Speaker's Commission
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Tax sharing plan gutted

Sacramento Bee

By Paul Krugman

August 8, 2002

After two years of pushing, Assemblyman Darrell Steinberg on Wednesday dropped his highly controversial effort to get cities and counties in the Sacramento region to share some of their sales taxes.

"I strongly believe in and continue to be committed to some form of regional revenue sharing ... but I can count (votes)," Steinberg, a Sacramento Democrat, told the Senate Local Government Committee.

He was still holding onto hope that the region's local jurisdictions could agree on a plan to build more affordable housing in the six-county area. But the chances of such a deal coming together before the Legislature adjourns Aug. 31 appeared slim.

"Even though I know I'm against the wall, I'm hopeful," Steinberg said. "I'm a fighter, and even more importantly, I believe that change needs to be pushed.

"We need to come out of this with a victory for the region."

Steinberg deleted all the substantive language from his bill, AB 680, on Wednesday and asked that the local government committee send the measure to a legislative conference committee so he could continue to work on a potential affordable housing deal.

When it became clear he didn't have the committee votes even for that action, Steinberg opted to put off a vote on AB 680 for one more week -- to give himself a little more time.

The delay drew groans from the audience, which was full of local officials from as far away as Southern California who had come to testify against the measure. While AB 680 applied only to the six-county Sacramento region, including El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, many cities throughout the state viewed it as a dangerous precedent that could spread to their areas.

Even with the sales tax language gone, other localities remained suspicious of what could happen in the final days of the legislative session, a time notorious for last-minute deals.

"Why not just kill the bill now?" said San Bernardino Mayor Judith Valles. "Sending this to a conference committee will only prolong the agony."

Most of the rural and suburban jurisdictions in the Sacramento region also oppose AB 680, and they fought Steinberg's attempt Wednesday to continue the affordable housing discussion.

"We've been working on this for 1,000 to 1,500 hours; what is the conference committee going to do in two and a half weeks?" asked Roseville Mayor Claudia Gamar.

The bruising Steinberg has taken over AB 680 illustrates how difficult it is to get the disparate governments in the greater Sacramento area to agree on common solutions to problems like traffic, the flight of wealth from older neighborhoods, loss of open space, polluted air and the lack of affordable housing.

"Everyone likes to extol the virtues of regionalism," Steinberg said. "Translating the talk to action is very difficult."

Supported by the city and county of Sacramento, AB 680 was characterized by suburban jurisdictions as a sales tax grab. Steinberg contends that changing the formula for sales tax distribution -- currently, each local government keeps taxes collected within its borders -- would lessen the frenzy to build new big-box stores and shopping malls.

Several months ago, Steinberg had quietly given up on getting the sales tax provisions through this year. He began intense negotiations with a region-wide coalition of cities and counties to see if they could find a solution to one regional problem: the shortage of affordable housing.

The two sides were close to a deal that Gamar said would have increased construction of affordable housing in the region by 300 percent or more. The deal would have required each local government in the region to ensure that 10 percent of new housing be affordable, most of it to low-income residents.

But Steinberg staff members said the negotiations broke down when the coalition insisted that the state guarantee about $30 million a year in housing money to offset the cost of building the new affordable housing.

Steinberg said this demand was a "poison pill," because it was impossible for him to meet.

Steinberg met with State Treasurer Phil Angelides and state housing director Julie Bornstein last week. He said they were open to giving the region added consideration for state money for working together -- but couldn't give guarantees of certain dollar amounts from state bonds or tax credits.

The local governments involved in the negotiations, however, said it was Steinberg who pledged state money, and then didn't deliver. Without such a guarantee, the cities and counties that make up the coalition wouldn't go along with the plan.

"This is a promise that Darrell made to us, that he would get us additional funding," said Roseville Assistant City Manager Craig Robinson.

"In order to meet the standards we proposed, it requires a pretty high subsidy -- about $400 million over five years," Robinson said.

Roseville already has a 10 percent affordable housing goal, which it has more than met, Robinson said.

The idea of imposing new affordable housing requirements doesn't sit well with officials from some of the Sacramento region's less affluent communities.

West Sacramento City Councilman Jim Cahill said his community already has plenty of low-income housing.

"This bill would add to our burden ... and would not address our need for moderate-income housing," he said.

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