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a 1 � AB 1221 from page 1 ........... The bill takes an idea from the work of a past Commission on local government finance reform appointed by then Speaker Antonio Villiargosa. In brief, the measure reduces the amount of sales taxes that local government receives from the 1 percent Bradley -Burns sales tax by one half and swaps that amount of money for an equal amount of property taxes. The measure is intended to be revenue neutral on the date the "swap" is made. Future revenue flow would depend upon the relative strength or weakness of the property tax versus the strength or weakness of the sales tax. The policy rationale behind the measure is to discourage local governments, particularly cities, from being too dependent on the sales tax and encouraging land use decisions that give prefer- ence to retail sales over other uses such as hous- ing or manufacturing. This same rationale, in part , was behind last session's AB 680 that proposed to redistribute sales tax on a regional basis in the Sacramento area. AB 1221 is scheduled for debate before the League's Revenue and Taxation Policy Committee next week, March 2r. A recommendation will be forthcoming from this committee to the League Board of Directors that meets on April 4/5 in Sacra- mento. Assembly Member Steinberg will likely be present at one or both of these meetings to present his proposal to the members of those League policy bodies. In initial discussions with Assembly Member Steinberg and Campbell, the League indicated the concern of its member cities over granting state control of local sales taxes. This would set a prece- dent that has been unhealthy for local government finance when applied to other revenue sources, the vehicle license fees and local property taxes to name just two. It was suggested that for the bill to be taken seriously by the League membership, it had to be coupled with constitutional protection for local government revenues sources. Without this stability and predictability in local government revenues, why would city officials willing give up local control over the Bradley -Burns sales tax to the state? On the flip side of this point, if Assembly Member Steinberg and Campbell believe that the proposal put forward in AB 1221 is the right direc- tion to go with local government finance, wouldn't they want it to be protected from the state when the next recession occurs? Steinberg and Campbell have indicated their willingness to discuss some type of protection for local governments, but have only offered a statu- tory trigger to protect local government revenues. Remember, the debate that is now raging in the state budget process about pulling the statutory trigger to raise the vehicle license fees points out the shortfall in this approach at local government revenue "protection." This measure will undoubtedly be a major factor in this year's discussions about local government finance reform and will certainly be on the League's priority list. QUOTES from pap 2 ••- "• " " "•• - "• "" Wesson noted that next week he is suspend- ing all hearings on issues not related to solving the budget issue. Sen. Gloria Romero, D -Los Ange- les, said the Senate is likely to do the same." The Torrance Daily Breeze, 03/18/03, Torrance holding workshop on cuts. Council eyes budget options including closing the Walteria Branch Library in case of a shortfall. "To prepare for a projected $12 million shortfall in the 2004 -05 fiscal year, the Torrance City Council will hold a budget workshop today to discuss potential cost - cutting measures that range from closing a library to delaying the start of an in- house animal control program.... In the Fire and Police departments — which have the largest budgets in the city — potential cuts would include reducing overtime, consolidating positions and turning over some jobs to civilians." San Diego Union Tribune 3/18/03, City faces taxing dilemma to balance books. "San Diego's financial outlook for the coming year is so bad that libraries and recreation centers will have to close early, other city services will be cut, and a variety of new taxes and fees are being consid- ered to balance the books... 'It's going to be difficult to absorb an additional $30 million in budget cuts without some impact on services,' Mayor Dick Murphy said." PAGE 4 /PRIORITY FOCUS Visit the League's Official Web Site -- www.cacities.org .... ...............................