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Home My WebLink AboutLRC 04-06-2026 Item No. 4 Legislative Update_Written CommunicationsLRC 4-06-2026 #4 Legislative Update Written Communications From:Liang Chao To:City Clerk Subject:Written Communication for the first LRC meeting Date:Monday, April 6, 2026 1:11:10 PM Attachments:image.png 2026 Rev & Tax_March_Policy Committee Slides.pdf Please enter this into the written communication for the first LRC meeting. I attended the March 26 Cal Cities Revenue Taxation Policy Committee. There are the bills, including one upcoming ballot measure, considered by the committee. Attached is the presentation slides for your reference. =========== Initiative 25-0006 “Local Taxpayer Protection Act to Save Proposition 13” - voted to oppose The committee voted to oppose the "Taxpayer Protection Act" ballot measure with a big margin - 31 (oppose) 7 (support) 3 (abstain), even though the staff analysis/recommendation is pretty biased towards supporting it. Proponent Guest Speaker:Susan ShelleyVice President of Communications, Howard Jarvis Taxpayers =========== SB 922 (Laird) Vehicles: local agency charges: use of streets or highways This measure would clarify and reaffirm local authority related to the recovery of street maintenance and repair costs associated with providing essential public services. Cal Cities Position: Sponsor Payment rounding SB 1005 (Caballero) Local agency: payment: rounding amount This measure would provide clarity to public agencies following the end of penny production by the federal government. Cal Cities Position: Co-Sponsor SB 1349 (Gonzalez) Taxation: tax expenditures: California Tax Expenditure Review Board This measure would establish the California Tax Expenditure Review Board as an independent advisory body to assess major tax expenditures and make recommendations to the Legislature. Cal Cities Position: Support (letter pending) SB 1172 (Hurtado) Sales and use taxes: local agencies: administration This measure looks to limit the compensation that a consultant can receive for negotiating a sales tax sharing agreement between a local agency and a private retailer. Cal Cities Position: Pending AB 2192 (Gonzalez) Sales and use taxes: farm equipment and machinery. This measure would exempt farm equipment and machinery from the Bradley Burns local sales tax, as well as any locally approved transaction and use tax. The bill appropriates $200 million, one-time, to offset fiscal impacts to local agencies. Cal Cities Position: Pending SB 1415 (Arreguín) Real property tax: welfare exemption: moderate-income housing This measure would create a new property tax welfare exemption for developers who build market-rate housing. Cal Cities Position: Pending AB 2214 (Jackson) Taxation: tax expenditures: California Tax Expenditure Review Board This measure would require the State Treasurer to allocate 5-10% of the Local Agency Investment Fund to fund a community reinvestment account for financial institutions to fund specified projects. Cal Cities Position: Pending AB 1953 (Lowenthal) Short-term rentals: emergencies and special events This bill seeks to raise the caps of allowed short-term rentals in areas impacted by natural disasters or other limited events (Olympics). Cal Cities Position: Pending Liang Chao Vice Mayor City Council LChao@cupertino.gov 408-777-3192 Strengthening California Cities through Advocacy and Education Policy Committee Meeting Revenue and Taxation March 26, 2026 Ben Triffo Legislative Affairs, Lobbyist Leila Romero Policy and Legislative Affairs Analyst Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Welcome and Introductions Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Welcome and Introductions •Chair Joe Vinatieri Mayor, City of Whittier Housekeeping •Please raise your hand or tent card to ask a question or make a comment. •A Cal Cities staff member will bring you a microphone. Committee Ground Rules •Please give a “thumbs-up” or use another silent indicator if you agree or want to emphasize a point someone else has made. •Please be mindful of time to allow the opportunity for everyone to speak. Try to limit comments to three minutes where appropriate. •As always, please remain respectful of one another over the course of the conversation. Committee Ground Rules •Remember to state your name and city when you first address the committee. This helps make sure everyone knows who you are and what city you represent. •Wait for the Chair to recognize you to speak. