HomeMy WebLinkAboutAgenda Report - January 21, 2003 C-01 SMAGENDA TITLE: Adopt Resolution Urging the California Legislature to Reject the Governor's
Proposed Shift of Local Vehicle License Fee (VLF) Revenues and to Honor the
1998 Commitment to Restore the VLF.
MEETING DATE: January 21, 2003
SUBMITTED BY: Janet S. Keeter, Deputy City Manager
RECOMMENDATION: That Council Adopt a Resolution Urging the California Legislature to
Reject the Governor's Proposed Shift of Local Vehicle License Fee
(VLF) Revenues and to Honor the 1998 Commitment to Restore the
VLF.
BACKGROUND INFORMATION: During the January 15, 2003 City Council meeting, Council Members
directed staff to return during the Special January 21, 2003 meeting
with a Resolution regarding the State of California's proposed Vehicle
License Fee "take -away" from the cities. The Resolution is attached and generally mirrors the message
that the League of California Cities is advocating which in essence states: Support restoration of the
Vehicle License Fee if the State can no longer afford the VLF backfill.
The VLF was reduced in 1998 when the State was "flush" with revenues and agreed to backfill the
revenues to cities so that cities would remain whole. In addition, they agreed to provisions that would
trigger restoration of the VLF if the State general fund could no longer afford the offset or backfill from the
general fund to pay for the VLF relief.
Should the Governor's proposal be implemented, then the City of Lodi could stand to loose $1,092,982 this
Fiscal Year, and $2,351,335 in Fiscal Year 2003-04. These funds comprise approximately 13% of the
City's General Fund revenues which help fund Parks and Recreation, Police, Fire, Administration, Library
and other programs and services. Not only will the potential loss of revenues affect the City's operating
budget, but it could potentially affect capital projects currently under various stages of planning
development.
Funding: Not applicable.
Re ctfully sub itted,
Jan t S. Ke er
D uty City Manager
JSKIsl
Atttachment
APPROVED:
H. Dixon Flynn -- City Manager
RESOLUTION NO. 2003-09
A RESOLUTION OF THE LODI CITY COUNCIL URGING THE CALIFORNIA
LEGISLATURE TO REJECT THE GOVERNOR'S PROPOSED SHIFT OF
LOCAL VEHICLE LICENSE FEE (VLF) REVENUES AND TO HONOR THE
1998 COMMITMENT TO RESTORE THE VLF
-------------
WHEREAS, prior to 1935, cities and counties collected property taxes on motor vehicles
to fund essential local public health and safety services; and
WHEREAS, in 1935, the Legislature first enacted the Vehicle License Fee (VLF) Act,
replacing the property tax on vehicles with a 1.75 percent fee charged against the value of the
motor vehicle; and
WHEREAS, in 1948, the rate of the VLF was increased to 2 percent of the value of the
vehicle; and
WHEREAS, in 1986, the voters voted overwhelmingly to constitutionally dedicate the
proceeds of the VLF to fund city and county services; and
WHEREAS, in 1998, a period of strong economic growth, the Legislature approved the
use of a portion of the rapidly growing state General Fund to reduce the VLF payments of
vehicle owners. This amount, known as the "offset," grew in future years to a 67.5 percent
offset against the amount owed. The amount paid to local governments in lieu of the reduced
VLF payment is known as the "VLF backfill"; and
WHEREAS, the 1998 legislation and subsequent enactments contain clear provisions
that when insufficient funds are available to be transferred from the General Fund to fully fund
the offsets and backfill amount that the VLF offset shall be reduced and VLF payments
increased; and
WHEREAS, VLF and backfill revenues constitute approximately 13 percent of the City of
` Lodi's general purpose revenues. Approximately 43 percent of the City of Lodi's operat11-ig
budget goes to fund public safety services; and
WHEREAS, revenues derived from the VLF and backfill are of critical importance in
funding vital local services; and
WHEREAS, any failure by the Legislature to maintain the VLF backfill or restore the VLF
will cause widespread disruption in local government services essential to the well-being of Lodi
citizens and their family members; and
WHEREAS, a range of City services could be affected in Lodi; and
WHEREAS, the City has multiple capital projects, which will likely be delayed; and
WHEREAS, Governor Davis' proposal to divert $3.35 million in City of Lodi VLF backfill
payments over the next 17 months fails to honor the 1998 commitment and is a direct assault
on local services that will be felt by every Lodi resident; and
WHEREAS, shifting $3.35 million in City of Lodi controlled revenues for local services is
neither equitable nor fair. No state program or department has been asked to shoulder such a
disproportionate share of the budget pain. These cuts come on top of the nearly $20 million
Educational Revenue Augmentation Fund (ERAF) transferred from City of Lodi services to fund
state obligations.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Lodi,
California, that if the state General Fund can no longer afford the expense of part or all of the
VLF "backfill" that the Legislature and Governor of California are hereby respectfully urged to
implement the provisions of the 1998 VLF law.
