HomeMy WebLinkAboutAgenda Report - August 6, 2008 K-01K-1
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CITY OF LODI
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AGENDA TITLE: Adopt Resolution Opposing State Budget Decisions that Would "Borrow"
Local Government and Transportation Funds
MEETING DATE: August 6,2008
PREPARED BY: Interim Deputy City Manager/Internal Services Director
RECOMMENDED ACTION: Adopt Resolution opposing State Budget decisions that
would "borrow" local government and transportation
funds.
BACKGROUND INFORMATION: The City of Lodi has been requested by the League of
California Cities to adopt the attached Resolution
confirming the City's opposition to the State
circumventing Proposition 1-A by borrowing from local government and transportation funds in
order to balance the 2008-09 State Budget.
Proposition I -A was passed in 2004 with support from 84 percent of voters giving a clear
mandate that local revenues not be continuously hijacked by the State. Two years later, a
second measure to protect transportation (sales tax) was approved by 77 percent of voters.
There have been rumors circulating in the Capitol that the State Legislature is considering
invoking a narrow provision in Proposition I -A which allows the State to borrowfrom local
governments only in a "severe state of fiscal hardship"for a period of up to three years to be
repaid with interest.
In terms of impact on the City of Lodi, it is estimated that such a move by the State could cost
the City up to $1.4 million for the 2008-09 fiscal year or about 15 percentof property tax
revenue. The League is urging the passage of resolutions opposing the proposed borrowing
scheme as soon as possible in order to send a powerful message to legislators.
FISCAL IMPACT: $1.4 million or 15 percent of propertytax revenue lost to the City's General
Fund for the current (2008-09) fiscal year.
FUNDING: NIA
Deputy City Manager/Internal Services Director
APPROVED:
Blair mg, ity Manager
RESOLUTION NO. 2008-157
A RESOLUTION OF THE LODI CITY COUNCIL
OPPOSING STATE BUDGET DECISIONS THAT
WOULD "BORROW LOCAL GOVERNMENTAND
TRANSPORTATION FUNDS
WHEREAS, on July I, 2008, the State Legislature missed its Constitutional
budget deadline; and
WHEREAS, both the Governor and the Legislative Budget Conference
Committee have recommended balanced budgets without resorting to "loans" of local
government propertytax and transportation sales tax funds; and
WHEREAS, in 2004 by an 84% margin of approval, the voters of California
approved Proposition 1 A and sent a loud and unambiguous message to state leaders
that they should stop the destructive practice of taking local government funds to finance
the state budget and paper over the state deficit: and
WHEREAS, in 2006 by a 77% margin of approval, the voters of California also
approved Proposition 1A, providing similar protections to transportation funding for state
and local transportation projects, including important street maintenance and public
transit programs; and
WHEREAS, both ballot measures allow the Governor to declare a "severe state
of fiscal hardship" and "borrow" these funds if they are repaid in three years with interest,
but the Governor believes it would be irresponsible to "borrow" such funds because it
would deepen the state's structural deficit and cripple local government and
transportation services; and
WHEREAS, refusal by the Legislature to carry out its constitutional obligation to
compromise on a balanced budget is not a "severe state of fiscal hardship" and would
not justify reductions in critical local services and infrastructure at a time when cities are
struggling to balance their own budgets during this economic down turn; and
WHEREAS, the Legislature should balance the state budget with state revenues
and respect the overwhelming support of voters for not using local property taxes and
transportation sales tax funds to fund the day-to-day operating cost of state programs;
and
WHEREAS, it would be irresponsible to ignore the state structural deficit with
more borrowing.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
oppose any and all efforts by state government to "borrow" local tax funds and
transportation sales tax funds by the state government to finance state operations. Such
a move would not be responsible and would hamper effective local services and
infrastructure investments; and
BE IT FURTHER RESOLVED that the City Manager is hereby directed to send
this resolution and communicatethis Council's strong and unswerving opposition on this
matter to the Legislators and the Governor along with an expression of our continued
appreciation for the Governor's steadfast opposition to further legislative borrowing and
raids on local government and transportation funding.
Dated: August 6, 2008
hereby certify that Resolution No. 2008-157 was passed and adopted by the
City Council of the City of Lodi in a regular meeting held August 6, 2008, by the following
vote:
AYES: COUNCIL MEMBERS —Hansen, Hitchcock, Johnson, Katzakian,
and Mayor Mounce
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS —None
NDI JOHL
City Clerk
K111&ff"
08/06/2008
Presented: August 6, 2008
WHAT'S AT RISK?
The State has a history of taking local government revenue
to balance State budgets since in 1991
Local Property Tax — "ERAF"
*Vehicle Code Fines
Cigarette Tax
*Business Inventory Subventions
Alcohol Beverage Fees
-Trailer Coach In -lieu Fees
-New fees — Property Tax Administration, Jail Booking
Fees
z+C &-,, K-1
08/06/2006
2
Legkkdtve Analyst Ofte Proposal
•Shift State General Fund Program Requirements to counties
and shift city monies to counties to pay for the new county
costs
*Biggest threat — Prop 172 (1993 — One-half cent sales tax to
fund public safety to replace the ERAF shift at that time)
$320,000
*Cut COPS grant funding
-Cut VLF in -lieu backfill
California City Finance Estimate — Lodi impact: $432,245
•• •••..,
ERAF III
($699,791-- say $700,000) x 2 =
$1,400,000
Prop 42 Suspensions — highway and
transportation taxes must be used
for intended purpose, with some
exceptions
08/06/2008
K,
08/06/2008
LEAGUE Of CALIFORNIA CITIES
STOP USING CITIES AS TFE
BUDGET BACKSTOP
4