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Sacramento's Auto Mall Deal: Self-Interest, Not Enlightenment

Sep 2, 2008

Sacramento city and county officials are congratulating themselves  – and getting congratulated by editorial writers and others – for cutting a deal to share sales tax revenues from auto dealers. But the deal's not the result of enlightened regional cooperation. It came about because both jurisdictions are threatened by auto malls elsewhere in the Sacramento region.

On the surface, the deal is commendable: Although the county currently receives a lot more auto sales tax revenue than the city -- $7.7 million versus $3 million --  the two jurisdictions will share all future revenues 50-50. Isn't this exactly the kind of thing that everybody in California's been trying to get local governments to do for years? After all, it's illegal to subsidize the move of an auto dealership across jurisdictional lines; and Sacramento's Darrell Steinberg – now the head of the Senate – caused a big ruckus when he was in the Assembly with his regional tax-sharing bill in 2002.

Well, sort of.

The city and county of Sacramento are not joining forces because it's the right thing to do. They're joining forces because they think it will help them better compete with the powerful auto malls in Roseville and Folsom and the emerging auto center in ever-aggressive Elk Grove. The geography of auto sales in metro Sacramento now favors these outlying areas.

Most of the older dealerships are located along Fulton Boulevard in Sacramento County, not far from Arden Fair Mall but far away from any freeway and increasingly hemmed in by traffic. The other auto centers have stronger locations, good marketing – and a lot of help from their cities. It's no coincidence that the Sacramento city-county deal was struck only a week after Roseville considered paying for half of a $6 million upgrade to the Roseville auto mall.

I learned a long time ago in planning school that politicians can work constructively together – but only when they think the alternative is worse. In the case of Sacramento's auto dealerships, we should congratulate the city and the county for doing the right thing – but we shouldn't forget that they're only doing it because the wrong thing isn't working anymore.

-- Bill Fulton

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