1997 AGN FEB 18 I17 - Laserfiche WebLink

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ENV. SVCS. G_ 02/04 I feel that the sales tax bill makes the best policy sense. If you come to the same conclusion as I have and want to do something about it, please call the League Task Force members and express your views prior to February I1 (See attached list of names and telephone numbers). The following points are provided for those interested in more information about tho sal€s tax option: • The bill language as introduced by Covina, technically speaking, does not shift any money to cities or counties --it enables cities and counties to put the decision before voters for a binding vote. • The bili language that we have introduced will hold schools harzmless--if voters decide to change the sales tax rate, then school funding will not be impacted. • The bill requires the state to make its general fund obligation to schools in a manner which does not affect the funding levels or service obligations of cities; it thus protects cities from possible retaliation. • A preliminary estimate of the maximum fiscal impact on the state of this bill is $600 million per year for five years until about 53 billion is reached or the proceeds from a 1 % rate change. (As a measure of comparison, schools are slated to receive S1.9 billion more next year through the FY 1997-95 budget). The rate change is not a. tax increase and would not affect Bradley -Burns. • The annual shift amount can come out of the state's annual general fund growth revenue, which has been estimated to grow at a rate of 52.3 billion per year, unless the state cuts taxes. • The bill will not impact the state's fiscal year 1997-98 budget, since the rate change would go into effect July 1, 1`9`98 following voter approval of the measure on a jurisdiction -by -jurisdiction basis. • Because the revenue shift would come out of what would go to the non -school state, this bill picks a fight with the state. The State Department at Finance will likely oppose the bill. We need to "win this fight" if we are to succeed. (Schools have done it before) Because counties will get far more benefit out of the property tax option (A.B. 1), it is unlikely that counties will support the sales tax option on a large scale (they might even oppose it). Counties have had a successful lobby in Sacramento for many years largely because of the small number of counties which make it easier for them to agree. However: (1) the Governor has already conte out in opposition to the ERAF bills; (Z) cities host 80% of the state's population; (3) 6057o of the cities in the state supported a sales tax shift last year. • With the revenue outlook as it is and city momentum behind this bill concept, now is the time for cities to exert themselves and "fight the fight." Please help us get a bill author and get the League Task Force to support the sales tax option. Thank you.