLE WITH THE LEAGUE OF
CALIFORNIA CITIES VERSUS WANT TO
SAY THANK YOU FOR PUTTING THIS
INFORMATIONAL HEARING ON AND
THANK YOU TO YOUR STAFF AS WELL.
THEY'VE BEEN A PLEASURE TO WORK
WITH AND THEN THANK YOU TO
EVERYONE WHO TRAVELED FAR AND
WIDE TO GET DOWN HERE. I THINK
THERE WAS A LOT OF GREAT
INFORMATION ON A NUANCED AND
COMPLEX SET OF ISSUES TODAY. SO
AS HAS BEEN STATED BELIEVE
CALIFORNIA CITIES HAS CONVENED A
CITY OR A STATE WIDE CITY
MANAGER OF SALES TAX WORKING
GROUP. THERE'S A FEW GOALS
THAT'S WORKING GROUP. BUT FIRST
I JUST WANTED TO POINT OUT AND
IT HAS BEEN STATED. THIS IS A
WORKING GROUP THAT COMPRISES OF
RURAL URBAN NORTHERN SOUTHERN
DESTINATION CITIES, YOU KNOW,
WAREHOUSE CITIES, SO WE HAVE A
DIVERSE SET OF CITY MANAGERS
THAT ARE TAKING PART OF THIS
WORKING GROUP EARLY, HOPING TO
BUILD A SET OF CONSENSUS BASED
POLICY SOLUTIONS THAT WE CAN PUT
FORWARD AND SINCE I'VE BEEN WITH
THE CALIFORNIA CITIES SINCE
MARCH, I THINK WE'VE DONE THAT.
UM ESPECIALLY AROUND THE SALES
TAX REBATE AGREEMENT PIECE, YOU
KNOW, IN FACT, THIS LAST JULY,
OUR BOARD OF DIRECTORS
UNANIMOUSLY APPROVED A SET OF
PERSPECTIVE POLICIES, PROPOSALS
PUT FORWARD BY THE CITY MANAGER
OF SALES TAX WORKING GROUP,
WHICH HAVE BEEN MENTIONED TODAY
KIND OF A BROAD STROKES. THEY
DEAL WITH A TERM LIMITATION ON
SALES. TAX REBATE AGREEMENT OF
REBATE CAP ENHANCED TRANSPARENCY
AROUND THESE WITH THE CREATION
OF SOME TYPE OF STATEWIDE
DASHBOARD. YOU KNOW WHETHER THAT
BECAUSE CITY T F A POTENTIALLY
THE STATE COMPTROLLER'S OFFICE
GO BIZ, YOU KNOW WHATEVER THAT
APPROPRIATE ENTITY AS WE HAVEN'T
QUITE DRILLED DOWN TO THAT LEVEL
OF DETAIL YET, BUT I THINK WE
ALL AGREE THAT THERE IS A NEED
FOR ENHANCED TRANSPARENCY IN
THIS SPACE. THE FINAL COMPONENT
OF OUR REBATE. A PROPOSAL ALSO
INVOLVE THE COUNTY POLLS TO AN
EXTENT THAT DAMIEN WAS SPEAKING
ABOUT, YOU KNOW, KIND OF, YOU
KNOW, BEING ABLE TO COUNT THAT
REBATED DOLLAR AS INTO YOUR
PROGRAM, A PORTION OF THE COUNTY
POOL SO ONE OF THE PROPOSALS
THAT WE PUT FORWARD IS YOU
CANNOT COUNT THOSE REBATE
DOLLARS INTO YOUR COUNTY POOR
CALCULATIONS. UM SECONDLY, YOU
KNOW, WE ALSO HEAR TALKED ABOUT,
YOU KNOW, REBATE OR SALES TAX
REFORM IN THE E COMMERCE SPACE
WHEN IT COMES TO, YOU KNOW,
WAREHOUSE CITIES, DESTINATION
CITIES. THIS IS SOMETHING THAT
THE WORKING GROUP IS REALLY
CERTAINLY DIVE INTO NOW. IT IS A
VERY COMPLEX SITUATION. THERE
ARE A LOT OF DIFFICULT
CONVERSATIONS GOING ON THAT
SAID. THERE IS A DESIRE FROM THE
WORKING GROUP TO MOVE FORWARD ON
THIS AND MAKE PROGRESS. YOU
KNOW, WE HAVEN'T DRILLED DOWN TO
WHAT THAT EXACT SOLUTION WILL
BE. THERE'S BEEN CONVERSATIONS
AROUND A POTENTIAL SPLIT.
