HomeMy WebLinkAboutAgenda Report - January 19, 2011 I-02AGENDA ITEM
-Z
A% CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: Authorize the Mayor, on Behalf of the City Council, to Send a Letter
Regarding the Governor's Budget Proposal
MEETING DATE: January 19,2011
PREPARED BY: Konradt Bartlam, City Manager
RECOMMENDEDACTION: Authorize the Mayor, on behalf of the City Council, to send a letter
regarding the Governor's Budget Proposal.
BACKGROUND INFORMATION: The City was asked by the League of California Cities to oppose the
Governor's Budget Proposal eliminating redevelopment agencies
and enterprise zones and send a letter of opposition regarding the
same to the Governor and specific members of the Legislature.
The League has indicated that redevelopment, which has been around since the 1950s, is a tool for
building things. It builds and improves communities, spurs job growth and taxes and is the most
significant provider of infrastructure, urban development and affordable housing in the state. Enterprise
zones are one of the few economic development tools that cities and counties have to bring jobs to
depressed areas. In addition, the League is reviewing the constitutionality of the proposal under
Proposition 22, a measure designed to protect various local revenues — including redevelopment —
from state raids.
The City Council may have differing views regarding the proposal. This item on the agenda will afford the
City Council an opportunity to discuss and provide direction.
FISCAL IMPACT: Not applicable at this time.
FUNDING AVAILABLE: Not applicable at this time.
APPROVED:
Korr)fadt Bartlam
City Manager
Bartlam, City Manager
* * * SAMPLE LETTER — 01/13/2010 DRAFT * * *
DATE
The Honorable Jerry Brown
Governor, State of California
State Capitol, Suite 1173
Sacramento, CA 95814
Dear Governor Brown:
I/WE write today on behalf of the City of INSERT CITY to express our Opposition to provisions
in your January Budget Proposal which proposes to eliminate redevelopment agencies in
California. Eliminating this program not only violates the will of the people, but will have grave
consequences on California's economy.
Last November, California voters approved Proposition 22, once again reaffirming the message
they have sent to California again and again: local funds should remain local and pay for services
and programs in their own communities. In doing so, they prohibited the state from requiring a
community development agency to remit property tax to or for the benefit of the state or any
jurisdiction directly or indirectly.
From a policy standpoint, eliminating this important program makes no sense. Redevelopment is
an essential tool for the state's economic recovery. Redevelopment, which has been around
since the 1950s, is a tool for building things. It builds and improves communities, spurs j ob
growth and taxes and is the most significant provider of infrastructure, urban development and
affordable housing in the state.
The City of INSERT CITY recognizes that this represents one of the toughest state budget
proposals in history. Our city is also facing tough budget times. (INSERT
EXAMPLES/CONTEXT, IF AVAILABLE). We agree that it is well past time that the state
faces the consequences of years of gimmicks and temporary budget fixes. However, taking local
funding —particularly funding that creates such a great number ofj obs and fuels economic
growth — is imprudent.
We strongly encourage you to consider the constitutional and economic implications of
attempting to eliminate redevelopment. We look forward to working with you to find solutions
that will address the state's fiscal problems while also supporting the economic growth.
Sincerely,
CC: (YOUR) State Legislators
Dan Carrigg, Legislative Director, League of California Cities
OF LEAGUE
RNIA
CITIES
Article from City Advocate Weekly
January 10, 2011
1400 K Street, Suite 400 • Sacramento, California 95814
Phone: 916.658.8200 Fax: 916.658.8240
www.cacities.org
Governor's Budget Eliminates Redevelopment Agencies, Enterprise
Zones and Realigns State Services to Local Governments
League Continues to Analyze Budget's Effects on Local Government
Gov. Jerry Brown has released his FY 2011-12 state budget proposal and, as expected, the state's
financial situation continues to be bleak with a $25.4 billion deficit. The Governor's budaet proposes $26.4
billion in solutions, allowing for $1 billion reserve. The proposal includes the elimination of redevelopment
agencies and enterprise zones to save $1.7 billion and $924 million respectively, as well as the
realignmentof state services such as fire, court security, community-based corrections, mental health
services, foster care and adult protective services to local government.
