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Placerville joins cities backing League proposal to split e-commerce sales tax revenues
Summary
Council approved sending a letter supporting League of California Cities' working-group recommendations for an equitable 50/50 split of in-state e-commerce sales tax between shipping (fulfillment) and receiving jurisdictions, with a 5-year phase-in and flexibility. CDTFA modeling indicated Placerville could gain revenue under the proposal.
The Placerville City Council voted Aug. 26 to approve a letter supporting the League of California Cities— City Managers Sales Tax Working Group recommendations on ecommerce sales-tax distribution and authorized the mayor to sign the letter to the League.
City Manager Warren briefed the council on the working group—s multiyear effort to examine how growth in online retail and in-state fulfillment centers has shifted sales-tax flows since the 2010s. The working group recommended a prospective allocation that would split the Bradley-Burns 1% sales tax for in-state ecommerce transactions 50/50 between the jurisdiction where goods are shipped from (fulfillment/warehouse city) and the jurisdiction where the consumer receives the goods (place of use). The group proposed a 10% flexibility band (40/60 to 60/40) and a 5-year phase-in after California Department of Tax and Fee Administration implementation.
Warren told the council that CDTFA modeling of the 50/50 split (using the top 200 online retailers) showed 483 California cities were studied; 255 would likely gain revenue and 104 likely lose revenue. The analysis projected Placerville could gain roughly 10–25% from the reallocation under the model, though staff noted the CDTFA analysis has data limitations and does not fully model county-pool changes.
The working group also supported continuing limits and transparency around sales-tax-sharing agreements (economic-development deals) such as those limited by Assembly Bill 2854 and codified in Revenue & Taxation Code changes, to reduce fiscal competition among cities. Warren recommended the council support the League's updated policy statement.
Councilors asked about local dependency on sales tax and the prospect of diversification if e-commerce revenue is reallocated. After brief discussion the council approved the letter of support and authorized the mayor to execute it on the city—s behalf; the motion passed 5–0.
The mayor and City Manager Warren emphasized the action is a policy-level endorsement of League recommendations and does not change local tax rates or create immediate local-budget changes.