WHETHER THAT WHAT BETWEEN THE
TWO CITIES WHAT THAT LOOKS LIKE
WHAT THAT NUMBER IS GOING TO BE
HAVING THESE CONVERSATIONS THIS
WINTER AND GOING TO THE SPRING,
BUT THE GOAL IS WE WANT TO
DEVELOP CONSENSUS AROUND THIS.
WE DON'T WANT THIS TO BE. YOU
KNOW, WE'RE PICKING THE WINNERS
AND WE'RE PICKING THE LOSERS AND
THE LAST THING WE WOULD WANT TO
DO. IS YOU KNOW, COME UP WITH
POLICY SOLUTION WE THINK WORKS.
WE RUN A BILL AND THAT IT GETS
BILLED FOR THE GOVERNOR LIKE
WHICH HAS BEEN MENTIONED WITH A
HANDFUL OF BILLS PREVIOUSLY, SO
I THINK WE'RE MAKING GREAT
PROGRESS. YOU KNOW, WE HAVE BUY
IN FROM THE ENTIRE WORKING
GROUP. YOU KNOW, WE'RE HAVING
FOLKS WHO YOU KNOW, KIND OF LIKE
YOU SAID, YOU KNOW, I'M NOT OKAY
WITH 100% OF THIS. I'M NOT OKAY
WITH 100% OF THIS. MAYBE THAT
MEANS THIS IS A GOOD POLICY. SO
THERE'S A SENSE OF YOU KNOW, WE
HAVE MOMENTUM. WE'VE YOU KNOW,
WE'VE BROUGHT FORWARD PROPOSALS
AROUND THE REBATE AGREEMENTS.
LET'S DIVE INTO THIS MODE. THIS
NEXT ELEPHANT IN THE ROOM, WHICH
IS THAT E COMMERCE SALES TAX. UM
YOU KNOW, SITUATION AND I'M
CONFIDENT THAT IN THE COMING
MONTHS WE'RE GOING TO BE ABLE TO
COME TO A CONSENSUS INTERNALLY.
WHAT THAT LOOKS LIKE. SO YOU
KNOW, AS WE GO FORWARD INTO THE
FUTURE, LOOK FORWARD TO WORKING
WITH YOUR COMMITTEE, YOUR STAFF
WHERE WE'RE ABLE TO AND AGAIN
THANK YOU AGAIN FOR HAVING US
HERE TODAY. I JUST WANT TO ASK
ONE QUESTION BECAUSE YOU'VE
COVERED MOST OF IT, AND I'M NOT
REALLY CLEAR ON THE SIMI VALLEY
EXAMPLE. I MEAN, MOST OF US
WOULD LOOK AND SAY THAT'S AN
INCREDIBLE IMPACT ON THOSE
STREETS. I MEAN, JUST LIKE THE
WAREHOUSES WITH THE WITH THE BIG
DIESEL TRUCKS ROLLING THROUGH.