Dated: January 21, 2003
------------------------------------------------------------------------
------------------------------------------------------------------------
I hereby certify that Resolution No. 2003-09 was passed and adopted by the City
Council of the City of Lodi in a special meeting held January 21, 2003, by the following vote:
AYES: COUNCIL MEMBERS — Beckman, Hansen, Howard, Land,
and Mayor Hitchcock
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
SUSAN J. BLACKSTON
City Clerk
2003-09
I am opposed to this resolution on substantive and procedural grounds.
Procedurally
We are asking the State to raise taxes on all of California in order for Lodi to
receive 18 cents for every extra dollar paid for a car registered in the City.
It is wrong to link two items that just happen to be in the same account.
Throughout the documentation provided by the league it is suggested that if the VLF is
not restored then 12,000 policemen and 15,000 firefighters will be laid off. That
presumes that 100% of any reduction in city revenues will come out of salary for public
safety line personnel. This resolution, by asserting that public safety personnel will be
laid off ignores the fact the Lodi has an elected body charged with making those
decisions. If anyone is to be laid off it is this council who will make that decision not
the State of California nor the League of Cities.
This is Herb Wesson's tax, not the City of Lodi's. If the Speaker wants more
taxes he can propose them. But the City of Lodi should not be his cheerleader. The tax
will fall on our citizens, on our constituents, on the people who elected us. I will not be
an accomplice in raising their taxes. Especially when only 18% of the dollars raised from
that tax will actually go to Lodi.
A tax cut is not an "offset." Throughout the documentation received from the
League the word offset is used to describe a decrease in the car tax. This was a tax cut,
call it a tax cut. To say we want to reduce the offset is to purposefully use words that are
misleading. This request is for a tax increase.
Substantively
"Do our part, share in the burden."
The Governor has told every state agency and department to prepare for cuts. He
said you must come to the table with suggestions on how you will be part of the solution.
The Governor's office said, if your only demand is for your department or agency to have
it's budget remain intact, then your request will be ignored. No one is exempt from this
fiscal crisis everyone will share in the burden.
With this resolution we are asking for our budget to remain in tact. We are asking
to be exempt from this fiscal crisis. Should this request be complied with and the car tax
goes back to 1998 levels, then our budget will have remained in tact. Therefore, it would
be as if we have not "participated" in the budget cuts. Our budget would still be ripe for
further cuts in other areas. In the big scheme of the budget, this request puts us in a
position where we have not "shared in the burden of solving the budget crisis."
Increased taxes are a disincentive.
In 1998 the legislature reduced the car tax and in subsequent years it was further
reduced by 67.5% of 1998 levels. The "restoration" of the VLF in real terms will triple
the tax you pay on your car over the 1998 level. Since Lodi is also heavily dependent
on sales tax, which comes predominantly from new car sales, this tax increase on cars
will decrease new car sales.
Since 1998 the state general fund revenues have gone from 54.9 billion to 79.4
billion a 44% increase, and state general fund expenditures have gone from 52.8 billion to
82.8 billion, a 57% increase.
