Bill to ban city subsidies to entice stores from other cities clears key test

By JIM WASSERMAN
Associated Press Writer

SACRAMENTO(AP) A favorite tool used by cities to snatch stores and car dealers from one other in California's bare-knuckle fights for sales taxes would be outlawed under a bill that passed a key Assembly committee Wednesday.

The bill would ban subsidies, tax breaks and public improvements frequently offered to retailers to leave one city for another, fattening the winning city's treasury with money for police cruisers and new parks.

The Assembly Local Government Committee passed the bill 5-2.

The proposal, which passed the Senate last month, has the blessing of cities and counties weary of battling one another for businesses. Most offer a range of enticements including temporarily waiving property taxes and reinvesting sales taxes in the firm that generated them. Cities also frequently promise street widening, upgraded traffic signals and expanded freeway offramps.

``It would be very helpful if we did not have the authority to provide these subsidies,'' said Ken Emanuels, a lobbyist for city and county redevelopment agencies that rebuild California's older neighborhoods, including downtowns.

Sen. Tom Torlakson, D-Martinez, the bill's author, cited ``estimates of tens of millions, hundreds of millions of dollars gone in past years to Wal-Marts and auto dealers.''

That money, Torlakson said, is ``not creating new jobs or new services. It's simply pitting one city against another.''

The bill specifically bans subsidies for stores larger than 75,000 square feet within 25 miles of one another, and car dealers within 40 miles. Representatives for both oppose the bill, saying the problem of cities battling one another is overstated.

``Let people decide what they want in their own communities,'' said Brian Moss, representing the California Motor Car Dealers Association.

``The last I checked this is still America,'' said Assemblyman Jay La Suer, R-La Mesa. ``If you get a better deal in La Mesa than you do in El Cajon, come on down. ... That's part of doing business in America.''

But supporters say that competition for sales taxes has distorted the state's growth patterns toward sprawl as retailers, fueled by financial incentives, leap from older neighborhoods to newer suburbs. Cities, which get one penny of every dollar collected in sales taxes inside their boundaries, reap $250 from the sale of each $25,000 car at a new auto mall.

The bill now goes to the Assembly Appropriations Committee.

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On the Net: Read SB114 at http://www.senate.ca.gov

(Copyright 2003 by The Associated Press. All Rights Reserved.)