While the Governor said he recognized some of the positive results of redevelopment, he made it clear in
his remarksthat shifting increased property taxes resulting from redevelopment back to the schools was a
priority.
From a policy standpoint, such a radical proposal makes no sense in a state with unemployment rate of
more than 12 percent, a monstrous infrastructure deficit and recently passed policies championing more
infill development. Redevelopment, which has been around since the 1950s, is a tool for building things. It
builds and improves communities, spursjob growth and taxes and is the most significant provider of
infrastructure, urban development and affordable housing in the state. Enterprise zones are one of the
few economic developmenttools that cities and counties have to bringjobs to depressed areas.
This proposal will hurt our underserved and distressed cities and communities. It will cost California
thousands of jobs. The reality is that the plan to eliminate redevelopment agencies will bring very little
financial benefit to the state and will actually move the state backward in terms of land use and infill
development. In addition, the League is reviewing the constitutionality of the realignment proposal under
Proposition 22, and other constitutional provisions.
Just a mere two months ago, Cal iforn ia voters picked their way through a crowded ballot and approved
Prop. 22 by 61 percent, a measure designed to protect various local revenues — including
redevelopment—from state raids. The voters' position on this issuewas no surprise because repeatedly
they have voted to protect local revenuefrom the state —takefor example Prop. 1A of 2004, which
passed by more than 80 percent. Moreover, poll after poll demonstrates that voters view their local
governments as much more accountable and trustworthy than the state.
While other states, and even the federal government, are working to stabilize and revitalize our economy,
the proposal to eliminate enterprise zones and redevelopment agencies move California in the opposite
direction.
The budget proposal assumes that voters will approve a five-year extension of taxes sun -setting this year
—a 1 percent sales tax and 0.5 percentvehicle license fee that they previously rejected. The revenues of
these taxes will maintain the current level of funding for K-12 schools and COPS (Citizens' Option for
Public Safety)/Booking Fees as well as support the realignment proposal. The Governor believes that
after five years the economy will have recovered enough the state can resume funding, but there has
been no indication as to how.
The Governor described the realignment proposal as "vast and historical," and this is an apt description.
The proposalwill have major impacts for both local and state government. While much has been said
about the importance of local government in recent days, the practice by the state of not bothering to
consult local governmentswhile devising such concepts continues.
Tomorrow, Tuesday, Jan. 11, the League will host Department of Finance Chief Deputy Directorfor
Budgets Michael Cohen who will presentfurther details on the Governor's plan. However, staff has
prepared a preliminary analysis of issues of importance to cities below.
Public Safety
Public safety programs and funding, including law enforcement, corrections, and emergency response,
are a major piece in the realignment of services and programs from state to local agencies.
COPS/Booking Fees. The Governor's budget supports the critical importance of local public safety
programs provided by police and sheriff departments and provides a direct allocation to COPS,
Booking Fee remediation, and specific county level programs. It proposes to provide these programs
$420 million in General Fund dollars that will be backfilled with realignment plan funding — if
approved by voters. Funding would include:
• $107 million for COPS programs, under the current distribution formula based on population
and with a $100,000 minimum for each police department; and
• $35 million for booking fee subventions, meeting the minimum threshold required to eliminate
the need for sheriffs to charge police departments for booking arrestees in county facilities.
Emergency Response/Fire Suppression Services. The Governor's plan also shifts certain
emergency response services for areas currently served by the California Department of Forestry and
Fire Protection (CAL Fire) to the adjacent local agencies, stating that the increased urbanization state
responsibility areas (also known as SBA's) distracts the core mission of CAL Fire's duty to suppress
wildland fires. In this transition of duties, CAL Fire is charged with assessing which areas should be
transferred to Iocaljurisdictions (primarily counties) for fire suppression and emergency medical
response services.