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Agenda Overview •Public Comment •Initiative 25-0006 •Update on City Manager Sales Tax Working Group •State Legislation and Budget Update and Roundtable •Economic Development and Attracting New Businesses Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Committee Introductions Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Public Comment Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Upcoming 2026 Events April 22-24, 2026 Sacramento, CACity Leaders SUMMIT REGISTER NOWMay 13-15, 2026 Universal City, CA City Attorneys Spring www.calcities.org/city-attorneys-conference CONFERENCE THE MUNICIPAL REVENUE SOURCES HANDBOOK New edition! The definitive guide to navigating municipal finance in California. Purchase your copy today! $100 for Cal Cities members $150 for nonmembers Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Initiative 25-0006 “Local Taxpayer Protection Act to Save Proposition 13” Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Initiative 25-0006A1 •Proposed Constitutional Amendment •Titled: Local Taxpayer Protection Act to Save Proposition 13 •Sponsors:  California Business Roundtable Howard Jarvis Taxpayers Association California Business Properties Association Spent $10+ million to qualify this measure; over $70 million since 2018 sponsoring similar measures. •Status: Proponents submitted 1.34 million signatures; pending qualification with the California Secretary of State for the November 2026 statewide ballot. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Key Terms •Real Property Transfer Tax (RPTT) 27 charter cities have adopted RPTTs. A city that imposes a RPTT may not also impose a Documentary Transfer Tax (DTT). There is currently no limit to the RPTT rate a charter city can charge. General law cities cannot impose a RPTT. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Key Terms •Parcel Tax “Special” non-ad valorem tax. Generally, either a flat per-parcel rate or a variable rate depending on the size, use and/or number of units on the parcel. • Citizens’ Initiative/“Upland Loophole”  Voter-initiated local special tax measure passed by a simple majority. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Provisions of Initiative 25-0006A1 •Requires special taxes adopted via citizens’ initiative to pass with a 2/3 majority (closing the “Upland Loophole”). •Prohibits Real Property Transfer Taxes. •Requires all parcel taxes to pass with a 2/3 majority. •Makes null and void taxes not in compliance with the measure on December 31, two years following the passage of this measure. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Statewide Impacts •Annual loss of $2 - 3 billion of local government revenues due to invalidated taxes. •27 cities and 2 counties directly impacted. •Impacted charter cities could go to the ballot to adopt the Documentary Transfer Tax authorized by R&T Code 11911 (.11%). •Any charter city could not impose a real property transfer tax going forward. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org These taxes can vary… Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org These taxes can vary… Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Impacted Cities Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Initiative 25-0006 Proponent Guest Speaker: Susan Shelley Vice President of Communications, Howard Jarvis Taxpayers Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Initiative 25-0006 Opponent Guest Speakers: Lisa Soghor, Assistant City Manager, City of Culver City Culver City Real Property Transfer Tax Measure RE •Approved by voters Nov. 3, 2020 •Implemented a marginal tax rate with four tiers •Allows City to adjust the tiers by CPI •Special provisions for affordable and multi-family housing •Effective April 1, 2021 Marginal Tax Rates Tax Tiers approved by voters: •0.45% on amounts from $0 to $1,499,999* •1.5% on amounts from $1,500,000 to $2,999,999 •3.0% on amounts from $3,000,000 to $9,999,999 •4.0% on amounts $10,000,000 and above *Tax rate remains unchanged for properties sold below $1.5 million Special Provisions Affordable and Multi-Family Housing The entire value of the sale is taxed at the pre-existing 0.45% rate in the following cases: •100% deed-restricted affordable housing •First transfer of newly constructed multi-family housing Local Development Activity Increased Post-Measure RE Housing applications have increased 1080% while Measure RE is in effect City’s Current Development Pipeline There are currently 69 projects in development in Culver City: •Residential •41 Projects in Development •4,473 Residential Units •660 Affordable Housing Units •Commercial •28 Projects in Development •Over 1 million square feet of commercial space Housing Increases Service Costs As a result of Measure RE, the City’s Real Property Transfer Tax revenue increased from $3-4 million to $8-9 million annually helping to off-set increased services costs Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Initiative 25-0006 Opponent Guest Speakers: Evan McLaughlin, Political Director, CA Professional Firefighters Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Update on City Manager Sales Tax Working Group Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Board Action Overview •Overview: After a robust discussion, the Cal Cities Board of Directors took the following actions on recommendations from the Revenue and Taxation Policy Committee which originated from the City Managers Sales Tax Working Group. •The Board rejected policy related to: A 50/50 split of Bradley-Burns sales tax revenues generated from ecommerce transactions. A plus or minus 5% flexibility band. Prospective application, excluding revenues from existing sales tax sharing agreements from any split. Five-year phase-in following CDTFA implementation. A plus or minus 20% volatility band shall be used when reallocating revenues, whereby revenues gained by a city in excess of 20% would be used to mitigate revenue losses greater than 20% for cities negatively impacted by the reallocation of the Bradley-Burns. