A state bill designed to end what its author called “corporate welfare” in California has made its way to Gov. Gavin Newsom’s desk, much to the displeasure of Fresno-area leaders.
Senate Bill 531 cleared the state Legislature this month and looks to do away with the practice of cities giving sweetheart tax deals to huge corporations like Amazon and Apple. It was penned by Sen. Steve Glazer, D-Orinda.
Fresno Mayor Lee Brand has repeatedly defended the tax breaks as a way to draw jobs to the city. Case in point, Amazon, Ulta Beauty and The Gap chose Fresno because it drew them in with a tax-sharing plan.
Brand has said Fresno needs an “economic tool” to help pull people out of poverty.
“(Newsom) has pledged to help lift up all of California, giving inland regions the same opportunities enjoyed by booming coastal regions. If SB 531 becomes law, it will instead deepen California’s economic divide where the wealthier coastal regions get richer and the struggling inland areas continue to get poorer,” Brand said Monday in a statement. “I will ask Gavin to veto this bill so we can continue to reduce our crippling poverty rates and help struggling families to live better lives.”
Brand said the three warehouses with tax-sharing deals created 4,000 good-paying jobs in Fresno, plua 700 indirect jobs. The 30-year agreement is projected to add about $3.3 million a year to the city’s general fund.
Fresno County is projected to see more than $164 million in new tax dollars and Fresno Unified is expected to gain close to $52 million in those 30 years, according to projections.
Glazer, the bill’s author, said the “rigged process” pushes cities to accept deals with big online sellers that are more favorable to the corporation, at the expense of taxpayers.
“These deals siphon money from every city in the state and give it away to some of the richest corporations in the world,” Glazer wrote in an op-ed for The Bee.
The sharing plans are common. Sacramento County used one such agreement to persuade Macy’s to open a warehouse in 2015, and Cupertino has returned $70 million to Apple through its agreement that goes back to 1997, according to Bloomberg.
If the governor signs SB 531, cities can maintain the tax-sharing agreements they already have — but the legislation would prevent any new ones in the future.
Supporters of the proposed legislation argue cities have other tools to attract business, including building infrastructure, helping with site preparation and reducing local regulatory hurdles.
State Sen. Andreas Borges, R-Fresno, has also made the case for keeping the tax-sharing deals. In a column for The Bee, he said Fresno needs the help.
“States such as Texas, Nevada and Arizona continue to provide even greater economic and infrastructure incentives to lure business away from California,” he wrote last month. “Ultimately, passage of SB 531 will aid and abet the ability of other states to poach businesses from California.”
Newsom has until Oct. 5 to sign the bill, which is a month after it was adopted.