For City Council Meeting February 10, 2026
TO: Honorable Mayor and City Council
FROM: Tanya Williams, City Manager
Title
Request City Council to Approve a Letter of Opposition to Revenue and Taxation Committee Recommendation Regarding E-Commerce Bradley-Burns Sales and Use Tax Allocation
Body
RECOMMENDATION
Staff recommends that the City Council Approve a Letter of Opposition to Revenue and Taxation Committee Recommendation Regarding E-Commerce Bradley-Burns Sales and Use Tax Allocation
BACKGROUND
At the January 22, 2026 Cal Cities policy committee meeting for Revenue and Taxation, the committee reviewed a recommendation from the City Manager’s working group on a policy recommendation regarding the allocation of Bradley-Burns sales and use tax revenues generated from e-commerce transactions. The proposed changes are being framed as a new “equitable split” of the Bradley-Burns sales and use tax generated from e-commerce
Transactions and would result in the following:
• A 50/50 split of the Bradley-Burns sales and use tax revenues generated from ecommerce transactions between warehouse/fulfillment city and destination city.
• A plus or minus of 10% to allow for flexibility.
• Prospective, revenues from existing sales tax sharing agreements not subject to
split.
• Five-year phase-in
• County pool use tax dollars from out-of-state e-commerce transactions
redirected to destination city.
The City Managers Sales Tax Working Group’s recommendation to split Bradley-Burns revenues between point-of-sale jurisdictions and destination communities would severely undermine this balance. Introducing a new allocation formula, particularly one with adjustable percentages, would inject uncertainty into many city budgets and weaken the ability to provide basic services to our residents. More importantly, it would penalize communities that assumed the greatest risks to create jobs and economic opportunity.
If these recommendations were to be approved as policy and a change of law were to be perused, a constitutional amendment would be required. This is because Section 25.5 of Article XIII of the California Constitution prohibits the Legislature from enacting a statute that would alter the method of distributing revenues derived under the Bradley- Burns Uniform Local Sales and Use Tax Law, as it read on November 3, 2004.
ANALYSIS/DISCUSSION
For cities hosting e-commerce distribution centers, Bradley-Burns revenues are vital to the health and safety of our communities. Cities that chose to attract logistics and distribution facilities did so with deliberate, costly investments. These decisions required substantial commitments to infrastructure, land use planning, and workforce development, while also accepting real challenges such as increased truck traffic, environmental impacts, and ongoing quality-of-life concerns. The revenues generated by these facilities are not optional or incidental, they are necessary to offset these impacts and reinvest in our communities.
Of those 482 cities studied in this policy consideration, 255 are projected to gain revenue, 105 are projected to lose revenue, and 123 lack sufficient data for a projection. For Rialto, the City could stand to lose upwards of 25% of our sales tax revenue, roughly $15 million. In addition, the City would experience lost in revenue from the Out of State pools to destination cities. This could result in an additional $3 million in revenue loss. A total loss of nearly $20 million annually would greatly impact the City’s ability to maintain our current levels of service in public safety and greatly limit our ability to deliver critical projects and services to our community. This is far from an equitable split as Rialto, and many other communities experience the impacts on our infrastructure of the e-commerce industry.
Staff recommends the City Council submit a formal letter of opposition to this proposed policy change (Attachment 1) which will be submitted to the Cal Cities Board of Directors prior to their upcoming meeting Feb 19-20, 2026.
ENVIRONMENTAL IMPACT
The request is not a Project as defined by Section 15378 of the California Environmental Quality Act (CEQA).
GENERAL PLAN CONSISTENCY
Complies with the following Rialto General Plan Guiding Principle:
Our government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW
The City Attorney's Office has reviewed the staff report.
FINANCIAL IMPACTS
Operating Budget Impact
There is no impact on the Operating Budget on the action to approve the opposition letter. However, there is a substantial financial impact that the City of Rialto would anticipate should this initiative move forward. A greater than 25% reduction in sales tax revenue as a result of this modification would be catastrophic in the City’s ability to deliver public safety and other core services to our community.
Capital Improvement Budget Impact
There is no impact on the Capital Improvement Budget in approving the opposition letter. However, there are estimates that this change would also directly impact other sales tax measures including Measure I which the City utilizes to fund a number of large road rehabilitation and other Capital Improvement projects.
ATTACHMENTS
1. Letter of Opposition