Curing Mall Mania
One of the pernicious legacies of Proposition 13, the 1978 property tax initiative, is what’s known to academics as “the fiscalization of land use.” In layman’s terms, it’s how some cities prostitute themselves to attract giant retail outlets so they can reap the sales taxes the businesses produce. “Cash-box zoning,” it was called, appropriately, in Times staff writer Douglas P. Shuit’s report on the issue.
Those who have studied the problem deplore this predatory competition for shopping malls, auto dealerships and big retailers, pointing to the traffic congestion, visual blight, public safety demands and other problems that the enterprises produce. It trashes the notion of sensible land-use planning. Rival cities are forced to succumb to retail developer demands at the expense of sound residential development. And the process encourages creation of low-paying sales jobs over the stable, salaried positions common to some other industries.
But cities usually favor the big retailers because they pump instant cash into their treasuries, a penny on every dollar of sales. High-tech jobs are fine, but income taxes all go to the state. The sales tax has become ever more critical to municipal finance since Proposition 13 reduced and capped property tax revenues. Sacramento worsened the problem early in the 1990s by siphoning off an additional $3.5 billion in local property taxes to weather the recession. Only a portion of that has been returned--earmarked for specific programs.
The Legislature is aware of the problem, of course, but has been reluctant to do anything about it. One bill, sponsored by Assemblyman Tom Torlakson (D-Antioch), would have prohibited cities from offering incentives, including sales tax rebates, to lure big retailers away from neighbors. Torlakson, a former Contra Costa County supervisor, cried “extortion” when Costco suggested it might move its Martinez store elsewhere if the city declined to cough up $2 million to subsidize an expansion project. Torlakson’s bill passed the Assembly but was buried in the Senate last month under opposition from business groups and the League of California Cities. The cities apparently don’t mind being targets of a little extortion so long as they can profit.
Still alive is a proposed constitutional amendment sponsored by Republican Assemblyman George Runner Jr., a former Lancaster mayor, that would empower neighboring cities to negotiate a sharing of sales tax revenues. The impetus came from a long, tiring struggle between Lancaster and Palmdale for sales tax dollars. Runner’s ACA 10 breezed through the Assembly 64 to 4 but with the legislative session ending Aug. 31 it must negotiate three committees in the Senate before a final vote. The Senate should expedite its approval as a signal that it finally is serious about addressing cash-box zoning.
These admittedly are mice-size bites out of an elephantine problem that is exacerbated by Sacramento’s parental attitude toward local government. But reform has to start someplace, sometime. One benefit of term limits is that the Legislature is being infused with members coming from local government, nearly half of the 80-member Assembly. They seek greater fiscal flexibility for cities and counties that are willing to accept economic responsibility. They know the parasitic quest for sales tax dollars is unhealthy. They should be given the tools to overcome it.
