California has long prohibited counties from levying their own income taxes, but a bill by state Senate President Pro Tem Darrell Steinberg, D-Sacramento, that passed out of a committee last week would allow just that.
If the bill is signed into law, the San Francisco Board of Supervisors could ask voters to subject themselves to an income tax, but it would need two-thirds approval.
The measure would give county boards statewide the power to put vehicle registration fees; soda, alcohol, gas or medicinal marijuana taxes; and other revenue-generating ideas on ballots.
Supporters said such revenue would give local governments another way to support struggling schools and have the necessary funding to keep police officers and firefighters on the payroll during tough economic times. The San Francisco Unified School District is supporting the measure.
The bill “would provide school districts with more options to raise revenue when the state fails to fund schools appropriately,” said Nancy Waymack, the executive director of policy and operations for the SFUSD. “Ideally, adequate funding would be provided by the state, but when that fails to happen we need to have options that allow voters to support their local schools.”
However, the bill, which requires a majority vote from the Legislature, is being opposed by Republicans, taxpayer advocates and organizations representing the alcohol and restaurant industries.
Opponents argue that a local income tax would affect residential decisions.
“For example, when choosing between San Francisco and Concord, some taxpayers might choose to reside in a county that doesn’t tax their incomes,” read an analysis of the bill.
Another complaint is that implementation of a new tax system would require a new level of bureaucracy.
“If passed, SB 653 could create long-term economic challenges as businesses are forced to comply with more than 1,000 different tax jurisdictions,” Gina Rodriquez, a vice president of state tax policy for the California Taxpayers Association, said in a statement.
State Sen. Mark Leno, D-San Francisco, has been working to pass a similar bill that would allow The City to implement a vehicle license fee. He said Steinberg’s proposal would let voters decide how they want to solve budget deficits.
“In a perfect world, this measure would not be needed, but given the near impossibility of legislative support for revenue, the state really has no other option,” Leno said.
A penny here, a dollar there
Taxes San Francisco residents and businesses already pay:
1.5% Company payrolls of more than $250,000
14% Occupied hotel rooms, amenities (for arts)
7.5% Utility users
Sources: City treasurer-tax collector,California Board of Equalization
What could be taxed
A state Senate bill seeks to allow local governments to put fees and taxes on ballots to generate revenue. Possibilities include:
- Local income tax
- Alcohol tax
- Gas tax
- Vehicle license fee
- Sweetened drinks fee
- Tobacco tax
- Medical marijuana fee
Source: Analysis of SB 653