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HomeMy WebLinkAbout1980-01-02; City Council; 6124; Advisory proposition regarding allocation of taxCITY OF CARLSBAD AGENDA BILL NO. fp / 3 V Initial: Dept.Hd. DATE: JANUARY 2, 1980 „ a, . \* » JTaL-t.y • DEPARTMENT; CITY MANAGER C. Mgr. (30) Subject: ADVISORY PROPOSITION REGARDING ALLOCATION OF STATE SALES TAX Statement of the Matter The League of California Cities at its 1979 Annual Conference adopted a resolution encouraging all cities to include an advisory proposition on the next municipal ballot regarding the allocation of the state sales tax. The League proposes that an additional one cent of the sales tax be allocated to cities, counties, and special districts. It is not clear if the additional one cent would be allocated according to site of sale or by some other method. Attached is an information packet on the subject distributed to all cities by the League. Also attached is a report from the City's Finance Director analyzing the financial benefit of the proposed change to the City in light of the limitations imposed by Proposition 4. Exhibits Letter and Information Packet from the League of California Cities dated December 3, 1979. Report from Finance Director dated December 17, 1979. Recommendations If the Council wishes to place this issue on the April Ballot as an advisory proposition, your action is. to direct the staff to prepare the necessary documents for action at your January 15, 1980 meeting. Council Action: 1-2-80 Council directed that the matter be placed on the April ballot as an advisory proposition. California CitiesWor/c rogethet Sacramento, CA 95814 December 3, 1979 To: Mayors, City Managers and City Clerks in Non-Manager Cities Subject: Information Packet and Procedures for Local Advisory Propositions on Distribution of State Sales Tax Revenue (1979 Annual Conference Resolution No. 62) Pursuant to the League 1979 Annual Conference Resolution No. 62 encouraging all cities to include an advisory proposition on the next municipal ballot regarding the alloca- tion of the state sales tax, an information packet is enclosed. On September 18, 1979 a virtually identical ballot measure was approved by the voters in the City of San Diego by a 3 to 1 margin. The iriforraation packet which is en- closed provides not only the text of the League Annual Conference Resolution but also the City of San Diego!s ballot measure. The packet also provides suggested and statu- tory election procedures and deadlines and arguments for and against the measure which appeared j.n the San Diego voter's pamphlet. City Clerks attending the League's City Clerks Institute last week also discussed the procedural aspects of an advisory ballot election with Ann Tanner, City'Clerk of Pale Alto, and member of the League's Board of DrLrectors. Because, other cities and the League are interested in following city actions regarding such an advisory vote, you are requested to respond to the following questions: City of 1) Has your city considered placing this advisory measure on the ballot? 2) Will the measure be placed on the ballot? Yes Yes No No Please return to tha Sacramento Office of the League as soon as.possible. (1400 K Street, Sacramento, CA 95814) 1400 K STREPT • SACRAMENTO 95814 (91o)444-57(iO HOTEL CLAREMONT • BERKELEY 94705 900 WILSHIRE BLVD. SUITE 70? • LOS ANGELES 00017 (213)624-1934 \ ) Leaaye of Citli California Cities 1 Work Together Information Packet Relating to Local Advisory Propositions on Distribution of State S?les Tax Revenues (1979 Annual Conference Resolution No. 62) December 3, 1979 1 A lli 1 ^ 1 £ 2.1 lllill Page Text of Annual Conference Resolution No. 62 Text of Proposition C, on San Diego City Ballot, on September 18, 1979 Election Procedures Regarding Local Advsj.ory Ballot Propositions 4-5 Ballot .Arguments Utilized in San Diego Election 6-7 - 1 - 1400 K STREET • SA"FW 1FNTO 95814 HOTEL Cl AREMONT • BERKF!! F.Y 9470S 900 WILSHIRE RL VD. SUITE 702 • LOS ANGELES 90017 (916)4-W-b790 . ('-15; 043-3083 (^13)624-4934 Text of Annual Conference Resolution No. 62 (Adopted at the 1979 Annual Conference, San Francisco, September 25, 1979) "RESOLUTION RELATING TO LOCAL ADVISORY PROPOSITIONS•ON DISTRIBUTION OF STATE SALES TAX REVENUE "WHEREAS, local governments in California provide many essential public serv- ices such as police protection, fire protection, and parks and recreation; and "WHEREAS, of the 6% sales tax collected in California, only 1% is levied by local agencies, the remainder being levied by the state for state distribution or placement in state reserves; and "WHEREAS, by adopting this resolution, the League of California Cities has no intention of supporting a change in the distribution of the existing 1^ local sales tax; and "WHEREAS, it is the position of the League of California Cities that of the sales tax, \i of the 4-3/4c? retained by the state should be distributed to local agencies; now, therefore, be it "RESOLVED, by the General A.ssembly of the League of California Cities assembled in Annual Conference in San Francisco, September 25, 1979, that the League encourage all cities, at an election prior to July 1, 1980, to include an advisory proposition on the ballot requesting an expression of the public will, which advisory proposition would read substantially as follows: 'Should the Governor and Legislature of the State of California be advsied that: , 'It is the will of the people of the City of that the Governor and Legislature apportion the existing six cents sales and use tax so that two cents rather than the present one cent be allocated to be used by cities and counties and special districts for priority local services 'rather than by the s.tate for state dis- tribution or state reserves. 'It is understood that if the Governor and Legislature so act, any funds resulting therefrom which would cause the city to exceed a spending limit imposed by a vote of the people of the City of or the State of California shall, in accordance with the provisions of nhe limitation, be returned to the people. 