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Next Steps/Ongoing Work •Board Direction: Pursue statutory change to reallocate county pool use tax from out-of-state e-commerce transactions to destination cities. Noted the need for additional data. •Ongoing Work:Continue exploring broader tax reform to increase revenue for all cities. This includes digital goods. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org 2026 Advocacy Priorities Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org 2026 Cal Cities Advocacy Priorities 1. Protect and enhance local revenues and expand economic development tools. 2. Strengthen partnerships with the state to improve public safety. 3. Secure investments to prevent and reduce homelessness and increase the supply of affordable housing. 4. Strengthen climate change resiliency and disaster preparedness. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Legislative and Budget Update/Roundtable Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Cal Cities Bill Search The Cal Cities bill search feature on our website will give you all the information you need on pending legislation. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org State Legislative Process The Committees We Work With Assembly Revenue and Taxation Committee •Chair: Mike Gipson (Carson) •Vice Chair: Kate Sanchez (Temecula) •Asm. Michelle Rodriguez (Chino) •Asm. Carl DeMaio (Valley Center) •Asm. Robert Garcia (Colton) •Asm. Tina McKinnor (Inglewood) •Asm. Sharon Quick-Silva (Fullerton) Senate Revenue and Taxation Committee •Chair: Jerry McNerney (Pleasanton) •Vice Chair: Marie Alvardo-Gil (Jackson) •Senator Angelique Ashby (Sacramento) •Senator Tim Grayson (Concord) •Senator Thomas Umberg (Santa Ana) The Committees We Work With Assembly Local Government Committee •Chair: Juan Carrillo (Palmdale) •Vice Chair: Tri Ta (Westminster) •Asm. Natasha Johnson (Lake Elsinore) •Asm. Blanca Pacheco (Downey) •Asm. James Ramos (Highland) •Asm. Blanca Rubio (Baldwin Park) •Asm. Catherine Stefani (San Francisco) •Asm. Chris Ward (San Diego) •Asm. Lori Wilson (Suisun City) Senate Local Government Committee •Chair: María Durazo (Los Angeles) •Vice Chair: Steven Choi (Irvine) •Senator Jesse Arreguín (Oakland) •Senator Angelique Ashby (Sacramento) •Senator Sabrina Cervantes (Riverside) •Senator John Laird (Santa Cruz) •Senator Kelly Seyarto (Murrieta) Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org FY 2026-27 State Budget Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org A trip down memory lane… The last few years have been a rollercoaster: •2022 – $90 billion surplus. •2023 – $31 billion deficit. •2024 – $47 billion deficit. •2025 - $18 billion deficit Governor’s proposed budget •$348.9 billion balanced budget. •$23 billion in reserves. •$2.9 billion deficit. •Outyear deficits north of $20 billion. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org How are we paying for this? But what does the LAO say? •The LAO forecasts a $18 billion deficit for FY 2026-27. •Outyear deficits north of $35 billion. •Notes economic headwinds. •Newsom Administration acknowledges challenges but doesn’t address them. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Revenues have improved •Up $6.1 billion over January Budget assumptions (December through February). •Potential surplus this year or next. LAO notes AI boom unlikely to last. •May Revision will contain additional solutions to solve for future deficits. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Uncertainty ahead… •“Iran War” impact on the stock market. Still up from a year ago. •Worldwide oil shock. •Short-term revenue surge continues. Revenues lag the stock market by six to twelve months. •Future structural deficits remain. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Uncertainty ahead… •GDP growth seems to be slowing 2025 Q4 revised down to 0.7% •Inflation in California is greater than the national rate. U.S. – 2.4% CA – 3.2% •Unemployment rate increased. 