WHERE WOULD THAT BE? WOULD THAT
BE ADDRESSED IN ANY OF THE
PROPOSALS YOU'RE LOOKING AT
CURRENTLY? I THINK YOU COULD BE
FOLDED IN THERE GO WITHOUT
SEEING THE SPECIFICS OF EXACTLY
HOW THOSE AGREEMENTS ARE
STRUCTURED. I COULDN'T WE'RE
LOOKING AT REBATE AGREEMENTS
BROADLY ACROSS THE STATE, YOU
KNOW, MORE THAN HAPPY TO CONNECT
WITH THE CITY MANAGER CITY IN
SIMI VALLEY TO SEE THOSE EXACT
IMPACTS BECAUSE AGAIN, YOU KNOW,
I'M MORE THAN HAPPY TO BRING
THOSE YOU KNOW. THOSE LITTLE
CARVE OUT SITUATIONS THAT AREN'T
YOU KNOW THE GENERAL 99% OF
THESE REBATE AGREEMENTS. I THINK
YOU COULD SAY THAT, YOU KNOW,
READY MIX CONCRETE IS VERY
DIFFERENT THAN YOU KNOW, HAVING
A WAREHOUSE DISTRIBUTION, SO I
WANT TO MAKE SURE THAT I'M
TAKING ALL THAT INTO
CONSIDERATION AND BRINGING THAT
BACK TO THE WORKING GROUPS, THE
MORE THAN HAPPY THAT, YOU KNOW,
TOUCH BASE WITH HIM AND THEN SEE
WHAT WE CAN DO TO, YOU KNOW,
BRING THAT FORWARD TO THE GROUP.
BUT I WOULD SAY THERE IS AN
INTEREST TO MAKING SURE WE'RE
COVERING ALL OUR BASES. ALTHOUGH
YOU CAN USE POLICY PROPOSALS
THAT SOUNDS GREAT, AND MR GABLER
IS STILL SITTING HERE. SO YOU
WILL HAVE AN OPPORTUNITY. ALL
RIGHT. THANK YOU SO MUCH. DO WE
HAVE ANY OTHER SPEAKERS? GOOD
AFTERNOON, MADAM CHAIR AND
COMMITTEE MEMBERS. MY NAME IS
JAMIE BALL SCREEN ON THE FINANCE
STRUCTURE FOR THE CITY OF 1000
OAKS IN THE NUMBER OF WESTLAKE
VILLAGE, AND I WANT TO THANK YOU
ALL AND ALL THE SPEAKERS TODAY
FOR BRINGING AWARENESS TO THIS
IMPORTANT TOPIC ALSO LIKE TO
THANK OUR CD F T A. FOR ALL THE
WORK THEY DO, AND AS MENTIONED
NUMEROUS TIMES AT CAL CITY IS
CITY MANAGER SELLS TAX WORKING
GROUP. THAT HAS BEEN MEETING
REGULARLY DELVING INTO THIS
TOPIC AND THOUGHTFULLY
IDENTIFYING EQUITABLE APPROACHES
TO REVISING THE EXISTING SALES
TAX CODE AS A CITY THAT
INCORPORATED WITHOUT A GENERAL
MUNICIPAL PROPERTY TAXES. SALES
TAX IS OUR LARGEST REVENUE
SOURCE AND BRINGING ALMOST 40%
OF OUR GENERAL FUND REVENUE.
NEGATIVE REVENUE DECLINES IN
SALES TAX CAUSE DIFFICULT BUDGET
DECISIONS BY CITY COUNCILS AND
MANAGEMENT A ROBUST, VIBRANT AND
DIVERSE SALES TAX BASE IS VITAL
TO A HEALTHY ECONOMIC
ENVIRONMENT IN A CITY OUR SALES
TAX REVENUE PAYS FOR OUR CITY
STREETS. WE REGULARLY HAVE OUR
GENERAL FUND, ASSIST OUR GAS TAX
AND IMPROVING OUR CITY STREETS.
