Communities compete to attract large retailers by offering sales tax refunds, diverting tax revenues that would be used for public services. The Constitution allows cities and counties to contract to share sales tax revenue, but these contracts must be approved by a majority of the voters in each jurisdiction. No California community has proposed such a contract. In effect, it shifts the power to share tax revenues from the voters to their elected representatives. The State Board of Equalization may incur additional costs to administer an increased number of jurisdictions that have elected to enter into the contracts authorized by this proposition.
Revenue sharing reduces the pressure to give away public funds.
Agreements to share tax revenues could be linked to other obligations, such as annexation. Copyright 1998 League of Women Voters of California Education Fund. This page may be linked to or printed in its entirety.