HomeMy WebLinkAbout1994-04-12; City Council; 12664; AB 3505 - SALES TAX REALLOCATIONI
AB # fAiu
MTG, 4/12/94
TITLE:
-
t AB 3505 - SALES TAX REALLOCATION
DEPT. - DEPl
CITY
CITY I I I
RECOMMENDED ACTION:
Adopt Resolution No. qq- 10s authorizing the Mayor to express the Ciq
opposition to AB 3505 (V. Brown) through letters and other contacts with sta
officials and legislators.
ITEM EXPLANATION
0 g #x & 2
On February 25, 1994 Assembly Bill 3505 was introduced to the Califon
Legislature. This bill is the latest bill to challenge the situs allocation of sales tar
and to suggest that a per capita allocation formula should be implemented. Unc
the situs allocation system sales taxes are returned to cities and counties based
where the sale took place (the site of sale). with a situs system cities and count
that have large retail centers within their boundaries will receive more revenue th
those with little or no retail development. Under a per capita formula sales ta:
are allocated back to a county with each entity within the county getting the sa
amount per person. A per capita system gives the largest share of the sales
received in a region to the entity with the greatest population regardless of wh
the sale took place.
A situs system favors those cities and counties that have made an effort to deve
a balanced community includhg residential, red and commercial operatkms wit
their boundaries. These entities must provide services to the high demand n
residential areas, and in exchange receive a share of the sales tax they generz
Cities and counties that have opted for residential development, or to rest
commercial development, escape the requirement of dealing with the ser
demands created by non-residential development. A situs system tends to rew
cities and counties that make an effort to balance land uses, or create oppofid
for non-residential development.
A per capita system favors cities and counties that have restricted retail
commercial development through land use rules that force the non-residential IJ
of development into neighboring communities. Although the residential city c
not have to deal with the problems and issues created by having a balanced gen
plan, they share in the sales tax generated in the neighboring communities.
5 A situs: system tends to encourage cities to compete to attract businesses with f
sales t:ax generating potential and low demand for services, while a per CE F: system tends to encourage cities to reject businesses in an effort to avoid any a related to providing services while retaining the ability to share in the sales 0
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revenues.
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Page Two of Agenda Bill No. g, 4 b '("
AB 3505 will have a serious effect on the City of Carlsbad in future year
Carlsbad's balanced land use plan calls for residential and non-residenti;
development between now and bdldout. If AB 3505 reallocates the growth in sdt
taxes on a per capita basis, Carlsbad will lose millions of dollars annually in sal6
tax revenues. These sales tax revenues would be used to balance the City's Gener;
Fund budget, the source of funding for many services including Parks, Librarie
Public Safety, Street Maintenance, and general administration.
Staff is recommending that he Council authorize the Mayor to make the necessa
contacts with State representatives to express the City's opposition to th
legislation.
FISCAL IMPACT
If AB 3505 were in effect at this time, Carlsbad would receive about $3.7 millic
represents about 10% of the General Fund budget. Although AB 3505 would n
instantly change the allocation formula, over a period of years the City would reat
a point where this magnitude of reduction has occurred.
Sales tax revenue for 1992-93 totaled $9.2 million. Under AB 3505 Carlsbad WOI
have lost about 40% of our sales tax dollars.
Cities that stand to lose revenue include San Diego, Escondido, El Cajon, Natior
City, Carlsbad, San Marcos, La Mesa, Del Mar and Solana Beach. The County
San Diego is the single largest winner, with the City of San Diego being the sin:
largest loser.
less in sales tax revenue than is received under the situs allocation formula. TI
EXHIBITS
I. Resolution No.44'-lD'Lhor;zing the Mayor to express the Chy's oppositi
to AB 3505 (V. Brown) through letters and other contacts with the Cit
state representatives.
2. Sales Tax Data.
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B
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5
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7
8
9
3.0
11
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I
0 0 EXHIBIT 1
RESOLUTION NO 94-105
A RESOLUTION OF THE CITY COUNCIL OF THE ClTY
OF CARLSBAD CALIFORNIA AUTHORIZING THE
MAYOR TO EXPRESS THE CITYS OPPOSITION TO AB
3505 (V. BROWN) THROUGH LETTERS AND OTHER
CONTACTS WITH THE CITY’S STATE
REPRESENTATIVES.
WHEREAS the City Council of the City of Carlsbad has adopted a legislat.
platform that includes the opposition to measures that would change revel
allocations which would negatively affect local government, including
reallocation of sales tax revenues, and
WHEREAS Assembly Bill 3505 (V. Brown) introduced in the 1994 legislar
session would change the allocation of sales taxes from a situs basis to a per ca
basis, thereby taking millions of dollars away from the City of Carlsbad in fu
years, and
WHEREAS Assembly Bill 3505 would seriously effect the City of Carlsb
ability to provide municipal services to the citizens of Carlsbad in the futur
reducing the availability of sales tax revenues, and
WHEREAS the City Council wishes to express its opposition to this legis12
to state officials and legislators,
~
NOW THEREFORE BE IT RESOLVED by the City Council of the Cf
1 Carlsbad, California, as follows:
1. That the above recitations are true and correct.
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ll e 1) i! 1 2. That the Mayor is hereby authorized to express the City's str
2 opposition to AB 3505 (V. Brown) through letters and other contacts with S
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representatives and legislators.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City COI
on the 19th day of April , 1994, by the following votc
7 wit:
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AYES: Council Members Lewis, Stanton, Kulchin, Nygaard, Firm
NOES: None
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ABSENT: None
,
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ATTEST:
I1 17
18 ALETHA u2w L. RAUTENKRANZ, City Clerk
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19 1
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21
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23
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27 ~
(SEAL)
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0 0 EXHIBIT Nc
Sources:
Population - SANDAG
Sales Tax - Board of Equalization
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WINNERS/LOSERS
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