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Item 17 - Appropriation for Contribution to Cities for Restroring Allocation AGENDA REPORT SUMMARY 0: Honorable Mayor and Members of the City Council James L. Bowersox, City Ma~ John 0, Fitch, Assi stant Ci ty Manager£1r)\- Penny Riley, Senior Management Analys~ FROM: INITIATED BY: DATE: May 2, 1995 SUBJECI': Appropriation for Contribution to Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue ABSTRACT On March 24, 1995, the City of Poway received a funding request from the Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue, This organization was formed to change the method by which the state of California allocates sales tax revenue from leased vehicles, This report recommends a $1,000 donation. ENVIRONMENTAL REVIEW Environmental review is not required for this item under California Environmental Quality Act guidelines, FISCAL IMPACI' The fiscal impact of the recommended action is an expenditure from the unappropriated General Fund of $1,000. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE None, RECOMMENDATION It is recommended that $1,000 be appropri ated from the unappropri ated General Fund for the continuing efforts of the Cities for Restoring Direct Allocation of Motor Vehicle LeasinG Tax Revenue. ACTION .=.\reports\motor,sum 1 of 5 MAY 2 1995 ITEM 17 CITY OF POW AY AGENDA REPORT 'flU, «port i, included "" Ib, Coooent Cakudu. Tho" will bo no .".."" d""u..i"" of tho <q>ort pri", 10 "",rovoJ by tho City Coomcil un1oo, .....bon of tho COWIeil. otaff '" publio «queot it 10 bo """""" from tho C.....t CoJeodu ... d""u.." """'toly. If you w~b 10 bay, thU <q>ort pull'" f", di""",i"". pi.... fill out, oIip indi"'ling tho <q>ort numbo, ... ¡;y, it 10 tho City CIo'" pri", 10 Ib, ""inn... of Ib, City Coomcil moetin¡. TO: FROM: INITIATED BY: Honorable Mayor and Members of the City Council James L, Bowersox, City Man~ John 0, Fitch, Assistant City Managercr)\- Penny Riley, Senior Management Analy~ DATE: SUBJECT: May 2, 1995 Appropriation for Contribution to Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue BACKGROUND On March 24, 1995, the Ci ty of Poway recei ved a fundi ng request from the Citi es for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue. This organization was formed to change the method by which the State of California allocates sales tax revenue from leased vehicles, This report recommends a $1,000 donation, FINDINGS Current law provides that when a vehicle is sold to an individual, the sales tax is based on the full purchase price of the vehicle and the local sales tax is allocated to the taxing jurisdiction where the automobile dealer is located. When a vehicle is leased, use tax is imposed on the monthly lease payments, The local use tax is allocated to the countywide pool in the lessee's county of resi dence. The countywi de pool i s then allocated to all taxi ng juri sdi ct i ons within the county based on their proportionate share of total local sales tax receipts in the prior fiscal year, About forty percent of total transactions relating to new vehicles are through leases. Given the large percentage of sales tax base attributable to auto sales in Poway and the increasing popularity of automobile lease options, the efforts of Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue may provide a mechanism for increased sales tax revenues for the City of Poway, 2 of 5 MAY 2 1995 ITEM 17 Agenda Report - Approp~ltion to CRDAMVLTR May 2, 1995 Page 2 ENVIRONMENTAL REVIEW Environmental reyiew is not required for this item under California EnYironmental Quality Act guidelines. FISCAL IMPACT The fiscal impact of the recommended action is an expenditure from the unappropriated General Fund of $1,000. