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HomeMy WebLinkAboutItem 3d: Resolution 6712 Supporting Local Taypayer Public Safety and Transporation Protection Act of 2010STAFF REPORT Administrative Services Department DATE: March 2, 2010 TO: Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Shannon Huang, Financial Services Manager /City reasurer SUBJECT: RESOLUTION NO. 6712 SUPPORTING THE LOCAL TAXPAYER, PUBLIC SAFETY AND TRANSPORTATION PROTECTION ACT OF 2010 Recommendation: Adopt SUMMARY The League of California Cities, together with a coalition of public safety, local government and transportation leaders, filed a ballot measure to protect local revenues. The act is cited as the Local Taxpayer, Public Safety and Transportation Protection Act of 2010. The measure closes !oopholes to prevent the State from taking, diverting or borrowing funds dedicated to supporting local government, transportation, and public transit. Thus, it ensures local control and accountability for local revenues that are used for vital local services and enhances stability and predictability of local government budgets. The measure is currently in the signature gathering phase of the campaign, and will need to have more than 1.1 million signatures to ensure it meets the required 694,354 valid signatures needed to qualify a constitutional amendment in November 2010 statewide ballot. DISCUSSION This statewide ballot initiative is designed to take the protections of Prop 1A further, and will completely and conclusively prohibit state politicians from using revenues dedicated for local government services. The measure would specifically: • Prohibit the State from taking, borrowing or redirecting local taxpayer funds dedicated to public safety, emergency response and other vital local government services. ✓ Stops borrowing of local property taxes. ✓ Prohibits borrowing or taking of local sales, parcel and other taxes imposed by local governments or local voters. ✓ Prevents raids of redevelopment funds. • Protect vital, dedicated transportation and public transit funds from State raids. ✓ Prevents State borrowing, taking or redirecting of the state sales tax on gasoline (Prop 42 funds) and Highway User Tax on gasoline (HUTA) funds. • Protect local taxpayers by keeping more of our local tax dollars local where there's more accountability to voters. The voters in California have overwhelmingly passed separate Prop 1A measures in 2004 and 2006 to protect local government and transportation funds. However, the State has continued its irresponsible practice of taking and borrowing local taxpayer dollars. This new measure is intended to stop State raids once and for all. In FY2009/10 alone, the State legislature approved a budget that has taken or attempted to take dedicated funds that are critical to local governments: • Borrowed approximately $2 billion in property taxes from local governments despite no clear path to repay these funds. • Took $2.05 billion in local redevelopment funds, despite a recent Superior Court filing that says these types of raids are unconstitutional. • Shifted $910 million in transit funding away from local transit agencies. The courts have since ruled these types of raids are unconstitutional. • Voted to take more than $1 billion of the local government share of the Highway User Tax (HUTA) in order to repay state bond debt (measure stalled in Assembly). • Took action to eliminate the state sales tax on gasoline (Prop 42 funds) and HUTA funds and replace them with a gasoline "fee" that would have no constitutional protection from future raids by the legislature (the Governor ultimately vetoed this measure). • Threatened to borrow Prop 42 funds to address the State's deficit. The City can formally take action by endorsing the Local Taxpayer, Public Safety and Transportation Protection Act of 2010 by approving resolution 6712 tonight. The approval of this resolution would further protect and closes loopholes to prevent the 2 State from taking, diverting or borrowing funds that are critically needed in providing local government services, street improvements, and transportation projects. Enclosed staff has attached additional information on the ballot measure provided by the Californians to Protect Local Taxpayers and Vital Services: Summary of the ballot measure; and pertinent Frequently Asked Questions FISCAL IMPACT The success of this ballot measure would protect the City from the State's borrowing or take away of Gas Tax and PROP 42 revenues, which is critical for street and transportation projects, totaling approximately $1.4 million annually as of Fiscal Year 2009/10. Other fiscal impacts cannot be determined at this time; however, the potential for the State to repeat what occurred in FY 2009/10 are credible as they borrowed from the City $1.2 million property taxes (this was repaid through a bond program) and will take $1.8 million of tax increment