HomeMy WebLinkAbout1992-08-25 - AGENDA REPORTS - PROPOSITION 167 (2)CONSENT CALENDAR
DATE: August 25, 1992
SUBJECT: Proposition 167
DEPARTMENT: City Manager
BACKGROUND
AGENDA REPORT
City Manager Approval
Item to be presented b
Michael P. Murphy
This item is brought before the City Council at the request of Councilmember
Darcy. Proposition 167 will be placed before the electorate at the General
Election of November 3, 1992.
Proposition 167, an initiative measure, would make a number of changes in
California tax law. Among the tax increase provisions are hikes in insurance
premium taxes (from 2.35Z to 2.462), bank and corporate income taxes (from 9.3%
to 10.32), personal income taxes, and business property taxes (reassessment to
occur at 50Z cumulative ownership threshold). The measure contains some tax
reduction provisions which include a repeal of the sales tax on snacks, candy,
bottled water, newspapers and magazines. Additionally, the state sales tax will
be reduced by 1/4 percent.
Other provisions of the measure include extension of the renters' income tax
credit to all renters and repeal of the Bank In Lieu Tax which would make banks
and other financial institutions subject to local business license taxes.
Proponents argue that this measure creates a more equitable tax structure in
both personal and corporate taxes. They further argue that local government
revenues would increase statewide approximately $585 million to $1.2 billion.
Opponents of the measure argue that additional taxes levied on business will
further exacerbate the recession and cause many firms to leave the state or
choose not to expand or relocate in California. They estimate cumulative job
losses at 100,000 people.
The City of Santa Clarita will lose approximately $150,000 in 'snack tax'
revenues (FY 1992/93) if Proposition 167 is approved by voters. Local revenue
increases due toproperty tax reassessments and business license taxes on
financial institutions are uncertain depending upon how business responds to the
changes and whether or not local taxing authority is utilized.
The League of California Cities Board of Directors recently voted to oppose
Proposition 167. While- recognizing the potential local government revenue
increases, they expressed concerns that a negative reaction by the business
community could cause significant job loss in the state, reducing revenues as
businesses close, relocate out of, state or chose not to establish business in
California.
RECOMMENDATION
Oppose Proposition 167. APPROVED Agen€taltem -9
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RESOLUTION IN OPPOSITION TO PROPOSITION 167
WHEREAS, the current economic times have resulted in high
unemployment and an uncertain future for working Californians:
and
WHEREAS, we should be doing everything possible to encourage
employers to stay in California, not give them more reasons to
eliminate jobs or leave; and
WHEREAS, a recent survey of 000 California corporations revealed
that one in every four businesses already plans to relocate some
or all of its operations outside of California. This initiative
would drive even more employers out of state; and
WHEREAS, Proposition 167 includes more than a dozen separate tax
increases — including property taxes, personal income taxes,
taxes on small businesses and insurance premiuma:.and
WHEREAS, it would drive more businesses and jobs out of
California; and
WHEREAS, it could cost California more than 100,000 jobs#
according to.recent economic studies: and
WHEREAS, it would hit email businesses the hardest -- 75 percent
of all California businesses are, in fact, small businesses with
10 or fewer employees; and
WHEREAS, it would result in a host of unwanted consumer price
increases, including insurance premiums, residential and office
rents, gasoline prices, utility bills, banking coats; and
WHEREAS, it covers too many different issues and includes dozens
of separate provisions, changing taxation and other laws covering
everything from personal income taxes to bank reserves to
apartment rentals to insurance premiums to gasoline sales; and
WHEREAS, the initiative gives local governments a free hand to
impose any new taxes on banks -- including -taxes on deposits and
loans; and
WHEREAS, it provides another blank check for government to waste.
The initiative doesn't earmark the new funder so there is
absolutely no guarantee the new taxes would be spent the way
proponents say it would; and
WHEREAS, Proposition 167 would cause serious damage to
California's economic livelihood: now
THEREFORE, BE IT RESOLVED THE Sante Clarite Valley Chamber of
Commerce OPPOSES Proposition 167.
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Maree Lau fern r�' esident
San a Clarita Valley Chamber of Commerce