HomeMy WebLinkAboutAgenda Report - July 2, 1997 (48)AGENDA TITLE: Further correspondence to Governor Wilson regarding Educational Revenue
Augmentation Fund
MEETING DATE: July 2, 1997
PREPARED BY: Assistant to the City Manager
RECOMMENDED ACTION: That City Council approve the attached letter for Mayor's signature and
submission to the Governor.
BACKGROUND INFORMATION: Two months ago, City Council sent a letter to Governor Wilson urging his
support of AB 95 (Sweeney), SB 880 (Craven), and ACA 4 (Aguiar).
These bills are designed to arrest growth of Educational Revenue
Augmentation Fund (ERAF) transfers at current year levels. Then, with
the passage of time, these transfers will be incrementally diminished until they disappear.
The intent of constitutional amendment ACA 4 is to serve as a fall back mechanism should the Governor
refuse to sign the bills. He has repudiated similar bills in the past, despite the fact they received full
bipartisan support. His rationale is that a complete package of local government finance reform must be
developed before any major revenue shifts can take place in California. This begs the question, why was it
acceptable to implement a major revenue shift in 1992-93 when no such package existed? With the state
now in full economic recovery, why can we not revert back to the structure in place before 1992-93 while
we wait for this ideal package?
For the upcoming year, the League of California Cities is lobbying for inclusion of a $280 million finance
package in the State budget. This represents a return of only 10% of the total ERAF amount as well as
expected growth in property tax revenues through increases in assessed valuation. One positive sign is
that the governor has offered a fiscal relief package that contains $24 million for cities. Unfortunately, this
is only one third of the amount the League of California Cities is requesting for FY 1997-98. These bills
represent the only opportunity this year to get funds back from the State for use by cities. If they pass, it
would mean a return of property tax revenues to the City of Lodi of approximately $175,000 in FY 97-98.
There are no other potential infusions of this type of revenue we can anticipate.
Lodi staff has communicated with Assemblyman Larry Bowler in person and Senator Patrick Johnston's
staff. They were urged to support these bills and not vote for the State budget if it lacks the $280 million
package for cities. Both representatives strongly support these bills. From the City of Lodi's perspective,
the primary obstacle remaining is the Governor. Staff recommends that City Council approve the attached
letter for submission to the Governor to r ' r our position regarding this matter.
FUNDING: N/A
Kirk J. Evans
Assistant to the City Manager
APPROVED'
l' H. Dixon Flynn -- City Manager
CITY COUNCIL
PHILLIP A. PENNING, Mayor
JACK A. SIEGLOCK
Mayor Pro Tempore
KEITH LAND
STEPHEN J. MANN
DAVID P. WARNER
July 2, 1997
CITY OF LODI
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209) 333-6700
FAX (209) 333-6807
The Honorable Pete Wilson
Governor
State of California
State Capitol
Sacramento, CA 95814
Dear Governor Wilson:
H. DIXON FLYNN
City Manager
JENNIFER M. PERRIN
City Clerk
RANDALL A. HAYS
City Attorney
On behalf of the City Council of the City of Lodi, I am writing once again to urge your
support of AB 95 (Sweeney), and SB 880 (Craven).
Every year more than $1.1 million is diverted from the City of Lodi by the Educational
Revenue Augmentation Fund (ERAF). In addition, the City loses any property tax growth
that accrues over time.
We appreciate your recent proposal to provide a $100 million fiscal relief package for local
government. Your proposal acknowledges that local government in California requires an
ERAF remedy. Unfortunately, this package would provide at most $24 million for cities on
a one-time basis. The City of Lodi can not use this package to provide meaningful change
in our community. We need to know a sufficient and stable property tax revenue stream
will be available in the future to cover our long-term commitments.
The League of California Cities is requesting a $280 million finance package for all local
governments to be included in the next state budget. This amount represents only ten
percent of the total annual ERAF property tax transfer in California. Nevertheless, the
League's request would provide significantly greater funding for cities than the amount
contained in your proposal. By satisfying this request you would provide a stable revenue
stream the City of Lodi could rely on in the' future and use to budget for worthwhile
change.
ERAF transfers have had several negative effects on the City of Lodi. Over the past six
years - and continuing into the future - we have lost the opportunity to use these funds to
provide parks, infrastructure maintenance, library programs, economic development
programs, crime prevention, and other essential local services that help maintain strong
neighborhoods and a healthy Lodi economy.
AB 95 (Sweeney) and SB 880 (Craven) attempt to address these issues through two
components: freezing growth of ERAF transfers at 1996-97 levels, and reducing annual
transfers by a schedule of unspecified percentages until the shift reaches zero.
Both houses of the California State Legislature and a broad coalition of business, labor,
local government, and development interests support these measures.
On behalf of the City of Lodi, I respectfully urge your support for AB 95 (Sweeney) and
SB 880 (Craven). Thank you for considering this exceptionally important issue.
Sincerely,
Phillip A. Pe no,
Mayor