revenue from the Arcadia Redevelopment Agency over the FY 2009/10 and 2010/11 periods. RECOMMENDATION It is recommended the City Council adopt resolution No. 6712 supporting the Local Taxpayer, Public Safety and Transportation Protection Act of 2010. Approved by: 1Q - Donald Penman, City Manager 3 RESOLUTION NO. 6712 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, SUPPORTING THE LOCAL TAX-. PAYER, PUBLIC SAFETY AND TRANSPORTATION ACT OF 2010 WHEREAS, California voters have repeatedly and overwhelmingly passed separate ballot measures to stop State raids of local government funds, and to dedicate the taxes on gasoline to fund local and state transportation improvement projects; and WHEREAS, these local government funds are critical to provide the police and fire, emergency response, parks, libraries, and other vital local services that residents rely upon every day, and gas tax funds are vital to maintain and improve local streets and roads, to make road safety improvements, relieve traffic congestion, and provide mass transit; and WHEREAS, despite the fact that voters have repeatedly passed measures to prevent the State from taking these revenues dedicated to funding local government services and transportation improvement projects, the State Legislature has seized and borrowed billions of dollars in local government and transportation funds in the past few years; and WHEREAS, this year's borrowing and raids of local government, redevelopment and transit funds, as well as previous, ongoing raids of local government and transportation funds have lead to severe consequences, such as layoffs of police, fire and paramedic first responders, fire station closures, stalled economic development, healthcare cutbacks, delays in road safety improvements, public transit fare increases and cutbacks in public transit services; and WHEREAS, State politicians in Sacramento have continued to ignore the will of the voters, and current law provides no penalties when state politicians take or borrow these locally- dedicated funds; and WHEREAS, a coalition of local government, transportation and transit advocates recently filed a constitutional amendment with the California Attorney General, called the Local Taxpayer, Public Safety, and Transportation Protection Act of 2010, for potential placement on California's November 2010 statewide ballot; and WHEREAS, approval of this ballot initiative would close loopholes and change the constitution to further prevent State politicians in Sacramento from seizing, diverting, shifting, borrowing, transferring, suspending or otherwise taking or interfering with tax revenues dedicated to funding local government services, including redevelopment, or dedicated to transportation improvement projects and mass transit. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. The City Council formally endorses the Local Taxpayer, Public Safety and Transportation Protection Act of 2010, a proposed constitutional amendment. SECTION 2. The City Council hereby authorizes the listing of City of Arcadia in support of the Local Taxpayer, Public Safety and Transportation Protection Act of 2010 and instructs staff to fax a copy of this Resolution to campaign offices at 916.442.3510. 2 ATTEST: City Clerk SECTION 3. The City Clerk shall certify to the adoption of this Resolution. Passed, approved and adopted this 2nd day of March 2010. APPROVED AS TO FORM: Stephen P. Deitsch City Attorney 3 Mayor of the City of Arcadia Local Taxpayer, Public Safety and Transportation Protection Act of 2010 Section One: Findings and Declarations Summary In order to maintain local control, California voters have repeatedly voted to restrict "state politicians in Sacramento" from taking revenues dedicated to funding local government services and to transportation improvement projects. Despite the clear intent and will of the voters, the State has repeatedly raided revenues dedicated to fund vital local government services and transportation improvement projects. More specifically, the state politicians have borrowed property tax; tried to borrow HUTA; taken redevelopment agency revenue; and public transit and capital improvement funding — all in the billions of dollars. All of these raids have had severe consequences. Section Two: Statement of Purpose The voters want to conclusively and completely prohibit state politicians from using revenues that the people have dedicated to local government services, transportation projects, and transportation services. Section Three: Local taxes - No borrowing, reallocation or restriction in use The Legislature may not interfere in any way with locally imposed parcel taxes or other local taxes such as UUT, TOT, BLT, Use Tax, etc. This means that they can't use the proceeds, reallocate them to some other agency, restrict how a local government uses the proceeds, or borrow them. Applies to all locally imposed taxes by cities, counties, schools, special