City v. City With Local Tax Increases

Katy Grimes: Threatening cuts of more than 20,000 teachers, $5 billion in cuts to schools, cuts in protection by police and sheriff, and the elimination of parole services, Sacramento Sen. Darrell Steinberg successfully passed a local taxation bill out of a legislative committee today at the Capitol.

But opponents of SB 653 warned of potential consequences which could result in regions and cities in the state pitted against each other in a tax war, ultimately resulting in statewide non-cooperation.

“What kind of community services do you want in your communities?” asked several supporters of the bill, largely labor unions, and school districts. “Would you like to pay to keep your sheriffs, schools and public safety?” asked Senate President pro Tem Steinberg.

Steinberg talked of “local options,” and “raising the revenues locally” as the driving need for transferring the ability to increase taxes from the state to local governments to pay for the services people want and need.

“Public safety is very much threatened,” said Yolo County Supervisor Jim Provenza, testifying in support of Steinberg’s bill. “It’s starting to look like a third world country.”

Calling Steinberg’s statements “scare tactics,” Sen. Bob Huff  said, “We’ve been bleeding jobs. It’s time we as a state find a way to incentivize jobs rather than taxing.”

Huff said the bill creates lopsided taxation, and was not the answer to address city and county services. “As a city, we contracted out public safety, buildings services and parks services,” Huff said. He explained that contracting out allowed the city flexibility, based on need and finances available.

Huff said that he was reminded of a Harvard Study which found that during recessions, cuts to budgets were far more effective at recovery than tax increases.

The California Taxpayers Association is adamantly opposed to SB 653 and states, “SB 653 seeks to dramatically alter California’s tax structure by significantly expanding new taxing authority to counties.”  The bill would allow increases in local personal income taxes, excise taxes, sales and use taxes, vehicle taxes and taxes on oil.

Despite sound talk about basic economic principals in opposition to the bill, SB 653 passed the Senate Committee on Governance and Finance on a party-line vote, 6-2, with only Huff and Sen. Doug LaMalfa (R-Butte) voting against it.

MAY 4, 2011