SCHEDULE 6
SUMMARY OF STATE POPULATION, EMPLOYEES, AND EXPENDITURES
Appendix 25
Expenditures per
$100
Revenue
Expenditures
Expenditures per
of Personal
Employees
Personal
General
General
Capita
Income
Population
Per 1,000
Income
Fund
Total
Fund'
Total 3
General
General
Year
(Thousands)
Employees
Population
(Billions)
(Millions)
(Millions)
(Millions)
(Millions)
Fund 2
Total 3
Fund Y
Total 3
1950•-51 .............
10,643
61,000
5.7
$20.0
$672
$994
$587
$1,006
$55.15
$94.52
$2.94
$5.03
1951-52 .............
11,130
63,860
5.7
23.2
734
1,086
635
1,068
57,05
95.96
2.74
4.60
1952-53 .............
11,638
65,720
5.6
25.7
774
1,151
714
1,177
61.35
101.13
2,78
4.58
1953-54 .............
12,101
69,928
5.8
27.6
798
1,271
809
1,381
66.85
114.12
2.93
5.00
1954-55 .............
12,517
74,099
5.9
28.4
879
1,434
852
1,422
68.07
113.61
3.00
5.01
1955-56 .............
13,004
77,676
6.0
31.2
11005
1,578
923
1,533
70.98
117.89
2.96
4.91
1956-57 .............
13,581
88,299
6.5
34.2
1,079
1,834
1,030
1,732
75.84
127.53
3.01
5.06
1957-58 .............
14,177
98,015
6.9
36.8
1,111
1,751
1,147
1,891
80.91
133.39
3.12
5.14
1958-59 .............
14,741
101,982
6,9
38.6
1,210
1,925
1,246
1,932
84.53
131.06
3.23
5.01
1959-60 .............
15,288
108,423
7.1
42.4
1,491
2198
1,435
2,086
93.86
136.45
3.38
4.92
1960-61 .............
15.863
115,737
7.3
44.8
1,598
2.338
1,678
2,525
105.78
159.18
3.75
5.64
1961-62 .............
16,412
122,339
7.5
47.5
1,728
2,451
1,697
2,406
103.40
146.60
3.57
5.07
1962-63 .............
16,951
128,981
7.6
51.3
1,866
2,668
1,881
2,703
110.97
159.46
3.67
5.27
1963-64 .............
17,530
134,721
7.7
54.8
2,137
3,057
2064
3,182
117.74
181.52
3.77
5.81
1964-65 .............
18,026
143,896
8.0
59.4
2,245
3,295
2.345
3,652
130.09
202.60
3.95
6.15
1965-66 .............
18,464
151,199
8.2
63.5
2,509
3,581
2,580
4,059
139.73
219.83
4.06
6.39
1966-67 .............
181831
158,404
8.4
69.1
2.895
4,073
3,017
4,659
160.21
247.41
4.37
6.74
1967-68 .............
19,175
162,677
8.5
74.4
3,682
4,927
3,273
5,014
170.69
261.49
4.40
6.74
1968-69 .............
19,432
171,655
8.8
81.6
4,136
5,450
3,909
5,673
201.16
291.94
4.79
6.95
1969-70 .............
19,745
179,583
9.1
89.5
4,330
5,743
4,456
6,302
225.68
319.17
4.98
7.04
1970-71 .............
20,039
181,581
9.1
96.4
4,534
5,919
4,854
6,556
242.23
327.16
5.04
6.80
1971-72 .............
20,346
181,912
8.9
102.4
5,395
6,897
5,027
6,684
247.08
328.52
4.91
6.53
1972-73 .............
20,585
188,460
9.2
112.2
5.780
7,366
5,616
7,422
272.82
360.55
5.01
6.61
1973-74 .............
20,869
192918
9.2
124.1
6,978
8,715
7,299
9,311
349.75
446.16
5.88
7.50
1974-75 .............
21,174
203,548
9.6
138.7
8,630
10,405
8,349
1Q276
394.30
485.31
6.02
7.41
1975-76 .............
21,538
206,361
9.6
152.7
9,639
11,567
9,518
11,452
441.92
531.71
6.23
7.50
1976-77 .............
