On Thursday, Governor Newsom announced he has directed the California Department of Tax and Fee Administration (CDTFA) to allow businesses with sales of $5 million or less to defer remittance of their sales and use taxes for up to one year to July 2021. It is estimated there are 300,000 filers that would be eligible to defer up to $50,000. Initial estimates anticipate a statewide “loss” of $3 billion in state and local sales taxes over the duration of the deferral. Of concern is how the time period of this deferral would affect the final fiscal quarter for 2020, and the impact it will have on low-population counties. Sales taxes provide a significant source of revenue for cities and counties, and fund both 1991 and 2011 county realignment programs as well as a number of local priorities, including transportation.
RCRC is joining its local government partners to pose a number of questions about the scope and process associated with the Governor’s plan. At the time of this writing, no Executive Order has been issued, nor legislative language proposed.