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE None, RECOMMENDATION It is recommended that $1,000 be appropriated from the unappropriated General Fund for the continuing efforts of the Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue. Attachment A: Funding Request from Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue. eb:\c:\reports\motor .par 3 of 5 MAY 2 1995 ITEM 17 Cities for Restoring Direct Allocation of Motor Vehicle Leasing Tax Revenue City of Noreo 909/735-3900 2870 C1lUt A IleIWe Norco, CA V1.760 FlU - 909/270-5622 March 24, 1995 .~. City of PcMay Jæœs biersax, City Manager 13325 Civic Center Drive PcMay, CA 92064 Subject: Cities for Restoring Direct Allcx:atial of M:Itar Vehicle :teasing Tax Revenue Dear Mr. biersax : Over the past several m:x¡ths you may have received cx:a.......¡?Cßienœ frail wr group regarding loss of sales tax revenue frail leased vehicles due to misallcx:ation to the =ty pool. We have conducted several organizational ueetings in beth Northem and Scuthern California to infoDII cities like ycurs of the fi.scal .iIIpIct of this issue. IXu"ing this period, a steering cœmittee was facœd to focus DCre intensely on a mathod to correct this prc:bIEIII. To date we have done the following: Met on a weekly basis to chart the IOOSt effective effort far wr su=ess. Retained advisors in the area of sales tax retentioo. and IlUtCllDtive leasing to carpose COIX:ise positioo. papers. Met with legislative aids of several state elected representatives to measure their suw>rt in carrying a bill. Created "Place Bolder" bills far intrcductioo. this year, if legislation becanes necesSaJ:Y (AB B66 & SB 602). Met with the State Board of Equalizatioo. in SðcraIœnto far gaining their suw>rt in attarpting to correct the prc:blEIII admi.ni.stratively. Interviewed lc:.bbyists which may becaœ necesSaJ:Y to retain to work with the SBJE ar assist in legislatial. Notwithstanding the ab:Ne, there is a great deal DCre that DUSt be done in order to achieve su=ess far wr efforts. To begin with, we are requesting that you actively suw>rt two legislative bills that have been intrcduced in beth the State Asseubly and Senate. 'lbese bills are AB 866 authored by AssE!IiDlyman Fred Aguiar and SB 602 authored by Senator Cathie M. Wright. Both of these bills seek to have DDtor vehicle lease revenue allcx:ated to the jurisdictions where the lease was negotiated. Letters of suwort sha1ld be ChairmiJn Y.u-CIuzimIDn Trt4.rurer ~C"'ID1] George T. Lambert City of Noreo Danny Roberts Cit)' of Palmdale 4 of 5 Rod Gould City of Monro"ÙJ John Cuevas City of Riverside ATTACHMENT A MAY 2 1995 I7;:M 1 7 sent to both of these legislators as well as your local assembly and senate representatives. Assemblyman Aguiar's address is: State Capitol, Room 4162, Sacramento CA 95814. Senator Wright'š is State Capitol, Room 4052, Sacramento CA 95814. In addition to the above, we are requesting your financial support. Certain cities have already spent a great deal of time and money in pushing this vital sales tax saving issue to where it is today. Our request is for a contribution of $1,000 which should be made payable to: CRDAMVLTR (CITIES FOR RESTORING DIRECT ALLOCATION OF MOTOR VEHICLE LEASING TAX REVENUE) and sent as soon as possible to: John Cuevas City of Riverside Department of Finance 3900 Main Street Riverside, CA 92522 The major portion of these funds may go for lobbyists' efforts and could be in the $40,000 to $50,000 range. Additional items such as advisory fees, meeting expenses, stationary and postage will also be necessary. The funds will be held in trust and disbursed by John Cuevas, Principal Analyst with the City of Riverside. Any unused amounts held at the end of our "campaign" will be returned proportionally to the supporters. We understand that everyone operates under tight budgets in these difficult times. That is even more reason why we must succeed in correcting this loss of general fund revenue through sales tax leakage and ask for your contribution. The reward will be well worth the expense and effort. We thank you in advance for your support. Sincerely, GE~~r CITIES FOR RESTORING DIRECT ALLOCATION OF MOTOR VEHICLE LEASING TAX REVENUE /pe MAY 2 1995 ITi:M 17 5 of 5