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9.410 AB 1221 from page 1 Both principal authors, Assembly Members - Darrell Steinberg and John Campbell, presented the bill to the committee. They were joined by a long list of supporters including the Building Indus- try Association, the American Planning Association, California Rural Legal Assistance Foundation and several individual counties along with the California State Association of Counties. Revenue and Taxation Committee on Monday, April 28. Please contact the members of the commit- tee and ask for a NO vote on AS 1221 unless it is amended to provide constitutional protection for local government revenues. And please, send copies of your letters to League Legislative Director Dwight Stenbakken ( email stenbakdOcacities.oro) . After all the groups with little or no direct finan- cial interest in the bill completed their testimony about the virtues of AB 1221 the chair of the committee called for the opposition. Along with the League, representatives from several cities around the state testified in opposition to the measure. The League's opposition testimony reminded the com- mittee members that 80 to 85 percent of the rev- enue from local sales taxes go to cities and that this revenue was not something in the abstract, but translated into police and fire salaries and other important local services. The League and other city representatives at the hearing emphasized that the primary reason for their opposition to AB 1221 was that the bill would gives the state control over local government sales taxes. This is completely unacceptable and sets a terrible precedent. The history behind state control of local tax revenues is both well known not good! The state has redistributed local property taxes and has used city and county vehicle license fee rev- enue to provide tax cuts. AB 1221 sets local gov- ernment up for a similar revenue cut. There is nothing to stop the state from taking sales taxes the next time there is a budget deficit. League Seeks Constitutional Protection of Local Revenues The League urged the authors to amend the measure to join it with a constitutional provision to protect local government revenues. Without this protection, there is no reason for local government to trust that the revenue reallocation provided by AB 1221 would not once again fall victim to state intrusion into local government finances. Letters from Cities Neededl The bill will be heard next in the Assembly REFORM from page 3 ............... policies of the board of directors, but not so in California government The Governor, no matter what his or her partisan affiliation or persuasion, should be given the discretion to manage to the budget Department heads should be given financial incentives (not penalties) for returning unused budget authority at the end of the fiscal year. This could come in the form of keeping a portion for equipment upgrades, capital improvements, or employee bonuses. 5. Diversity Revenues. It is indisputable that a more balanced revenue portfolio would likely provide greater stability in state revenues and expenditures. This could be accomplished any number of ways, but anything to decrease depen- dence on the steeply progressive personal income tax would seem desirable. At a minimum, we advise collecting the sales tax on remote sales by California based businesses to Califomia consumers and participation in the Streamlined Sales Tax ProjecL An alternative to revenue diversification is adopting a policy that simply diverts a percentage of any rev- enue that exceeds a historic growth rate into the prudent reserve and prevents its use until future years under certain limited circumstances. Mr. Russo concluded by assuring the commis- sion that the League stands ready to help fashion some needed reforms: "The fiscal integrity of the state of California has massive impacts on the fiscal health of cities, and we urge you to seize the mo- ment presented to you to make the necessary changes. As you know, the alternative to doing nothing about the budget structure and process is to invite further fiscal disasters." PAGE 10/PRIORITY FOCUS Visit the League's Official Web Site-- www.cacities.org ............... ...............................