Corrections. Also proposed is a major shift of corrections programs from the state to the county
level, in three areas: incarceration of short term, low level offenders and parole violators; adult
parolee supervision; and all remaining state -level Department of Juvenile Justice wards. The state
would maintain funding responsibilities through a direct allocation to counties, but authorize county
probation and sheriff departmentsto determine how those dollars should be spent.
The start date for corrections realignment is not yet set and would impact prospective inmates only
and allow time for county facilities and administration systems to preparefor the additional population.
Moving the specified inmates and parolee populationsto county supervision is intended to coincide
with other proposed state -to -county shifts, which would providefor rehabilitation type services
including substance abuse and mental health treatment.
Environment
State Parks. The Governor proposesto reduce funding to state parks by $11 million which will result
in partially or fully closing some state park units and reducing expenditures at the State Parks
Department headquarters in Sacramento.
Basin Plan Funding. The Governoralso proposesto shift $12.8 million from the General Fund to fee
based funding. Basin Plans, developed by the state's nine regionalwater quality control boards
providethe water quality information upon which Waste Discharge Permits are based. Underthe
Governor's proposal, future Basin Plans will be funded through Waste Discharge Permit Fee
revenues.
Community Services
Public Libraries. State funding for the Public Library Foundation (PLF), Transaction Based
Reimbursement (TBR) and the California Library Literacy and English Acquisition Service (literacy
program) would be eliminated. This amount totals $30.4 million ($12.9 million cut to the PLF, $12.9
million cut to the TBR and $4.6 million cut to the literacy program).
Transportation
Reenactment cf the Gas Tax Swap. The Governor proposes to reenact the Gas Tax Swap,
approved March 2010, as required by Prop.n 26 (2010). This action will ensure the continuation of
transportation funding as well as provide state General Fund relief.
Truck Weight Fees. Shifts weight fees from the State HighwayAccount to pay for transportation -
related debt service and to provide state General Fund relief. This was previously being
accomplished using Highway Users Tax Account revenues which is now prohibited by Proposition22.
Public Contracting. Proposes to shift $7.2 million in costs to local agencies for developing CalTrans
Project Initiation Documentsfor local projects.
Proposition 1 B. Appropriates $2.3 billion for capital funding of bond projects, including $22 million for
local bridge seismic safety and $200 million for state -local partnership programs.
Transit. In an effort to bring the level of transit funding in linewith what is required by Prop. 22,
appropriates additional funding to ensure local transit agencies receivethe equivalent of 75 percent of
diesel sales tax revenues.
LEAGUE
OF CALIFORNIA
CITIES
Honorable Jerry Brown
Governor, State of California
California State Senators
California State Assembly Members
State Capitol
Sacramento, CA 95814
January 12,2011
1400 K Street, Suite 400 • Sacramento, California 95814
Phone: (916) 658-8200 Fax: (916) 658-8240
www.cacities.org
Dear Governor Brown and California State Legislators:
RE: Eliminating redevelopmentis wrong decision in this economy and fails to offer a real
solution for the state budget
As elected city officials in the State of California, we fully understand that the State's massive budget deficit
will require sacrifice by all Californians. We stand ready to work with the Administration and the Legislature to
pass an honest budget that finally puts California on the road to fiscal health. However, it is important to
ensure that no decisions are made in the frenzy of the upcoming budget deliberations that will make our
financial problemsworse.
Unfortunately, the Administration's proposal to abolish redevelopment represents more of the same State
raids of local funds that voters have fought to prevent, and it will jeopardize the State's prospects for an
economic recovery.
The Governor's proposal to eliminate redevelopment agencies is wrong because it:
• Will not provide expected budget relief to the State or local governments after bond and contractual
obligationsare repaid;
• Will destroy billions of dollars in local economic activity and hundreds of thousands of jobs;
• Will kill the State's only meaningful programsto provide affordable housing; and
• Will block our efforts in California to grow responsibly by focusing on urban and infill development.
The proposal will not provide budget savings to the State or local governments. and represents
continued State raids of local funds the voters have acted to prevent.
