HomeMy WebLinkAboutAgenda Report - October 6, 2004 I-01AGENDA ITEM I-1
CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Adopt a Resolution supporting Prop. 1A limiting the State's ability to
reallocate local revenues in order to achieve State policy goals and
requiring the State to reimburse local governments for mandated
programs and services on a timely basis.
MEETING DATE: October 6, 2004
PREPARED BY: Interim City Manager
RECOMMENDED ACTION: That the City Council adopt a Resolution Supporting Prop. 1A
limiting the State's ability to reallocate local revenues in order
to achieve State policy goals and requiring the State
to reimburse local governments for mandated programs and services on a timely basis.
BACKGROUND INFORMATION: The following information is provided to Council by Debbie
Olson, Regional Representative with League of California
Cities. Ms. Olson will be present during the meeting to
discuss Proposition 1A and to answer questions regarding this matter.
Proposition 1A, a Constitutional amendment placed on the ballot by the Legislature as part of
the 2004-05 budget agreement, would fundamentally change the fiscal relationship between the
State and local governments. Proposition 1A limits the State's ability to reallocate local
revenues in order to achieve State policy goals and requires the State to reimburse local
governments for mandated programs and services on a timely basis. Proposition 1A is
supported by the League of California Cities, the California State Association of Counties, the
California Special Districts Association, and Governor Schwarzenegger.
In brief, Proposition 1 A would amend the State Constitution to:
• Allocate revenues from current VLF rate and require the State to reimburse counties
and cities for losses due to any future VLF rate decrease;
• Prohibit the Legislature from reducing the share of property tax revenues allocated to
any county, city or special district below the level required on November 3, 2004;
■ Suspend State -imposed requirements ("mandates") on counties, cities, and special
districts in any year in which the state does not fully reimburse local governments for
the costs of fulfilling the requirements.
APPROVED:
Jan S. Keeter, enm City Manager
Attached are a number of documents provided by the Yes on 1A organization, setting forth
arguments in favor of this measure. The arguments in favor of Constitutional protection for local
government revenues are well-known to the City Council, as these issues have been in the
forefront of Council's budget deliberations for several years. Earlier this year, the Council
passed a general resolution in support of constitutional protection, but not any specific measure.
At the bottom line, Proposition 1A prohibits the State from raiding local government
revenue sources in future years. Specifically, the State may borrow only twice in 10
years, and not before full repayment of the VLF Backfill Gap borrowed last year, and only
in demonstrable State budget emergencies.
If Proposition 1A does not pass, Lodi, along with all other California local governments, will find
themselves subject to those interests in the State Legislature who believe that all local
government revenue collected in California should be controlled and allocated by State
government rather than by locally elected officials. The continued deterioration of local control
over local spending priorities will surely continue unabated if Proposition 1A does not pass.
Finally, Proposition 1A replaces the need for Proposition 65. Proposition 65 was put on the
ballot earlier this year before this historic agreement with the Governor and the Legislature was
reached. Proposition 1A is a more flexible approach with broad, bipartisan support of the
Legislature. All of the official proponents of Proposition 65 are now supporting Proposition 1A
instead of Proposition 65.
If both measures pass and Proposition 1A receives a greater number of votes, none of the
provisions of Proposition 65 will take effect. If both measures pass, but Proposition 65 receives
more votes, then the tax shift included in the 2004-05 budget agreement would be prohibited but
other details common to both measures will need to be sorted out by a constitutional committee
and/or the courts.
FUNDING: None
Jane . Keeter
Inte m City Manager
JSK/sl
THE PROBLEM
LOCAL TAXPAYERS AND PUBLIC SAFETY
SERVICES ARE THREATENED
For more than a dozen years, the state legislature
has been taking local tax dollars that local
governments use to provide vital services like fire
protection, paramedic response, law enforcement,
healthcare, parks and libraries. The State has
taken more than $40 billion from cities, counties
and special districts in the last 12 years. If these
raids continue, it could mean fewer firefighters,
fewer law enforcement officers and longer
waits at emergency rooms -- or higher local
taxes and fees.