districts, etc. Section Four: Property Taxes — No more borrowing, reallocation for mandate reimbursement This section (1) prohibits any future borrowings of the property tax. (2) prohibits the Legislature from using its power to reallocate property tax between and among cities, counties and special districts to reimburse for state mandates; and prohibits reallocation of VLF to reimburse for state mandates; and (3) prohibits requiring a redevelopment agency to transfer its tax increment revenues to another jurisdiction to benefit the state; or to use its tax increment revenues for a particular purpose that benefits the state. Exceptions are provided for affordable housing, and existing pass- through requirements. Section Five: HUTA — No more borrowing or use for other purposes; statutory allocation change with 2/3 vote after CTC process; state share can be used for state issued bonds with voter approval after 11/10 This section (1) prohibits loaning HUTA funds to the General Fund; (2) allows existing statutory allocation of HUTA to be changed by legislature (with 2/3 vote) after following a public hearing process conducted by the California Transportation Commission; (3) allows State to use its HUTA to pay off bonds issued after November 2, 2010 with voter approval; (4) clarifies that State may not use local HUTA to pay off state - issued bonds; and (5) prohibits delay, deferral, suspension of allocation or use of funds for anything other than purposes specified in Article XIX (existing law). Section Six: Public Transportation Account — No borrowing or use for other purposes; spillover deposited into PTA as originally required in 2001; no reduction of one- quarter cent sales tax in local transportation funds; definitions of "transportation planning" and "mass transportation" This section (1) requires spillover gas tax to be deposited into the PTA in accordance with the law in effect on June 1, 2001; (2) adds to the constitution the existing allocation of PTA monies: 50% to State; 50% to locals; (3) requires quarterly deposit of Prop 42 funds for public transit and mass transportation into the PTA; (4) prohibits borrowing of money in the PTA or use for any purposes other than transportation planning and mass transportation; and (4) defines "transportation planning" and "mass transportation." The definition of "mass transportation" is surface transportation, operated by bus, rail, ferry, etc; generally for which a fare is charged; and provided by any transit district, JPA, or other agencies that receive funds for these purposes. School buses would not be included as "mass transportation." In addition, this section prohibits the Legislature from reducing the one - quarter cent county use tax that is deposited into local transportation funds; and from borrowing, transferring, appropriating, or using the money for any other purpose. Section Seven. Prop 42 — Sales Tax on Gasoline — No borrowing or use for other purposes; statutory allocation change with a 2/3 vote and after CTC public hearing process This section (1) requires Prop 42 funds to be deposited directly into the Transportation Investment Fund (TIF) rather than in the General Fund (which requires I egislature to appropriate from GF to TIF); (2) removes authority of Legislature to borrow Prop 42 funds; (3) allows the Legislature to change existing allocation as between public transit and mass transportation; transportation capital improvements; and street and highway maintenance, etc. by cities and counties ONLY with 2/3 vote and after CTC conducts public hearings; (4) puts into the Constitution the existing allocation of Prop 42 funds for "public transit and mass transportation" ; (5) prohibits Legislature from using money for any other purposes. The definitions of "public transit" and "mass transportation" that are added in Section 6 are also added in Section 7. Section Eight. Lawsuits. Voters provide for "continuous appropriation" so legislature is not relied upon to make payments of funds that it owes to local governments or state funds. Under existing law, a court will not order the legislature to appropriate funds even if the law requires the appropriation. This means that if a city brings a lawsuit alleging that the Legislature owes it money (e.g. a mandate claim), and the court agrees with the city, the city may never get the money unless the Legislature chooses to follow the law. The ballot measure adds an article to the Constitution that seeks to solve this problem. If a city files a lawsuit alleging that the Legislature has violated Article XIX (HUTA); Article XIXA (PTA); or Article XIXB (Prop 42), and the court agrees with the city, then the measure provides for a continuous appropriation of funds to either pay the city (e.g. unlawful property tax borrowing); or repay an account (e.g. unlawful use of TIF funds), etc. Interest would accrue on the amount of the award. Section