4.4%, up 0.1% Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Revenues and the stock market Source: LAO Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Revenue and Taxation Bills Road repair SB 922 (Laird) Vehicles: local agency charges: use of streets or highways This measure would clarify and reaffirm local authority related to the recovery of street maintenance and repair costs associated with providing essential public services. Cal Cities Position: Sponsor Payment rounding SB 1005 (Caballero) Local agency: payment: rounding amount This measure would provide clarity to public agencies following the end of penny production by the federal government. Cal Cities Position: Co-Sponsor Sales tax SB 1172 (Hurtado) Sales and use taxes: local agencies: administration This measure looks to limit the compensation that a consultant can receive for negotiating a sales tax sharing agreement between a local agency and a private retailer. Cal Cities Position: Pending Sales tax AB 2192 (Gonzalez) Sales and use taxes: farm equipment and machinery. This measure would exempt farm equipment and machinery from the Bradley Burns local sales tax, as well as any locally approved transaction and use tax. The bill appropriates $200 million, one- time, to offset fiscal impacts to local agencies. Cal Cities Position: Pending Property tax SB 1415 (Arreguín) Real property tax: welfare exemption: moderate-income housing This measure would create a new property tax welfare exemption for developers who build market-rate housing. Cal Cities Position: Pending Taxes generally SB 1349 (Gonzalez) Taxation: tax expenditures: California Tax Expenditure Review Board This measure would establish the California Tax Expenditure Review Board as an independent advisory body to assess major tax expenditures and make recommendations to the Legislature. Cal Cities Position: Support (letter pending) Financial reporting AB 2214 (Jackson) Taxation: tax expenditures: California Tax Expenditure Review Board This measure would require the State Treasurer to allocate 5-10% of the Local Agency Investment Fund to fund a community reinvestment account for financial institutions to fund specified projects. Cal Cities Position: Pending Short-term rentals AB 1953 (Lowenthal) Short-term rentals: emergencies and special events This bill seeks to raise the caps of allowed short-term rentals in areas impacted by natural disasters or other limited events (Olympics). Cal Cities Position: Pending Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org High Speed Rail Authority Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org HSRA Business Plan •Gain authority to enter and lead a tax increment financing district. Half mile radius of planned stations Sales and property tax increment at risk Land use authority •Likely included in budget. •Constitutional and legal concerns. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Property transfer tax reform •Vehicle may be AB 698 (Wicks). •Looking to modify transfer taxes: Cap rates Limit applicability Convert to a “net” tax Retroactive Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Tax Exemptions Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Local agencies and sales tax •Should local agencies be exempt from paying sales tax? •Currently, do not pay property tax. •Precedent in other states. •Are there risks? Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org LAO Tax Reform Report Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Published on 3/24/26 •The LAO report “Comparing Options to Raise and Lower Taxes” put forward a range of options for the Legislature to consider: Tax Increase Options Major Tax Increase Options Tax Decrease Options •The report took into consideration: Budgeting (Growth, Stability, and Predictability) Economy Taxpayer Experience Progressivity Fairness •Many proposals had little to no direct impact on cities, other could result in dramatic change. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Tax Increase Options •13 options that raise taxes between $1 and $3 billion annually. •Some proposals that could impact cities: Quarter-cent sales tax increase Tax digital goods Soda tax Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Major Tax Increase Options •8 options that raise taxes between $10 and $15 billion annually. •Some proposals that could impact cities: 1.25 percentage point sales tax increase Increase “Big Three” Taxes (income, corporation, and sales taxes) Tax consumer services Eliminate tax expenditures and broaden the base “Split Roll” property tax Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Tax Decrease Options •9 options that lower taxes between $1 and $3 billion annually. •Some proposals that could impact cities: Quarter-cent sales tax decrease Expand sales tax exemptions for business equipment Reduce gas and diesel taxes Exempt $10,000 of value from vehicle license fee Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Thoughts? Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org Economic Development and Attracting New Businesses Guest Speaker: Timothy Kelly, President, Imperial Valley Economic Development Corporation Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org THANK YOU! The next Revenue and Taxation Policy Committee meeting isJune 4, 2026, • 9:30 am – 12:30 pm, Virtual. Strengthening California Cities through Advocacy and Education @calcities @calcities @calcities.org CONNECT Ben Triffo Legislative Affairs, Lobbyist btriffo@calcities.org