21,936
213,795
9.7
171.4
11,381
13,463
10,467
12,632
477.16
575.86
6.11
7.37
1977-78 .............
22352
221,251
9.9
191.5
13,695
15,962
11,686
14.003
522.82
626.48
6.10
7.31
1978-79 .............
22,836
218,530
9.6
219.7
15,219
17,711
16,251
18,745
711.64
820.85
7.40
8.53
1979-80 .............
23,257
220,193
9.5
252.2
17,985
20,919
18,534
21,488
796.92
923.94
7.35
8.52
1980-81 .............
23,782
225,567
9.5
286.3
19,023
22104
21,105
24,511
887.44
1,030.65
7.37
8.56
1981-82 .............
24,278
228,813
9.4
320.7
20,960
23,601
21,693
25,022
893.53
1,030.65
6.76
7.80
1982-83 .............
24,805
228,489
9.2
341.9
21,233
24,291
21,751
25,330
876.88
1,021.17
6.36
7.41
1983-84 .............
25,337
226,695
8.9
367.5
23,809
27,626
22869
26,797
902.59
1,057.62
6.22
7.29
1984-85 .............
25,816
229,845
8.9
411.6
26,536
31,570
25,722
30,961
996.36
1,199.30
6.25
7.52
1985-86 .............
26,403
229,641
8,7
447.1
28.072
33,558
28,841
34,977
1,092.34
1,324.74
6.45
7.82
1986-87 .............
27,052
232,927
8.6
477.8
32,519
37,767
31,469
38,079
1,163.28
1,407.62
6.59
7.97
I987 -U.- ..........
27.717
237,761
8.6
517.3
32,534
38,773
33,021
40,452
1.191.36
1,459.47
6.38
7.82
1988-89 .............
28,393
248,173
8.7
561.1
36,953
43,322
35,897
44,634
1,264.29
1,572.01
6.40
7.95
1989-90 .............
29,142
254,589
8.7
606.7
38,750
46,453
39,456
48,594
1,353.92
1,667.49
6.50
8.01
1990-91 .............
30,659
260,622
8.5
655.6
38,214
47,024
40,264
51,446
1,313.28
1,678.01
6.14
7.85
1991-92 .............
31,272
261,713
8.4
669.8
42026
53,117
43,327
56,280
1,385.49
1,799.69
6.47
8.40
1992-93 .............
31,780
260,939
8.2
701.6
40,946
52,526
4Q948
56,480
1,288.48
1,777.22
5.84
8.05
1993-94 .............
32,083
265,035
813
714.1
40,095
52384
38,958
53,083
1,214.29
1,654.55
5.46
7.43
1994-95 .............
32,269
269,004
8.3
735.1
42,710
54,942
41,961
54,613
1,300.35
1,692.43
5.71
7.43
1995-96 .............
32432
271,076
8.4
771.5
46,296
59,266
45,393
59,870
1,399.64
1,846.02
5.88
7.76
1996-97 .............
32,669
271,966
8.3
812.4
49,220
62831
49,088
64,523
1,502.59
1,975.05
6.04
7.94
1997-98 .............
33,180
271,254
8.2
862.1
54,973
69,424
52874
68,528
1,593.55
2065.34
6.13
7.95
1998-99 .............
33,609
282,860
8A
924,3
58,615
74,281
57,827
75.260
1,720.58
2239.28
6.26
8.14
1999-00 .............
34,183
296,076
8.7
991.4
71,931
87,536
66,494
84,864
1,945.24
2.482.64
6.71
8.56
2000-01 .............
34,808
316,451
9.1
1,107.8
76,899
93,651
79,708
100,695
2,289.93
2,892.87
7.20
9.09
2001-02 .............
35,410
317,369
9.0
1,171.3
79,434
96,875
82,853
104,727
2339.82
2,957.55
7,07
8.94
' Population as of July 1, the beginning of
the fiscal year.
2 Includes Special Accounts in
General Fund from 1973-74 to 1976-77.
3 Expenditures include payments from General Fund, Special Funds and Selected Bond Funds beginning in 1963-64.
Appendix 25