THE FACTS ABOUT
PROPOSITION 1A
www.YesonProplA.com
THE SOLUTION = PROPOSITION 1A
HISTORIC AGREEMENT TO PROTECT LOCAL
TAXPAYERS AND VITAL LOCAL SERVICES
Prop 1A is a historic bipartisan agreement between
Governor Arnold Schwarzenegger, local
governments, legislators, public safety officials,
healthcare advocates, taxpayers and community
leaders. Prop 1A prevents the State Legislature
from taking and using local government funds.
Prop 1A would keep more of our local tax dollars
local and would protect funding for vital local
services like fire and paramedic response, law
enforcement, healthcare, parks, libraries, and
transportation.
What Proposition 1A Does:
✓ Restricts the State Legislature's ability to raid local government funding, including local government share
of existing sales taxes, property taxes and VLF revenues.
✓ Protects funding for local services like fire and paramedic response, law enforcement, emergency and
trauma care, parks, roads, libraries, transportation and more.
✓ Requires the State to provide funding for any program or service the State forces local governments to
provide. If the State fails to provide funding, Legislature must repeal these state -mandates.
✓ Provides flexibility in a state budget emergency. Prop 1A allows the State to borrow local government
revenues if funds are needed in fiscal emergency to support schools or other state programs.
What Proposition 1A DOES NOT Do:
O Does not raise taxes. Prop 1A helps ensure local governments don't have to raise taxes or fees in the
future to make up for revenues raided by the State Legislature.
O Does not reduce funding for schools or any other state programs or services.
O Does not increase funding to local governments.
O Does not prevent the state from borrowing local funds in times of fiscal emergency, or shut the door to
future reforms of the state -local fiscal relationship.
Proposition 1A Replaces Need for Prop 65.
A coalition of local government officials placed Proposition 65 on the ballot earlier this year to stop the State
from taking local government funding. HOWEVER, that was before passage of the historic bipartisan
agreement that put Prop 1A on the ballot. Prop 1A is a better, more flexible approach to protecting local
services and local tax dollars. That's why ALL the official proponents of Prop 65 are now supporting
Proposition 1 A.
Paid for By Yes on lA Californians to Protect Local Taxpayers and Public Safety, Sponsored by a coalition of local
government organizations, League of California Cities (non-public funds account), California State Association of Counties
(non-public funds account) and the California Special Districts Association (non-public funds account).
1121 L Street, #803 • Sacramento, CA 95814 • Phone (800) 827-9086 • www.YesonProp1A.com
PROTECT LOCAL TAXPAYERS
ON
*YESIA..,,.,'
PROTECT PUBLIC SAFETY SERVICES
Q: What would Prop 1A do?
A: Proposition 1A would prevent the state legislature from taking and using local tax dollars that
local governments use to provide essential services like fire and paramedic response, law
enforcement, emergency and trauma care, parks, roads, libraries, transportation and more.
Specifically, Prop 1A prohibits the State Legislature's ability to lower the existing city, county
and special district's existing share of sales taxes, property taxes and VLF revenues.
Proposition 1A also requires the state to reimburse local governments for the cost of programs
and services it forces cities, counties and special districts to provide. If the state fails to provide
reimbursement to local governments for state -mandated local programs, the mandate must be
suspended, except for specified employee rights and benefits.
Q: Why is Prop 1A needed?
A: For more than a dozen years, in both good fiscal times and bad, the state legislature has
been raiding local tax dollars to pay for state responsibilities — more than $40 billion over the
past 12 years. This practice has starved local communities of the funds needed to pay for vital
services like fire protection, paramedic response, law enforcement, healthcare, parks and
libraries. If these funding raids continue, it could mean fewer firefighters, fewer law
enforcement officers and longer waits at emergency rooms -- or higher local taxes and
fees.
The system is broken. Voters must act now to protect local revenues for local services from
being taken by the State.
Q: Who supports Prop 1A?
A: Proposition 1A is a historic, bipartisan accord reached among local government leaders,
public safety representatives, Governor Arnold Schwarzenegger, Democrat and Republican
state legislators, healthcare advocates, taxpayer groups, business and labor leaders, and many
more. The coalition in support of Prop 1A is growing daily.
Q: Will Prop 1A raise taxes?
A: NO. Proposition 1A will not raise taxes. It simply ensures that existing local tax dollars
continue to be dedicated to local services. In fact, Prop 1A helps ensure local governments
aren't forced to raise taxes or fees to make up for revenue raided by the State.