Over the last 10 years, the State has adopted too many budgets based on proposals that are at best
questionable and in some cases illegal. The proposal to eliminate redevelopment agencies is just another in
a long string of proposals that will not deliver the real dollars needed to close the budget gap and put the
State's fiscal house in order.
The measure is completely contrary to Proposition 22, which passed by 61 percent in November 2010, to
protect local government revenues from grabs by the State. The provisions of Prop. 22 clearly prohibitthe
redevelopment proposal as it appears in the governor's budget.
Second, redevelopment agencies issue bonds to finance redevelopment activities, which must be repaid with
interest. Redevelopment agencies currently hold more than $20 billion in bonded indebtedness. Under the
federal and state constitutions, these contractual obligations must be met before revenues could be used
under the Governor's proposal to benefit the state's budget deficit.
The bottom line is that this is not a "real" budget proposal. It is a proposal that will once again fall far short of
expectations.
The proposal will kill lobs and economic expansion at the worst possible time.
Eliminating redevelopmentwill have a direct and lasting negative impact on the California economy and job
creation.
• Redevelopment activities support an average of 304,000 full- and part-time private sector jobs in a
typical year, including 170,600 construction jobs;
• Redevelopment contributes over $40 billion annually to California's economy in the generation of
goods and services;
• Redevelopmentconstruction activities generate $2 billion in state and local taxes in a typical year;
and
• The success stories of redevelopmentare all over California and available for all to see. The
downtown areas of San Diego, Pasadena, Los Angeles and San Jose stand as outstanding
examples of saving blighted neighborhoods and turning them into hubs of economic activity and job
creation.
The proposal is bad for the environment, bad for our state.
Eliminating redevelopmentwill take away the primarytool local governments have to comply with the
requirements of State law to plan for more compact urban development supported by improved public
transportation opportunities. Redevelopment encourages infill development rather than Greenfield
development and redevelopment agencies have the experience and tools needed to help implement AB 32
and SB 375.
Redevelopment is also the second largestfunder of affordable homes after the federal government.
More than 98,000 units of affordable housing have been constructed or rehabilitated through redevelopment
since 1993.
As local officials, we stand ready to assist you in the passage of a responsible budget. However, this
proposal runs completely contrary to the Governor and Legislature's stated goals of realigning state services
to provide more responsibility and funding locally. We strongly urge you to reject this measure and refocus
on proposals that offer real solutions to California's budget problems.
Sincerely,
LEAGUE
OF CALIFORNIA
CITIES
Jan. 11,2011
F UR IMMEDIATE RELEASE
1400 K Street, Suite 400 • Sacramento, California 95814
Phone: (916) 658-8200 Fax: (916) 658-8240
www.cacities.org
Contact: Eva Spiegel, (916) 658-8228
Cell: (530) 400-9068
City Officials Vow to Fight Governor's Plan to Eliminate Redevelopment
and Take Local Funding
Proposed Budget Violates Recently -Approved
ConstitutionalAmendment in Proposition 22
Yesterday, Gov. Jerry Brown delivered one of the toughest state budget proposals in history — one
that contains many proposalsworth serious consideration. Amazingly, however, it included a
proposal that violates the will of the voters who supported Prop. 22 in the November election. The
constitutional amendment passed overwhelmingly by 61 percent of the vote. Then-Attomey
General Jerry Brown's ballot summary stated that Prop. 22: "Prohibits the state from borrowing or
taking funds used for transportation, redevelopmentorlocal governmentprojects and services."
City officials reacted with outrage that the state is once again seeking to take funding from local
governments.
Prop. 22 was designed to prevent "state politicians in Sacramentofrom seizing, diverting, shifting,
borrowing, transferring, suspending or otherwisetaking or interferingwith tax revenues dedicated
..." to vital local programs and services.
The measure specifically prohibitsthe state from requiring a community redevelopment agency to
remit property tax to or for the benefit of the state or any otherjurisdiction directly or indirectly.
Prop. 22 states clearly that it shall be liberally construed to effectuate its purpose of prohibitingthe
state from taking or borrowing these revenues. The proposal raises other constitutional issues as
well.