Nine. Redevelopment Article XVI, section 16 of the Constitution protects the system of tax - increment financing: The Legislature is not allowed to divert tax increments (to school districts, for example) prior to their receipt by redevelopment agencies. This measure protects the use of tax increment revenues after they have been received by redevelopment agencies: The Legislature may not tell redevelopment agencies to make payments of tax increments to other jurisdictions for the benefit of the state; nor tell them to use tax increments for these purposes directly (e.g. repair schools). Section 9 explains this distinction. Section Ten. Continuous appropriation As mentioned above, the "continuous appropriation" is a tool used to avoid the need for the Legislature to make an appropriation of funds. The Constitution allows the State Treasury to make payments pursuant to an "appropriation made by law." This section makes it clear that the continuous appropriations in this measure are intended to be "appropriations made by law" within the meaning of the Constitution. Section Eleven. Liberal Construction. Section Twelve. Conflicting statutes Any statute enacted after October 19, 2009 and November 2, 2010 that would have been unlawful if the measure were in effect, is automatically repealed as of the effective date of the measure. Section Thirteen. Conflicting ballot measures Section Fourteen. Severability. Sponsors: California Alliance for Jobs; League of California Cities; and California Transit Association Californians to PROTECT LOCAL Taxpayers & Vital Services RIK www.savelocalservices.com YES to Protect Local Taxpayers and Funding for Public Safety, Transportation & Other Vital Local Services from State Raids THE PROBLEM: STATE RAIDS AND BORROWING ARE JEOPARDIZING PUBLIC SAFETY, EMERGENCY RESPONSE, TRANSPORTATION, TRANSIT AND OTHER VITAL LOCAL SERVICES. California voters have overwhelmingly passed separate ballot measures to dedicate local funding sources to essential local services and to prevent the State from shifting or raiding local government, transit and transportation funds. Despite this, the State recently passed a budget that borrows and takes approximately $5 billion in city, county, transit, redevelopment and special district funds this year. This year's raids and previous, ongoing state raids and borrowing are jeopardizing the services Californians need most: X Police, fire and emergency 911 services have been cut. X Healthcare services for children, seniors and the disabled are being slashed. X Road repair and maintenance, congestion relief and safety improvements are constantly at risk. X Public transit like buses, commuter rail and shuttles are being slashed and fares are being raised. X Parks and libraries are closing, and other local government services critical to protect our neighborhoods and improve our quality of life are shutting down. X Vital community economic development and job creation projects are being shut down. State raids of local funds are fiscally irresponsible. The fiscally irresponsible practice of borrowing local taxpayer and transportation funds makes our budget problems worse down the line because local government and transportation funds have to be repaid, with interest. Additionally, many of the outright raids are ultimately rejected by the courts, creating even larger state budget deficits down the line. THE SOLUTION: PROHIBIT THE STATE FROM RAIDING LOCAL GOVERNMENT, TRANSIT AND TRANSPORTATION FUNDS. The Local Taxpayer, Public Safety and Transportation Protection Act, scheduled for the November 2010 statewide ballot, would: ✓ Prohibit the State from taking, borrowing or redirecting local taxpayer funds dedicated to public safety, emergency response and other vital local government services. The measure would close loopholes to prevent the taking of local taxpayer funds currently dedicated to cities, counties, special districts and redevelopment agencies. It would also revoke the State's authority to borrow local government property tax funds. ✓ Protect vital, dedicated transportation and public transit funds from state raids. The measure would prevent State borrowing, taking or redirecting of the state sales tax on gasoline (Prop 42 funds) and Highway User Tax on gasoline (HUTA) funds that are dedicated to transportation maintenance and improvements. It would also prevent the State from redirecting or taking public transit funds. ✓ Protect local taxpayers by keeping more of our local tax dollars local where there's more accountability to voters, and by ensuring once and for all that our gas taxes go to fund road improvements. The measure also reduces pressure for local tax and fee increases that become necessary when the State redirects local funds. ✓ Reform state government and enhance fiscal accountability. This measure is a key step in reforming California's broken budget system by restoring more local control and