Cities are fighting over sales tax—not fighting over jobs. Cities are using tax dollars to get more tax dollars via lawsuits and incentives to giant corporations, instead of being even handed and helping all businesses, large and small.
“Rancho Cucamonga Mayor Pro Tem Lynne Kennedy said the change in Amazon’s ownership structure exposed a flaw in a dated system to distribute tax revenue. The resolution proposed was meant to streamline sales tax distribution with how people spend their money, she said. If approved by League committees, the League would send the resolution to the state Legislature for potential approval.
Fresno’s leaders called that proposal racist since distribution centers are mostly located in disadvantaged communities of color that deal with the negative health and environmental effects from warehouses. In Fresno, residents who live near Orange Center Elementary and the Amazon and Ulta warehouses have fought new warehouses from locating in their neighborhood, saying they cause unsafe traffic, noise, light and air pollution.
“I would call it a money grab,” Fresno City Council President Luis Chavez said of the proposal. “It’s social equity flipped on its head.”
Where does the tax money go? Not to fund cops, not to fix roads—but to finance illegal aliens, welfare programs to keep people from working and worse. Stop the fight over taxes, start a fight over jobs.
California cities want a slice of Amazon sales tax. Here’s why Fresno calls one plan ‘racist’
By Brianna Calix, Fresno Bee, 10/5/21
California cities are fighting over tens of millions of sales tax dollars their residents pay when buying things from Amazon and other large retailers.
Cities such as Fresno, where a number of large distribution centers are located, are ready to go to the mat to hold on to the revenue they hope to collect. But other cities support proposed legislation they say is more equitable and benefits all California cities.
The conflict came to a head last month at an event hosted by the League of California Cities, an organization with a mission to protect local control and advocate for the common interest of the Golden State’s cities. But in this case, leaders of San Joaquin Valley cities said the League proposed legislation that pit its members against each other.
‘Equity’ or ‘money grab?’
It’s no secret that in the last 10 years online shopping has skyrocketed. The coronavirus pandemic was another hit to brick-and-mortar retailers who rely on in-person sales.
To that end, Rancho Cucamonga city leaders in the name of equity proposed a resolution at last month’s League of California Cities Expo that would result in online sales tax revenue being distributed among cities where packages are delivered, rather than where distribution centers are located. The resolution was titled “Online Sales Tax Equity.”
Currently, most sales tax revenue from large retailers goes to counties, local school districts and special districts. But since Amazon has adjusted its ownership structure, cities with distribution centers are poised to receive the money. Fresno Mayor Jerry Dyer estimated the city of Fresno will receive over $20 million in sales tax revenue over the next few decades.
Rancho Cucamonga Mayor Pro Tem Lynne Kennedy said the change in Amazon’s ownership structure exposed a flaw in a dated system to distribute tax revenue. The resolution proposed was meant to streamline sales tax distribution with how people spend their money, she said. If approved by League committees, the League would send the resolution to the state Legislature for potential approval.
Fresno’s leaders called that proposal racist since distribution centers are mostly located in disadvantaged communities of color that deal with the negative health and environmental effects from warehouses. In Fresno, residents who live near Orange Center Elementary and the Amazon and Ulta warehouses have fought new warehouses from locating in their neighborhood, saying they cause unsafe traffic, noise, light and air pollution.
“I would call it a money grab,” Fresno City Council President Luis Chavez said of the proposal. “It’s social equity flipped on its head.”
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Another Fresno City Councilmember, Miguel Arias, took it a step further: “It’s modern-day racism,” he said. “They’re using the power of the taxation system to directly benefit themselves.”
Kennedy pointed out that 76% of California’s cities are home to disadvantaged communities, and 10% of cities have fulfillment centers. That means two-thirds of cities with disadvantaged communities would benefit from the proposed resolution, she said.
“Why does any city with a fulfillment center feel entitled to money that was not theirs to begin with? It really was going to a pool,” Kennedy said. “Now, because of that flaw, and change of status of that retailer, now that money is being diverted away from the county pool, and into one single pot, rather than the pot of equitable distribution. So that’s really the question.”
Diane Sharp, Hanford’s vice mayor, said the proposed resolution would help her city since it’s unlikely to attract a fulfillment center.