OUR ROADS, OUR SIDEWALKS ARE
LANDSCAPE ARE STORMWATER
HOMELESSNESS EFFORTS AFFORDABLE
HOUSING, SUSTAINABILITY
IMPROVEMENTS, EVIE
INFRASTRUCTURE SOLAR PROJECTS AT
CITY FACILITIES. SO SALES TAX IS
PROVIDING A SIGNIFICANT IMPACT
IN OUR COMMUNITY. AS DISCUSSED
TODAY. SALES TAX AND USE TAX IS
COMPLICATED. THERE HAVE BEEN
MANY CHANGES AS WE HAVE ALL
HEARD IN THE WAY WE ALL SHOP AND
THE RESULTING IMPACTS AND NEW
DELIVERY METHODS. AND ALTHOUGH
THE WAYFAIR DECISION WAS A
VICTORY FOR ALL CALIFORNIA
CITIES, WE DO BELIEVE THAT
CHANGES ARE NECESSARY AND
DETERMINE HOW TAXES ALLOCATED
THE PROLIFERATION OF DELIVERY
VEHICLES ON CITY STREETS, BRING
ADDED DETERIORATION TO OUR
STREETS, INCREASED TRAFFIC AND
INCREASED POLLUTION. CITIES SUCH
AS 1000 OAKS HAVE A LAST MILE
WHERE HOUSE BUT WE DO NOT GET
THE SALES TAX FROM ANY GOODS
THAT ARE DELIVERED OUT OF THAT
LAST MILE WAREHOUSE THAT IS
INSTEAD GOING TO THE
DISTRIBUTION CENTER THAT HAS
OPENED UP IN VENTURA COUNTY, AND
WE DO UNDERSTAND THE IMPACT THAT
A LARGER DISTRIBUTION
FULFILLMENT CENTER HAS ON THE
CITY THAT IT IS LOCATED IN AND
WE DO NOT EXPECT ALL OF THE
SALES TAX ESTE IN 1000 OAKS, BUT
THAT IT SHOULD BE SHARED
EQUITABLY. WE HAVE IMPACTS AS
WELL, JUST AS THOSE CITIES DO.
WE'VE SEEN THESE IMPACTS. WE
FELT THESE IMPACTS OVER THE PAST
SEVERAL YEARS IS MR GABLER
MENTIONED SIMI VALLEY ALSO HAS
LAST MILE, UM, WAREHOUSES AS
WELL. WE'VE SEEN MILLIONS OF
DOLLARS IN THE PAST SEVEN REAL
SEVERAL YEARS OF A LESSENING AND
SALES TAX BASED ON ONLINE
RETAILERS BECAUSE OF THE IMPACT
OF THE DISTRIBUTION CENTER IN
VENTURA COUNTY. UM WE DO BELIEVE
THERE IS A MORE EQUITABLE METHOD
. I WOULD JUST DISTRIBUTING THE
SALES TAX. THERE HAS BEEN NO
CHANGE IN HOW ARE RESIDENTS ARE
SHOPPING. UM HOW GOODS ARE BEING
DELIVERED YET? WE'VE LOST
MILLIONS OF DOLLARS IN THE PAST
SEVERAL YEARS BECAUSE OF THIS
DISTRIBUTION CENTER. AND THIS IS
SOME OF THE IMPORTANT WORK THAT
CAL CITIES WORKING GROUP IS
DOING. AND WE REALLY APPRECIATE
ALL THE EFFORTS AND THE
CONTINUED MOVEMENT AND FORWARD
PROGRESS ON THIS. THANK YOU. UM
I JUST A COUPLE OF QUESTIONS. SO
UH, THIS IS AFFECTING OBVIOUS.