The League requeststhis proposal be further vetted on constititutional grounds and encourages
the Governorand legislatorsto reflect on what the voters have repeatedly communicated at the
ballot box on the importance of protecting local government funding.
From a policy standpoint, such a radical proposal also makes no sense. While other states, and
even the federal government, are working to stabilize and revitalize our economy, California — with
an unemployment rate of more than 12 percent, a monstrous infrastructure deficit, and recently
passed policies championing more infill development — is moving in the opposite direction.
Redevelopment, which has been around since the 1950s, is a tool for buildingthings. It builds and
improves communities, spurs job growth and taxes and is the most significant provider of
infrastructure, urban developmentand affordable housing in the state. Enterprisezones are one of
the few economic developmenttools that local agencies have to bringjobs to depressed areas.
The California Redevelopment Association and the State Building and Construction Trades Council
of California, AFL-CIO have issued statements yesterday identifying redevelopment's contributions
to the state, and the losses that will result should the Governor's proposed budget be adopted:
- More-
League of California Cities
Jan. 11,2011
Page 2
• It will kill 300,000jobs a year provided by redevelopment projects, most of them
construction jobs;
• It will encourage sprawl development and increase greenhouse gas emissions in the future
and limit the construction of affordable housing; and
• It will deprive the state and local agencies of $2 billion in new revenues from these
projects.
League President Jim Ridenour, mayor of Modesto, closed with these comments: "Last week the
League's officers had the pleasure of meeting with Gov. Brown, and we pledged to work with him
to help turn California around. We told him how cities have been making tough budget decisions
and that we know the state has to do the same. His proposed budget is full of tough choices. We
urge him to consider carefully the constitutional and policy flaws associated with attempting to get
rid of local redevelopment and enterprise zones, and thejobs these programs create. It is clear that
he listens closely to the voters and intends to cavy out their will. While we oppose these proposals
to take away critical local economic development tools, we look forward to working with him in the
effort to improve our state."
CITY COUNCIL
BOB JOHNSON, Mayor
JOANNE MOUNCE,
Mayor Pro Tempore
LARRYHANSEN
PHIL KATZAKIAN
ALAN NAKANISHI
January 25,201 1
CITY OF LODI
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209) 333-6702 / FAX (209) 333-6807
www.lodi.gov cityclerkCa)l_odL ov
The Honorable Jerry Brown
Governor, State of California
State Capitol, Suite 1173
Sacramento, California 95814
Dear Governor Brown:
KONRADT BARTLAM,
City Manager
RANDI JOHL, City Clerk
D. STEPHEN SCHWABAUER
City Attorney
write today on behalf of the City of Lodi to express concern regarding your January Budget
Proposal. Specifically, the City of Lodi has concerns regarding the proposals to eliminate
Enterprise Zones in California. Eliminating this program will be detrimental to California's
economic recovery.
In our city, the Enterprise Zone has provided assistance to businesses located in
economically -distressed areas through incentives to promote business expansion and job
creation. By encouraging entrepreneurship and employer growth, the program creates and
sustains economic expansion in our local community.
From a policy standpoint, the elimination of these important programs makes no sense. The
Enterprise Zone Program was established in 1984 to bring business, jobs and investment to
California's most depressed areas. Research shows that the program fundamentally boosts
the economy by helping reduce poverty, lower unemployment, improving wages, and
increasing household income levels. Enterprise zones are one of the few economic
development tools that local agencies have to bring jobs to depressed areas.
Ultimately, California's budget crisis will be solved by strengthening California's economy and
creating jobs. We pride ourselves on the good partnerships we have built with businesses in
our city, as should the state. Now is not the time to abandon these partnerships and the
resulting infrastructure creation. We strongly encourage you to consider the constitutional and
economic implications of enacting the budget you have proposed.
We look forward to working with you to find solutions that will address the state's fiscal
problems while also supporting tools for economic growth.
Sincerely,
Bob J on
May r
Q Assembly MemberAlyson Huber, 10th District
Senator Tom Berryhill,14th District
Dan Carrigg, Legislative Director, League of California Cities