Paid for By Yes on 1A Californians to Protect Local Taxpayers and Public Safety, Sponsored by a coalition of local
government organizations, League of California Cities (non-public funds account), California State Association of
Counties (non-public funds account), and the California Special Districts Association (non-public funds account)
1121 L Street, Suite 803 • Sacramento, CA 95814 • Phone (800) 827-9086 • Fax (916) 442-3510
www.YesonProp1A.com
Q: What happens in the event of a fiscal emergency? Will this measure tie the
legislature's hands in passing a budget or create more problems during the next state
fiscal crisis?
A: Prop 1A was intentionally written to allow flexibility and provide the Governor and legislature
with options — but only in the event of a "significant state fiscal hardship". Under the provisions
of Prop 1A, beginning in 2008-09, if the Governor proclaims a "significant state fiscal hardship",
the Legislature may suspend the constitutional protection and may borrow local property taxes
only under following conditions:
■ A separate urgency bill must be passed by a 2/3 vote of Legislature;
■ The Legislature must pass a law to fully repay the loan with interest within 3 fiscal years;
■ New loans are prohibited until prior loans have been repaid;
■ No more than two loans may occur during any ten-year period;
■ The loan amount is capped at 8% of local government property tax amount (equivalent
of approximately $1.3 billion in today's property tax dollars);
While Prop 1A contains flexibility in a state fiscal hardship, it also prevents the state from using
local government funds any time legislators choose. It also requires that future state reductions
be repaid in full.
Q: Will Prop 1A erode state funding for schools or education?
A: No. Prop 1A was carefully written to ensure that it does not reduce funding for education or
schools by one dime. Under Proposition 98, schools are guaranteed a level of funding from the
state — and Prop 1A does not change that.
Q: Does Prop 1A give more protection to local government than schools currently
receive?
A: NO. Under Proposition 98, schools are guaranteed a minimum amount of funding out of the
state general fund and Proposition 1A does not impact those protections at all. Further,
comparing the funding guarantees for schools with Prop 1A is an apples -to -oranges protection.
Proposition 98 guarantees schools a specific amount of State General fund revenues.
Proposition 1A simply protects revenues that are LOCAL GOVERNMENT revenues, but that the
state has been taking for more than 12 years.
Q: What about other state programs? Will this measure reduce funding for state
programs like roads and prisons?
A: Prop 1A simply prevents the state from raiding local revenues. The state still has flexibility
over its own revenues.
Q: Doesn't Prop 1A just add to the state's fiscal woes by initiating further "ballot -box -
budgeting" that puts restrictions on how it can spend its revenues?
A: No. The initiative does not tell the state how to spend the state's own revenues (as some
propositions have done). What it does is prevent the state from raiding local government
revenues for state purposes. This will mean that, for the first time in many years, local
communities will be have the certainty and predictability they need to plan and provide for
current and future service needs.
Q: Will this measure prevent state fiscal reform efforts?
A: No. The first and most important step in reforming the troubled State -Local fiscal relationship
is to protect local government funding from continual state raids. Prop 1A would accomplish this
important first step, while also leaving the door open for more comprehensive fiscal reform in
the future. Specifically, Prop 1A would retain authority for the Legislature to approve the
exchange of local sales tax for an equal amount of property tax when requested by local
agreements. Any type of voluntary revenue exchange agreement must be revenue -neutral for
the impacted local governments.
Q: Does this measure increase revenues to local governments?
A: No. Prop 1A simply prevents the state Legislature from further reducing existing levels of
local government revenues.
Q: Why doesn't Prop 1A attempt to recollect lost ERAF property tax dollars?
A: Prop 1A was intentionally drafted to draw a line in the sand and prevent future state
legislative raids of local government funding. While local governments and services are still
deprived by the ongoing state raid of property taxes, given the state of California's fiscal health,
we believe a more responsible approach at this time is to "stop the bleeding" at current levels.
Q: What happened to Proposition 65, which is also on the November ballot and attempts
to protect city, county and special district revenues from state raids?
A: Our coalition placed Proposition 65 on the ballot earlier this year, prior to the historic,
bipartisan July agreement that placed Prop 1A on the November ballot. After Prop 65 qualified
for the ballot, Governor Schwarzenegger approached our coalition and asked that we work with
him on an alternative local government protection measure. We agreed to provide the state
with short-term contributions from local governments to help the state out of its immense budget
problems, and the Governor agreed to work with the legislature to place Prop 1A on the ballot
and to actively campaign for passage of Prop 1A this Fall. Proposition 65 will continue to be on
the ballot, but all of the official sponsors of Prop 65 are now opposing 65 and supporting Prop
1A as a better, more flexible approach to protect funding for local governments and local
services.
