Compare Versions


Bill PDF |Add To My Favorites | print page

SB-1494 Local agencies: Sales and Use Tax: retailers.(2023-2024)



Current Version: 05/20/24 - Amended Senate

Compare Versions information image


SB1494:v98#DOCUMENT

Amended  IN  Senate  May 20, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill
No. 1494

Introduced by Senator Glazer
(Coauthor: Senator Allen) (Coauthors: Senators Allen and Dahle)

February 16, 2024

An act to amend Section 53084.5 of the Government Code, relating to local government, and declaring the urgency thereof, to take effect immediately. government.


LEGISLATIVE COUNSEL'S DIGEST


SB 1494, as amended, Glazer. Local agencies: Sales and Use Tax: retailers.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose a local sales and use tax in accordance with that law for tangible personal property sold at retail in the city or county, or purchased for storage, use, or other consumption in the city or county. That law requires the city or county to contract with the California Department of Tax and Fee Administration for the administration of the taxes and requires the department to transmit those taxes to the city or county. That law provides that for the purpose of a local sales tax adopted pursuant to that law, all retail sales are consummated at the place of business of the retailer unless otherwise specified.
Existing law prohibits a local agency, defined to mean all cities and counties, from entering into any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of Bradley-Burns local tax revenues to any person, as defined, for any purpose, if the agreement results in a reduction in the amount of Bradley-Burns local tax revenues that, in the absence of the agreement, would be received by another local agency and the retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency, with specified exceptions.
This bill would additionally prohibit, on or after January 1, 2024, a local agency from entering into, renewing, or extending any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of Bradley-Burns local tax revenues to any retailer, as defined, in exchange for the retailer locating or continuing to maintain a place of business that serves as the place of sale, as defined, within the territorial jurisdiction of the local agency if that place of business would generate revenue, from the sale of tangible property delivered to and received by the purchaser in the territorial jurisdiction of another local agency, for the local agency under the Bradley-Burns Uniform Local Sales and Use Tax Law. The bill would make those forms of agreements existing before January 1, 2024, void and unenforceable on January 1, 2030. The bill would require a local agency to post those forms of agreements existing before January 1, 2024, on the local agency’s internet website until the form of agreement expires or is made void and unenforceable by these provisions. The bill would make related findings and declarations.
The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: TWO_THIRDSMAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Current tax law allows retail companies to allocate all sales and use tax revenue in a specific location in the state.
(b) This tax allocation provision allows cities to enter tax revenue sharing agreements with retail companies in exchange for those companies locating in those cities.
(c) These revenue sharing agreements cause cities to compete with each other to offer the most tax revenue to a retail company to incentivize the company to locate in that city. As a result, these agreements can share as much as 50 to 80 percent of tax revenue with the company rather than those revenues going towards public services.
(d) California and its people have little knowledge about the specific agreements cities enter into due to lack of transparency. By requiring cities to post current agreements online, California will learn more about how much tax revenue is being shared with retail companies and how long the contracts are.
(e) This act is urgently needed to prevent new tax revenue sharing agreements from taking money from vital local public services while the state endures deficits of historic proportion.

SEC. 2.

 Section 53084.5 of the Government Code is amended to read:

53084.5.
 (a) On or after January 1, 2016, a local agency shall not enter into any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) to any person for any purpose when both of the following apply:
(1) The agreement results in a reduction in the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency.
(2) The retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency.
(b) (1) A local agency entering into an agreement that results in a reduction of the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency shall post the proposed agreement on its internet website for at least 30 days prior to ratification or approval of that agreement by its governing body.
(2) A local agency entering into an agreement that results in a reduction of the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency shall notify the other local agency by certified mail addressed to the attention of the chief executive of that other local agency at least 60 days prior to ratification or approval of that agreement by its governing body.
(3) A local agency shall post any agreement on its internet website it has entered into that results in a reduction of the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency, including any agreements entered into prior to January 1, 2016, that are still in effect on and after that date.
(c) (1) On or after January 1, 2024, a local agency shall not enter into, renew, or extend any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) to any retailer in exchange for the retailer locating or continuing to maintain a place of business that serves as the place of sale within the territorial jurisdiction of the local agency if that place of business would generate revenue, from the sale of tangible property delivered to and received by the purchaser in the territorial jurisdiction of another local agency, for the local agency under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code).
(2) A form of agreement described in paragraph (1) that exists before January 1, 2024, shall be void and unenforceable on January 1, 2030.
(3) A local agency shall post any form of agreement described in paragraph (1) that exists before January 1, 2024, on the local agency’s internet website until the form of agreement expires or is made void and unenforceable by paragraph (2).
(d) For the purposes of this section, the following terms have the following meanings:
(1) “Local agency” means a chartered or general law city, a chartered or general law county, or a city and county, of this state.
(2) “Person” means a person as defined in Section 6005 of the Revenue and Taxation Code.
(3) “Physical presence” means the lease or ownership of any real property for the purpose of carrying on business operations.
(4) “Place of sale” means the place at which retail sales are consummated pursuant to Section 7205 of the Revenue and Taxation Code and the regulations promulgated thereunder.
(5) “Retailer” means a retailer as defined by Section 6015 of the Revenue and Taxation Code.
(e) This section shall not apply to any agreement by a local agency to pay or rebate any use tax revenue resulting from the imposition of a use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law relating to a use tax direct payment permit issued under Section 7051.3 of the Revenue and Taxation Code.
(f) This section shall not be interpreted to limit the ability of a local agency to contract with or otherwise enter into an agreement pursuant to subdivision (b) of Section 7056 of the Revenue and Taxation Code.
(g) This section shall not apply to any mutual tax revenue sharing agreement between local agencies to pay, transfer, or divert tax revenues that would be received by a local agency resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law to another local agency, and where the agreement would not result, directly or indirectly, in the payment, transfer, diversion, or rebate of those tax revenues to a retailer.

SEC. 3.

 The Legislature finds and declares that the subject of this act is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution for the reasons discussed in Section 1 of this act. Therefore, Section 2 of this act amending Section 53084.5 of the Government Code applies to all cities, including charter cities.
SEC. 4.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect for the reasons discussed in Section 1 of this act.