THE NEW DISTRIBUTION WAREHOUSES
AFFECTING EVERY CITY IN THE
COUNTY. WHAT DO YOU THINK THE
LOSSES TO THE OTHER CITIES PER
YEAR? I WOULDN'T KNOW. I THINK
MR GABLER SAYS SOMETHING LIKE
300,000 ANNUAL, UM, WE
ANTICIPATE FOR 1000 OAKS. IT'S
LIKELY CLOSER TO A MILLION
DOLLARS ANNUALLY. OUR SECOND
QUARTER RESULTS, WHICH WAS APRIL
THROUGH JUNE. I THINK AT THE
STATE AS A WHOLE IN THE COUNTY
AND A LOT OF CITIES HAD ACTUALLY
NEGATIVE SALES TAX REVENUE
GROWTH, WHEREAS THIS PARTICULAR
CITY EXPERIENCE IN OVER 30%
INCREASE IN SALES TAX REVENUE
GROWTH FOR THAT QUARTER, AND
THAT'S 100% BECAUSE OF THE
DISTRIBUTION CENTER. WE GET
NEGATIVELY IMPACTED. ALSO
BECAUSE NOW OUR SHARE OF THE
COUNTY POLL IS SMALLER BECAUSE
THEY HAVE A HIGHER SHARE OF THE
OVERALL SALES TAX REVENUE IN THE
COUNTY. AND SO THEN THEY'RE
GETTING A HIGHER SHARE OF THE
COUNTY POOL. SO WHEREAS BEFORE
MAYBE WE WERE GETTING OVER 20%
SHARE OF THE COUNTY POOL. NOW
WE'RE GETTING LESS THAN THAT. SO
IT'S A DOUBLE IMPACT TO ALL OF
THE OTHER CITIES IN THE COUNTY
THAT ARE NOW RECEIVING A SMALLER
SHARE OF THE COUNTY POOL. AND SO
THE CITY OF 1000 OAKS, IS
HELPING TO ADDRESS THIS THROUGH
THE CITY MANAGER'S GROUP, NOT
SOME LOCAL AGREEMENT WITH, UM
THE CITY'S IN MANCHURIA WERE
HOPEFUL THAT THE CITY MANAGER'S
A GROUP, UM WILL BE ABLE TO HAVE
IT EQUITABLE METHOD. YOU KNOW,
WE DON'T EXPECT AS I MENTIONED
HUNT PERSON AND THAT SALES TAX
BECAUSE OBVIOUSLY, THERE ARE
IMPACTS TO THE CITIES THAT HAVE
DISTRIBUTION CENTERS. UM, BUT WE
SHOULD GET A SHARE OF THAT SALES
TAX FROM THE GOODS THAT ARE
SITTING IN THE DISTRIBUTION
CENTER BECAUSE YOU KNOW, THEY
MAY BE GOING INTO OUR LAST
MALWARE HOUSE, AND THEN IT'S
CAUSING TRAFFIC AND, YOU KNOW,
IMPACT STAR STREETS AND ROADS AS
WELL. WELL, THANK YOU VERY MUCH.
APPRECIATE YOU JOINING US TODAY.
GOOD AFTERNOON. GOOD AFTERNOON.
MY NAME IS DAVID BULLOCK. I HAD
THE LEGISLATIVE SUBCOMMITTEE OF
THE SFE ALLIANCE. THANK YOU FOR
THIS HEARING TODAY
ASSEMBLYMEMBER'S WOMAN AND THANK
YOU FOR THE PRESENTATION FROM
THE PARTICIPANTS TODAY. IT WAS
VERY CLEAR. I'M ACCUSTOMED TO
STATE LEGISLATIVE HEARINGS ON MY
TESTIMONY WILL BE TWO MINUTES OR
LESS. WHAT WOULD A REVENUE
TAXATION HEARING BE WITHOUT A
GRIZZLY MAN AND A COWBOY HAT,
SAYING THEY OFTEN AGREED UPON
BUT RARELY ADDRESSED STATEMENT
THAT TAXATION IS THEFT. A PERSON
DOES NOT HAVE TO BE A NERD TO
FOLLOW HOW MONEY IS TAKEN FROM
THAT PERSON IN HIS DISTRIBUTED
JUST A BASIC EDUCATION, WHICH
SEEMS TO BE THE WAY THE SUPER
MAJORITY OF DEMOCRATS ARE MOVING
AWAY FROM EDUCATING OUR CHILDREN
AND TURNING THEIR FOCUS ONTO
STUDENTS, SEXUALITY AND IDENTITY
EVEN BEFORE THE CHILDREN HAS
PHYSICALLY DEVELOPED MENTALLY
THOUGHT OF SUCH SUBJECTS ABOUT
THEMSELVES. WHY WOULD THIS EVEN
BE AS TOPIC FOR TODAY'S HEARING?