accountability. It also stops the irresponsible practice of the State borrowing special funds that have to be repaid with interest, which only puts our State further in debt. Paid for by Californians to Protect Local Taxpayers and Vital Services, a coalition of taxpayers, public safety, local government, transportation, business and labor, with major funding from the League of California Cities (non - public funds and CitiPAC) and the California Alliance for Jobs — Rebuild California Committee 1121 L Street, #803 — Sacramento, CA 95814 o Californians to PROTECT ' LOCAL Taxpayers & Vital Services www.savelocalservices.com Frequently Asked Questions About the "Local Taxpayer, Public Safety and Transportation Protection Act" WHAT IS YOUR MEASURE AND WHAT DOES IT PROPOSE TO DO? The Local Taxpayer, Public Safety and Transportation Protection Act is a constitutional amendment that we are working to place on California's November 2010 statewide ballot. The initiative would stop the State from raiding or borrowing funding for local public safety, transportation, transit and other essential local govemment services. Specifically, the measure would: ✓ Prohibit the State from taking, borrowing or redirecting local taxpayer funds dedicated to public safety, emergency response and other vital local government services. The measure would close loopholes to prevent the taking of funds currently dedicated to cities, counties, special districts and redevelopment agencies. It would also end the State's fiscally irresponsible practice of borrowing local government property tax funds. ✓ Protect vital, dedicated transportation and public transit funds from State raids. The measure would prevent State borrowing, taking or redirecting of the state sales tax on gasoline (Prop 42 funds) and Highway User Tax on gasoline (HUTA) funds that voters have dedicated to transportation maintenance and improvements. It would also prevent the State from redirecting or taking public transit funds. ✓ Protect local taxpayers by keeping more of our local tax dollars local where there's more accountability to voters, and by ensuring once and for all that our as taxes go to fund road improvements. The measure also reduces pressure for local tax and fee increases that become necessary when the State redirects local funds. WHY IS IT NEEDED? Unfortunately, the State has continued its irresponsible practice of taking and borrowing local taxpayer dollars and dedicated transportation funds. The 2009/10 state budget borrows and takes approximately $5 billion in city, county, transit, redevelopment and special district funds this year despite the fact that voters have overwhelmingly passed ballot measures to keep local funding at the local level to provide essential local services. This year's raids and previous, ongoing state raids and borrowing jeopardize the services Californians need most, including police, fire and emergency 911 services; local economic development and redevelopment; mass transit like buses and commuter rail; and transportation improvements like road repairs and congestion relief. We need to pass this measure to protect these vital local services from State raids and borrowing. ISN'T FUNDING FOR LOCAL GOVERNMENT AND TRANSPORTATION ALREADY PROTECTED FROM STATE RAIDS? California voters have overwhelmingly passed separate measures to prevent the State from raiding local government and transportation funds. However, each and every year the State attempts to take or borrow local government, transportation and transit funding using loopholes, or illegal funding diversions that have only been stopped after expensive and lengthy court battles. This year alone, the Legislature: • Borrowed approximately $2 billion in property taxes from local governments, despite no clear path to repay these funds. • Took $2.05 billion in local redevelopment funds, despite a recent Superior Court ruling that says these types of raids are unconstitutional. • Shifted $910 million in transit funding away from local transit agencies. The courts have since ruled these types of raids are unconstitutional. • Voted to take more than $1 billion of the local government share of the Highway User Tax (HUTA) to repay state bond debt (but the measure stalled in Assembly). These are funds that have always been used to finance local road repairs and maintenance. • Took action to eliminate the state sales tax on gasoline (Prop 42 funds) and HUTA and replace with a gasoline "fee" that would have no constitutional protection from future raids by the legislature (the Governor ultimately vetoed this measure). • Threatened to borrow Prop 42 transportation funds to address the State's deficit. Paid for by Californians to Protect Local Taxpayers and Vital Services, a coalition of taxpayers, public safety, local government, transportation, business and labor, with major funding from the League of California Cities (non - public funds and