SB 1172

SB1172:v95#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 1172

An act to add Section 53084.6 to the Government Code, relating to tax sharing agreements.

LEGISLATIVE COUNSEL'S DIGEST

SB 1172, as amended, Hurtado. Bradley-Burns Uniform Local Sales and Use Tax Law: tax sharing agreements.

Existing law prohibits a local agency from entering into any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law to any person for any purpose when the agreement results in a reduction in the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency and the retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency. Existing law also requires a local agency entering into an agreement that results in a reduction of the amount of revenue under the Bradley-Burns Uniform Local Sales and Use Tax Law that, in the absence of the agreement, would be received by another local agency to take certain actions with respect to that agreement, including posting the proposed agreement on its internet website for at least 30 days prior to ratification or approval of that agreement by its governing body.

This bill would prohibit a person from paying compensation to a consultant with respect to a specific tax sharing agreement, as defined, that exceeds the lower of 5% of the total tax revenues shared pursuant to the tax sharing agreement and $250,000. The bill would define a tax sharing agreement for this purpose to mean any agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law to any person for any purpose. The bill would exclude from these provisions agreements between a local agency and a member of the agency’s staff directly employed by the jurisdiction or technical consultants providing noncompensated advisory services. The bill would apply these provisions only to agreements entered into on and after January 1, 2027.

The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 53084.6 is added to the Government Code, to read:

53084.6.

(a) As used in this section:

(1) “Consultant” means a person or a business that provides services, including, but not limited to, legal, lobbying, or financial services, for facilitating, negotiating, and advising on a tax sharing agreement.

(2) “Local agency” means a city, county, city and county, or special district.

(3) (A) “Tax sharing agreement” means any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of any tax revenue resulting from the imposition of a sales and use tax under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) to any person for any purpose.

(B) “Tax sharing agreement” shall not include an agreement between a local agency and a consultant to identify and recover tax revenues that have been incorrectly allocated and distributed to another local agency.

(b) A local agency shall not pay compensation to a consultant with respect to a specific tax sharing agreement that exceeds the lower of the following:

(1) Five percent of the total tax revenues shared pursuant to the tax sharing agreement.

(2) Two hundred fifty thousand dollars ($250,000).

(c) A consultant shall not receive compensation from proceeds of a tax sharing agreement more than three years after the effective date, or completion of the project phase that directly benefits from the agreement, whichever occurs first.

(d) This section shall not apply to the following:

(1) Local agency staff directly employed by the jurisdiction executing the agreement.

(2) Technical consultants providing noncompensated advisory services.

(e) The Legislature finds and declares that ensuring fairness in tax sharing agreements across the state is a matter of statewide concern and is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution. Therefore, this section applies to all cities, including charter cities.

(f) This section shall only apply to tax sharing agreements entered into on or after January 1, 2027.