Cal Cities halts revenue-endangering bills

Jun 28, 2023

The League of California Cities notched two new wins for cities this week. Two bills that would have jeopardized local revenues were held for the year due to Cal Cities’ advocacy. Safeguarding local revenues is one of Cal Cities’ major advocacy priorities for 2023.

Well-intended housing fund bill goes back to the drawing board

Sen. Monique Limón today said she is holding her proposed, 15% statewide short-term rental tax.  Proceeds would have gone back to local governments as grants for “laborforce housing.”

Cal Cities supported the author's intent to provide long-term funding for affordable housing. However, a statewide tax on top of existing local rates would cripple tourism-dependent cities. Cal Cities had proposed levying a tax or fee on short-term rental owners, instead of the lodger.

SB 584 faced several major hurdles. A broad group of stakeholders, including local government groups, opposed the measure. The bill needed a two-thirds majority in both houses to pass. It squeaked out of the Senate with the minimum number of votes.

SB 584 is now on hold for the year, as the bill’s author works with Cal Cities and others to determine a possible path forward. Local officials played a key role in halting the bill and will play an equally important role in shaping any future amendments.

Committee chair presses pause on pension divestment measure

Asm. Tina McKinnor on Tuesday said she is holding SB 252 (Gonzalez) in the Assembly Public Employment and Retirement Committee. The bill would have forced the state’s public pension systems to divest from oil and gas companies. 

Cal Cities opposed SB 252 due to its potential financial impact on local governments. Many public agencies rely on the state pension system to provide retirement benefits.

The committee chair said she needed more time to negotiate with labor unions and other organizations, including local governments. Last year, then-chair Asm. Jim Cooper blocked a similar measure, citing the bill’s financial impacts. McKinnor’s chief of staff echoed that sentiment.

“Ms. McKinnor’s primary concern is about the retirees themselves,” Terry Schanz told Politico. “This is their money. We have a responsibility to make sure the fund is solvent.”

Less-than-expected returns have led to a drop in total assets for the state’s pension funds. Divestment would only increase the likelihood of further increasing employer contributions and by extension, local budgets.