CitiPAC) and the California Alliance for Jobs 1121 L Street, #803 — Sacramento, CA 95814 Our measure would close loopholes in current law that the legislature has exploited to take or divert local funds. And it would tighten sections of the law to prevent illegal State funding raids of local government and transportation funds before they happen. WHY DOES YOUR MEASURE PREVENT THE STATE FROM BORROWING LOCAL GOVERNMENT AND TRANSPORTATION FUNDS? The local government revenue protection measure in 2004 (Prop 1A) and the transportation revenue protection measure in 2006 (Prop 1A) included provisions that allow the State to borrow these funds during fiscal emergencies. However, after several budget cycles it is clear that these borrowing provisions are not only bad for local governments and transportation services, but fiscally irresponsible for the State. Borrowing these dedicated funds only plunges our state deeper into debt because the funds must to be repaid, with interest within three years. The borrowing was meant to provide an outlet in short-term budget emergencies, but it's instead being used to paper over structural budget problems. For example, the State has no clear way to pay back the $2 billion plus interest in local property taxes that the State is borrowing as part of this year's 2009 -2010 State budget, yet lawmakers borrowed these funds anyway. What's more, because the State has the authority to borrow local government and transportation funds, it creates mass uncertainty for cities and counties who need to plan and pass their local budgets, and for transportation and transit planners who aren't sure if they can rely on these revenues in any given year. DOES THIS MEASURE INCREASE OR DECREASE REVENUES FOR LOCAL GOVERNMENTS OR FOR TRANSPORTATION AND TRANSIT? This measure does not increase or decrease the existing revenues that are dedicated to local government, transportation and transit funds. It simply prevents the State from borrowing or raiding existing local government, transportation and transit revenues that voters have dedicated to these services. WON'T THIS MAKE OUR STATE'S BUDGET SYSTEM EVEN WORSE BY FURTHER PUTTING A LOCK BOX ON BILLIONS OF DOLLARS IN FUNDING? First, these are revenues that have historically been dedicated to cities, counties and special districts to fund local government services. It's fiscally irresponsible for State Government to raid funds from local governments. Second, it's important to remember that these are funds that voters have ALREADY dedicated to local government, transportation and transit services. We are not dedicating any NEW funding for these services, but instead ensuring that the will of voters is upheld by protecting local government and transportation funds from further State raids and borrowing. This reform is fiscally responsible and a key step in long -term reform for California. The State has gotten itself into this deep fiscal mess in large part because lawmakers have relied on budget gimmicks like tapping into voter - protected funds and borrowing which only pushes our problems into the future. HOW DOES THIS MEASURE FIT INTO THE NEED FOR BROAD REFORM OF STATE GOVERNMENT IN CALIFORNIA? This measure is a necessary and responsible first step toward fiscal reform in California. Virtually everyone agrees that State reforms must include the restoration of more local control over local tax dollars, and moving services closer to the people at the local level. This measure ensures local control, predictability, and accountability for local tax dollars that are used to provide the most essential local services. WILL THIS MEASURE IMPACT FUNDING FOR PUBLIC SCHOOLS, HEALTHCARE OR OTHER SERVICES? No. This measure does not take away funding from schools or any other service funded by the State because it only protects EXISTING funds that are already dedicated to local services like public safety and transportation. And this measure in no -way alters Proposition 98, which guarantees funding levels for K -14 schools. HOW WILL THIS MEASURE IMPACT TAXPAYERS? This measure provides further protections for existing revenues that voters have already dedicated to local government, transportation and transit services. It does not increase taxes. In fact, this measure protects taxpayers by keeping more of our tax dollars local where they're more accountable. And this measure decreases pressure for local tax and fee increases at the local government level that become needed when the state takes local revenues and local governments are forced to look for new revenues to protect vital services. Paid for by Californians to Protect Local Taxpayers and Vital Services, a coalition of taxpayers, public safety, local government, transportation, business and labor, with major funding from the League of California Cities (non - public funds and CitiPAC) and the California Alliance for Jobs 1121 L Street, #803 — Sacramento, CA 95814