“We’d like to see the rules change because we’d like to see the spending dollars of Hanford residents stay in Hanford,” she said. “It’s pretty clear that spending patterns in the state have been revolutionized by the internet. While we’re thriving in Hanford, we’d like to be able to provide even more for our residents. We’d be able to do that if we were able to capture more of the percentage of tax dollars.
“We’re already working with less than some cities,” Sharp said. “Changing this tax apportionment would go a long way in making Hanford an even better city in which to raise a family and live.”
Dyer compared the resolution to Fresno asking cities with tourist attractions, such as the beach or Disneyland, for a cut of their tax revenue since Fresnans spend money in those areas. Those cities likely saw declining tax revenue due to the pandemic, so now they’re hoping to backfill with online sales tax revenue, he said.
At the League Expo, Fresno leaders banded together with other cities with fulfillment centers to propose an amendment to the resolution. Ultimately, the League’s general assembly of statewide city leaders voted overwhelmingly to send the resolution back to a working group of city managers.
League of California Cities
Fresno pays $95,000 annually for its League of California Cities membership.
It’s not uncommon for the League to lobby for legislation.
What is uncommon, Valley leaders said, is for the League to consider supporting legislation that benefits some members and harms others.
“It’s counterproductive and contradicts the spirit of what the League of Cities was intended for when it was created, and that was to bring cities together to coalesce and advocate for the cities as a whole,” Chavez said. “This was the opposite. It’s essentially saying you have to fight against each other for revenue.”
Sharp agreed: “This really pit city against city in a way I haven’t seen before,” she said.
Officials with the League defended the process, saying the organization’s democratic style worked and reflected the diversity of its membership.
“The recent resolutions demonstrate how the Cal Cities resolutions process is both democratic and responsive to individual cities’ concerns,” Jill Oviatt, League of California Cities director of communications and marketing, said in a statement. “In a state as diverse as California, city leaders are going to have unique and differing positions on these issues. This process allows passionate debate on pressing issues in a manner that is civil and productive. The democratic process lends itself to passionate debate, and that’s a good thing.”
Kennedy said the resolution was a chance to discuss the issue.
“I think that a resolution doesn’t pit people or cities against each other — people do that,” she said. “We need to fly above, and we need to look at what’s going to be good for California, for everybody in California.”
Amazon in Fresno
Amazon began operations in Fresno in 2018 in an 855,000-square-foot warehouse. Ulta built a similar-sized warehouse nearby, and Gap also operates a distribution center in Fresno. Now, construction is under way for a second, larger Amazon warehouse next to the existing one.
The city’s deal to bring Amazon here was controversial because it kicks back sales tax revenue to warehouse retailers. While previous mayors touted the deals as a way to add jobs to the city, other legislative analysts have argued the deals reduce local revenue for services.
Since then, other flash points over hosting Amazon have arisen: it has been hard to prove how many Fresno residents or people from the neighborhood actually work at the fulfillment center; and in the first year of operation, workers at the Fresno Amazon warehouse were seriously injured on the job at a rate nearly three times the national warehouse industry average, and more than double the statewide industry average, according to OSHA records.
Before construction on the second Amazon warehouse was given the green light, city leaders brokered an unprecedented deal with residents in the neighborhood to build water and transportation infrastructure in the area and install filters and filtration systems in the residents’ homes.
“From my perspective, the promise Fresno made to south Fresno is being threatened by a handful of affluent cities,” through the League of California Cities resolution, Arias said.
What’s next?
It’s possible the League’s Online Sales Tax Equity resolution could come back, Dyer said, and Fresno leaders will continue to fight it.
“It is a hill to die on,” Dyer said.
Kennedy said the conflict is slowing down the process and could ultimately lead to the Legislature taking up the issue and making the decision without cities’ input.
“If we as the elected officials don’t come together to come up with something that we believe is fair, equitable, and supports every city, then it’s going to be taken out of our hands because the legislators will do it. It’s going to happen,” she said. “The question becomes, do we want to solve our own problems? Or do we want Sacramento to solve it for us?”
Arias said the Fresno City Council must gear up to figure out how to spend the new sales tax money coming its way.
“The same discussion we just had at the League of Cities will be replicated at the city of Fresno within the context of the ‘Tale of Two Cities’ and south Fresno neighborhoods being made whole for the burden they’ve been asked to put up with,” Arias said.
