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8A Page 6 SBX6 2 is based, in part, on recent litigation over the application of the ~pay first" rule in City of Anaheim v. Superior Court of Los Angles County, (Cal, 2nd Dist.). The Court ruled that because the city did not have a .pay first" clause in its local ordinance, it could not enforce this requirement. The Court also held that Article X\II, Section 32, only applied to state revenues. But another court recently enforced local .pay flrsf' provisions in similar litigation involving the city of San Francisco. The Anaheim case represents just a sliver in a much broader legal dispute between local agencies and online travel companies throughout the nation. The crux of this dispute is the concem that these companies are collecting TOT from customers who purchase rooms over the Internet, but then fail to fully remit the proceeds of those taxes to local agencies. Courts in Texas, Georgia and South Carolina have held in favor of local agencies in this dispute. The League is opposed to this legislation for three reasons: 1) The policy behind this bill is fundamentally flawed. While the Anaheim case may have surprisingly interpreted a state Constitutional provision to only apply to state revenues. it makes no policy sense for local agencies to be subject to a different legal standard. In fact, the legislation that is needed would be to clarify that the local standard should be identical to that of the state. 2) This bill is drafted much more broadly than the holding In the Anaheim case, so that It seeks to apply the Court's holding to all.pay firsf' provisions that would apply to this industry, even in instances where the local ordinance contains a separate .pay flrsf' provision. This is contrary to the Court's holding. 3) This legislation establishes a very bad policy precedent. If approved. any other industry that wishes to challenge a local tax will, no doubt, seek a legislative exemption to the .pay first" rule before commencing litigation. This is not the time to adopt legislation that further disrupts local revenue streams. It is unclear if SBX6 2 will be heard in the current special session or if a similar bill may be Introduced In the next regular session. This bill is not currently set for a hearing. Recently, the League also became aware of another potential piece of legislation by Senator Rod Wright that would benefit online travel companies by restricting the ability of local agencies to collect TOT from online rental of hotel rooms is being considered for introduction soon. This measure has not yet been Introduced in bill form. Take Action Now City officials are urged to draft a letter of opposition for SBX6 2 and send it to the author with copies to their state senator's capitol office. Closely monItor thIs legislation. and remain alert for other related legislation that may be introduced in the coming weeks that will undermine local TOT collection authority. A sample opposition letter can be found on the League's Web site at www.cacities.ora/billsearch. Type .SBX6 2" into the search function to pull up the letter. Public Works Officers Institute Registration Closing March 2 The registration deadline is quickly approaching for the Public Works Officers Institute scheduled on March 24-26 in Monterey. This conference is an opportunity to network with peers from around the state and get educated on various topics ranging from key industry essentials to how state decisions will affect your city. Featured Topics at this Conference: Persuading Local Officials to Take the Long Tenn View for Public Works; Various Project Delivery Methods; and Balancing Competing Interests - Economic, Environmental, Social. 6