FIRST ALTHOUGH YOU HAVE BEEN
MORE THAN CRUCIAL TODAY, AND
THROUGHOUT THE YEAR WITH A
WELCOMING DISPOSITIVE THE
DISPOSITION IN THE IN THE
CAPITAL, YOUR COLLEAGUES IN
SACRAMENTO DO NOT HAVE THE SAME
CONTINUALLY THAT YOU HAVE
EXHIBITED SO COMPANIES. THESE
HEARINGS IS ONE OF THE FEW
OUTLETS PEOPLE HAVE. IN
ADDRESSING THEIR CONCERNS
LEGISLATORS AND HAVE THEM
RECORDED ONTO THE MEDIA RECORD.
HEALTHY WELL ADJUSTED CHILD WITH
A GOOD UPBRINGING WILL GROW INTO
A PRODUCTIVE CHILD OF GROWN TO
HAVE PROTECTIVE ADULT IN ORDER
TO CONTINUE PROLIFERATING A
VIBRANT ECONOMY IN WHICH THE
PARASITIC STATE CAN CONTINUE TO
TAKE RESUME REVENUE FROM ANTI
FAMILY LEGISLATION THAT YOU'VE
SUPPORTED AND VOTED FOR, SUCH AS
STATE SANCTIONED KIDNAPPING BILL
A B 665 AND MAYBE 957, WHICH
WOULD HAVE MANDATED INTERFERING
IN THE PARENTS RAISING THEIR
CHILDREN AWAY THAT THEY KNOW
BEST WOULD HAVE STRAINED AND
WILL ULTIMATELY REMOVE THE CHILD
PARENT RELATIONSHIP FROM WHICH
WILL HARM THE EDUCATION PROCESS,
LEAVING THE CHILD GROWN INTO
ADULT EITHER OR NOT LIVING UP TO
THEIR FULL POTENTIAL. OR WORSE,
BECOMING AN ECONOMIC BURDEN TO
THE STATE AND THE ECONOMIC
VITALITY OF THIS THIS SIDE OF
THE SOCIETY. THE DEMOCRATIC
LEGISLATORS ARE MOVING INTO
DIRECTOR AND SET HARM, NOT NOT
ONLY THE PEOPLE, THE STATE,
CREATING MORE BURDENS RATHER
THAN ALLOWING PEOPLE TO EXPAND
THE ECONOMY AND ULTIMATELY
HAVING A LARGER TAX BASE. IN THE
FUTURE. I ENCOURAGE YOU.
ASSEMBLYMEMBER'S WENT TO VOTE IN
A WAY THAT SUPPORTS FAMILY
INSTEAD OF TEARING. THEM APART
FROM BY PUTTING A CHILD WHO DOES
NOT YET HAVE A BRAIN WITH A
FULLY DEVELOPED FRONTAL COLLEGE
CORTEX. IMMATURE THOUGHTS FIRST
BEFORE THOSE THAT KNOW LOVE AND
WOULD DO ANYTHING FOR THEM. THE
PARENTS, CHILD, THE CHILD'S
PARENTS. THANK YOU. THANK YOU
FOR JOINING US TODAY. DO WE HAVE
ANY OTHER SPEAKERS? ALRIGHT WELL
AGAIN FOR THE 10TH TIME. THANK
YOU ALL FOR JOINING US TODAY,
AND WITH THAT WE CONCLUDE THE
SPECIAL HEARING HERE IN WEST
LAKE OF THE REVENUE AND TAXATION
COMMITTEE.