Ban on Corporate Tax-Sharing Deals Heads to Governor

A bill that would block cities and counties from sharing tax revenues with online retailers has passed the Legislature and is now headed to the governor for approval. He has until Oct. 13 to sign or veto the bill.

SB 531 was authored by Sen. Steve Glazer (D). It prohibits future revenue-sharing deals with companies like Amazon and Ulta, which have been used by municipalities to woo corporations to their regions.

In an op-ed, Glazer said “these deals siphon money from every city in the state and give it away to some of the richest corporations in the world.” He calls it the worst form of corporate welfare — one that is “robbing residents of the resources they need to pay for police, firefighting, parks and other local services.”

The League of California Cities supports the bill. But some local governments such as Fresno, Riverside, and San Bernardino say it eliminates a crucial instrument for economic development.

“This bill basically prohibits cities in California from offering sales tax incentives to leverage their deals with e-commerce centers,” complained Fresno Mayor Lee Brand (GV Wire). “This is one of our biggest tools, and they want to take it away from us.”

Amazon and Ulta have contributed an estimated $99 million to the city’s general fund and created about 4,000 local jobs, according to Sen. Andreas Borgeas.

Bloomberg Tax took look at some of these deals. It found that around 10% of California’s cities are using tax-sharing incentives to attract or retain corporations.

“Apple has received about $70 million from its hometown of Cupertino over the past 20 years, according to payment ledger information obtained by Bloomberg Tax. Best Buy has received or is owed $9.5 million from Dinuba, a small city in the economically struggling Central Valley. Staples Inc. and QVC Inc. have similar deals with the city of Ontario, which is a hub for warehouses and goods movement.”

The governor has not said whether or not he will sign the bill.