Q: What happens if both Proposition 65 and Prop 1A pass?
A: Proposition 1A was written so that if it gains more votes than Proposition 65, it supersedes
Prop 65 in its entirety. Prop 1A contains language that specifically says that Prop 1A is a
"comprehensive and competing alternative" to Prop 65, and that "it is the intent of the people
that this measure supersedes in its entirety Prop 65", if Prop 1A gets more votes.
RESOLUTION NO. 2004-209
A RESOLUTION OF THE LODI CITY COUNCIL SUPPORTING
PROPOSITION 1A LIMITING THE STATE'S ABILITY TO
REALLOCATE LOCAL REVENUES IN ORDER TO ACHIEVE STATE
POLICY GOALS AND REQUIRING THE STATE TO REIMBURSE
LOCAL GOVERNMENTS FOR MANDATED PROGRAMS AND
SERVICES ON A TIMELY BASIS
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WHEREAS, state government currently seizes more than $5.2 billion annually in
local property tax funds statewide from cities, counties, and special districts, costing
local governments more than $40 billion in lost revenues over the past 12 years; and
WHEREAS, these ongoing shifts and raids by the state of local property tax
funds and other funding dedicated to local governments have seriously reduced
resources available for local fire and paramedic response, law enforcement, public
health and emergency medical care, roads, parks, libraries, transportation, and other
essential local services; and
WHEREAS, these funding raids also add pressure for local governments to
increase fees and taxes to maintain basic local service levels; and
WHEREAS, this drain of local resources has continued even during periods
when the state's budget has been overflowing with surpluses; and
WHEREAS, Proposition 1A is an historic measure that will appear on the
November 2004 statewide ballot that would limit the State's ability to take and use local
government funding; and
WHEREAS, by protecting local government funding, Prop 1A would protect local
public safety, healthcare, and other essential local services; and
WHEREAS, Prop 1A will not raise taxes and, in fact, will help reduce pressure
for local fee and tax increases by limiting state raids of local government funding; and
WHEREAS, Prop 1A does not reduce funding for schools or any other state
program or service, and Prop 1A was carefully written to allow flexibility in the event of a
state budget emergency; and
WHEREAS, Prop 1A is supported by a bipartisan, diverse coalition including
Governor Schwarzenegger, Democrat and Republican legislative leaders, local
government officials, public safety representatives, healthcare, business, labor, and
community leaders.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
support Proposition 1A, the statewide ballot initiative that will prevent the state from
further taking local government revenues; and
BE IT FURTHER RESOLVED that the Lodi City Council does hereby direct the
City Clerk to send a certified copy of this resolution to Yes on 1A - Californians to
Protect Local Taxpayers and Public Safety (Fax: 916-442-3510 or Mail: 1121 L Street,
#803, Sacramento, CA 95814).
Dated: October 6, 2004
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I hereby certify that Resolution No. 2004-209 was passed and adopted by the
City Council of the City of Lodi in a regular meeting held October 6, 2004, by the
following vote:
AYES: COUNCIL MEMBERS — Beckman, Hitchcock, and Howard
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Land and Mayor Hansen
ABSTAIN: COUNCIL MEMBERS — None
SUSAN J.BLACKSTON
City Clerk
2004-209
FACSIMILE COVER SHEET
CITY CLERK'S OFFICE
221 WEST PINE STREET - P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
PHONE (209) 333-6702 FAX (209) 333-6807
cityclrk@lodi.gov or jperrin@lodi.jov
DATE: October 7, 2004
FROM: Jennifer M. Perrin, CMC
Deputy City Clerk
TO: Yes on 1 A — Californians to Protect
Local Taxpayers and Public Safety
(916) 442-3510
COMMENTS: Attached is Resolution No. 2004-209, adopted by the Lodi
City Council on October 6, 2004, supporting Proposition 1A.
NOTE: A certified copy has been mailed as well.
THIS TRANSMITTAL CONTAINS 3 PAGE(S), INCLUDING THIS COVER SHEET.
forms\aafujen.doc