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Share the Sales Tax Wealth

June 19, 2002

The rich get richer and the poor get poorer all over California. Not just individuals or families this time, but cities, suburbs, rural counties and entire regions, as coveted sales tax dollars gravitate to newly wealthy places such as Roseville, a former railroad town near Sacramento. With their glitzy shopping malls and vast auto sales plazas, these communities flourish. Nearby towns whose retail centers were the latest thing in the 1960s and 1970s stagnate, their stores empty and dark.

When a local government grabs a Costco or an auto mall, it also lands a bounty of sales tax money, often creating a have-not community next door. Suddenly, these older areas can't afford the services and infrastructure that keep communities vibrant.

Until now, California lawmakers have seemed incapable of grappling with the distortions created by the 1% of the sales tax that is returned to the local government where the sales occurred. But today the Senate Local Government Committee can begin to repair that flaw--and redeem the Legislature--by approving AB 680, by Assemblyman Darrell Steinberg (D-Sacramento).

The bill provides for the regionwide sharing--on a trial basis in the Sacramento area only--of any growth in sales tax revenues beginning in 2004. A third of the new sales tax receipts would go back to the locale of the sales. Another third would be distributed within the region on a population basis. The rest would be used to reward cities and counties that lived up to their commitment to build low- and medium-income housing.

Unfortunately, the League of California Cities and individual cities from Mission Viejo to San Mateo--affluent ones more often than not--oppose the bill because they fear that if the program works in Sacramento they too may get stuck with it.

This self-centered arrogance ignores the likelihood that today's affluence will someday migrate, leaving behind seedy malls and lagging tax income. These towns should get over themselves and recognize that ultimately they stand to benefit from Steinberg's proposed experiment.

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