GILROY
– City officials are worried about a state Assembly bill that
they say could eventually drain some of the crucial sales tax
revenue Gilroy relies on heavily for services.
GILROY – City officials are worried about a state Assembly bill that they say could eventually drain some of the crucial sales tax revenue Gilroy relies on heavily for services.
AB 1221 would reduce the percentage of revenue that cities receive from sales taxes but increase the amount they get from property tax.
Gilroy officials say the problem is that because sales taxes tend to grow faster, the change means a gradual yearly drop in revenues that would eventually reach the $1 million mark in roughly five years’ time.
City sales tax revenues are projected to be $11.4 million next year with the addition of revenues from new Costco and Lowe’s stores at U.S. 101 and state Highway 152. That’s roughly a third of the general fund, the pot of discretionary revenue used mainly for police and fire services.
“After years of reliability, AB 1221 threatens our last reliable revenue source,” wrote Mayor Tom Springer in a letter to the bill’s principal co-authors, Assemblymen Darrell Steinberg, D-Sacramento and John Campbell, R-Irvine.
The bill, called the “California Balanced Communities Act,” is meant to create a more balanced system of local government financing that provides incentive for communities to build more housing and cut down on the chase for major retail developments that bring sales-tax dollars.
“As the state prepares to handle 12 million more people over the next 20 years, policies must be enacted that incentivize a more balanced approach to land development,” says a statement on Steinberg’s Internet site.
But some Gilroy officials say the bill could thwart affordable housing here because the city uses sales taxes to help pay for police and fire services that low-cost housing doesn’t cover by itself.
Gilroy is joined in its opposition by the League of California Cities, which asserts the bill would give the state control over cities’ only remaining source of local revenue that has not already been preempted.
The league wants a constitutional provision added that would protect local government revenues from being swiped by the state in the future.
The bill is currently being held in the Assembly’s Appropriations committee, which is chaired by Steinberg.
