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Winning by sharing: Steinberg sales tax plan benefits region.

Sacramento Bee

April 9, 2001

Assemblyman Darrell Steinberg's proposal for sales tax sharing among local governments across the Sacramento region is a kind of political three-cushion bank shot. It's not the shot you'd choose to play every day, but the one you reserve for those messy situations when no other approach will work.

Steinberg wants to solve an enduring and universally acknowledged problem -- that local governments are skewing planning decisions in the chase for sales tax revenues.

Right now, 1.25 cents of the sales tax you pay on a dollar purchase goes to local government as general revenue that can be used for police, fire and other day-to-day services. The root of the problem is the way the money is divided. It doesn't go to the community where you live and get services, but to the one where you buy your clothes or furniture or cars.

This system sends the wrong signals to local decision-makers. It makes them covet revenue from regional shopping malls and auto dealerships, not the manufacturers and other firms that produce the jobs and wealth that make the economy grow. It makes housing look less desirable than big box hardware stores. And it leads local officials to use taxpayer dollars to pay unnecessary subsidies to lure stores from the town down the road.

The straight shot here would be simply to divvy up the local sales tax according to where people live, not where they shop. But the straight shot would create winners and losers, as money would have to flow from cities like Roseville and West Sacramento, which have high sales tax collections, to places like Galt and Lincoln, which don't.

So Steinberg has shaped a more imaginative plan in which everybody would gain. To keep any community from being a loser, he proposes to have the state backfill any revenue lost from sales tax sharing, using property taxes it spirited away from local governments a decade ago.

To ease state concerns about the backfill, he proposes that the state use U.S. EPA rules to win additional air pollution credits in this Sacramento region because sales tax sharing would lead to better planning and less emissions. These air credits would then make it possible to build more power plants to ease the state's power crisis, which is Gov. Davis' highest priority. And the dollars from the sale of the air credits could be used to preserve open space in the region.

Up and down the state, planners, policy wonks and officials have been complaining about the skewed distribution of local sales taxes and how it "fiscalizes" land use in ways that hurt California. This year, with Steinberg's bill, AB 680, the Sacramento region has a chance to get beyond complaining to imaginative action that helps improve communities, promote smart growth and keep the lights on. Citizens need to push their local elected leaders to get past narrow parochial concerns and support Steinberg's win-win-win approach.

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