Support cautious for Assembly tax swap bill

Paul Clinton

A local assemblyman’s proposal to swap out sales tax revenue to

cities for property tax revenue, dollar for dollar, has met with

cautious support in Costa Mesa, a city with a strong retail base.

On Thursday, Assemblyman John Campbell, who represents Newport

Beach, unveiled the plan with Assemblyman Darrell Steinberg

(D-Sacramento) as a joint author.

“It’s an interesting concept and is worthy of more discussion,”

Costa Mesa City Manager Allan Roeder said. “That may sound like

heresy coming from anyone from Costa Mesa because our city is so

heavily dependent on sales tax.”

The two legislators floated their plan, known as Assembly Bill

1221, at a morning news conference in Sacramento.

Part of a series of proposals to overhaul state budget and

financing, the bill would cut in half the amount of revenue cities

receive from sales tax. Cities now get a penny of each dollar spent.

If the bill becomes law, they would get only half of that penny.

In exchange for that revenue loss, the state would hand cities an

equal share of money from property tax revenue. In essence, the state

would match half of a city’s current sales tax proceeds.

Costa Mesa, during the 2001-2002 fiscal year from July 1 to June

30, received $32.69 million in sales tax revenue and $12.26 million

in property tax revenue.

Newport Beach City Manager Homer Bludau was also skeptical of the

bill, citing a handful of state tax-revenue grabs from cities over

the past decade.

“The devil would be in the details,” Bludau said. “The state has

not been kind to cities and has always found ways of eroding their

[tax revenue].”

The goal of the bill is to inspire cities that aggressively court

new retailers as revenue generators to build more housing, Campbell

said.

“What we’re trying to do is very simple,” Campbell said. “We’re

trying to remove the disincentive for local governments to build

housing. We need a balance.”

The bill is an odd collaboration, considering the political

polarization in Sacramento over the state’s budget crisis. In

Steinberg, Campbell, an accountant and auto dealer himself, has as a

co-author one of the state’s more liberal Democrats.

They may have wildly differing political views, but they have

found common ground on this bill because of their mutual respect, the

assemblymen said.

“When John Campbell and Darrell Steinberg get together on a bill,

it’s a significant development,” Steinberg said. “I respect John’s

intelligence.”