'Further, it is the. will of the people that the Governor and LegiS" lature enact such allocation into law no later than July 1, 1980, to avoid enactment of this proposal through the initiative process to cure legislative default."1 — 2 — Text of Proposition C, as it appeared and was approved on the San Diego City Ballot, September 18, 1979. "PROPOSITION C (THIS PROPOSITION WILL APPEAR ON THE BALLOT IN THE FOLLOWING FORM) "PROPOSITION C. ADVISING THE GOVERNOR AND THE LEGISLATURE OF THE STATE OF CALIFORNIA OF THE WILL OF THE PEOPLE OF THE CITY OF SAN DIEGO TO HAVE ENACTED INTO LAW A RE- ALLOCATION OF EXISTING SALES AND USE TAXES. "Should the Governor and Legislature of the State of California be advised that: "It is. the will of the people of the city of San Diego that the Governor and .the Legislature apportion the existing six cents state sales and use tax so that two cents rather than the present one cent be allocated to be used by cities and counties for priority local services rather than by the state for state services or to the state surplus. "It is understood that, if the Governor and Legislature so act, any funds re- sulting therefrom .which would cause the city to exceed a spending limit imposed by a vote of the people of the City of San Diego or the State of California shall, in accordance with the provisions of Section 77 of the City Charter, be returned to the people or expended for capital improvements. "Further, it is the will of the people that the Governor and Legislature en- act such allocation into law by no later than the first cf May 1980, to avoid the urmece.ssary enactment by the people through the initiative process to cure legislative default." - 3 - ELECTION PROCEDURES REGARDING LOCAL ADVISORY BALLOT PROPOSITIONS The Elections Code (Section 5353) provides a mechanism for the public to voice their opinion on substantive.issues or to indicate to the local legislative body approval or disapproval of the ballot proposal. The "advisory vote" means an indication of general voter opinion and the results in no way are controlling on the legislative body. Procedures for placing an advisory measure on the ballot are briefly summarized below. You should consult with your city clerk and city attorney regarding the elections procedures to be followed. 1. Council to place measure on ballot 2. Determine and announce deadline for submission of arguments 3. City attorney to prepare synopses and may be requested to prepare impartial analysis 4. Prepaid cards to order synopses 5. Public notice of nominees and measures 6. Committees supporting/opposing measures 1st statement due 2nd statement due 3rd statement due Suggested Date January 24) ) January 24) February 13 February 18 February 28 February 23) March 27 ) June 12 ) Code Citation Elec. C. §54017, 403.8. 5010- 5016 and 22807 Elec. C. §5011 Elec. C. §4018 Elec. C. §§22833- 22835 Gov. C. §§84200- 82205 Suggestions Regarding Advisory Election Procedures: - While not apparently required by law, ordering submission of the advisory measure to the electors of the city at the general municipal election should probably be published to be cautious and avoid any allegations of lack of notice. - Since there appears to be no deadline for submission of advisory ballot mea- sures, the controlling factor is the time required locally to prepare the necessary sample ballot materials. City clerks usually prefer to publish any notice of deadlines for subroittal of ballot arguments at the same time as the Notice of Election (i.e. required between January 10 and January 24, 1980) in order to give notice of measures that will be on the ballot. - Regarding an impartial analysis of the measure, under Elections Code Section 5011 the governing body may request the city attorney to prepare an Impartial analysis of the measure. - 4 - Campaign Disclosure. If groups form to support or oppose the advisory ha]lot measure qualify as "committees" under the Political Reform Act, the.n campaign statements will have to be filed as required by law. Statements are to be filed 40 days prior to the election, 12 days prior, and 65 or less days after the election (February 28, March 27, June 12). Advisory Vole Outside City Boundaries. Section 5353(d) of the Elections Code apparently permits the sponsoring legislative body to call for an advisory vote outside the territory of the jurisdiction if the residents of th?.t territory are affected by the issue and if the advisory election can be consolidated with the regular or special elections in such terri- tory. However, there would be additional election costs involved. Ballot Arguments Utilized in San Diego Election "ARGUMENT IN FAVOR OF PROPOSITION C "Want to send a message to Sacramento? Then Vote Yes on Proposition C! Ask yourself, what public services are of the greatest importance to you? Police protection? Fire'protection? Libraries? Parks and recreation? All these services are provided by local government and essential to a good quality of life. Certainly they are of far greater value than those championed by overstaffed state and federal bureaxicracies, which produce questionable benefits to the public while unquestionably devouring your tax dollars. Did you know that the state collects locally a 6% sales tax, yet returns only slightly more than 1%? The rest stays in Sacramento where a massive budget surplus has proven to be an irresistible temptation for Sacramento politicians to underwrite their pet projects. Yet, local government is faced with having to reduce or hold the line on these most important public services. It simply does not make sense! Proposition C tells Sacramento it had better get the priorities straight, and address our most critical needs without increasing the tax burden. Proposition C proposes that some of that money that now goes to and is spent in Sacramento be returned to local government so -that city and county government does not have to be concerned with providing you with the kind of police and fire pro- tection or other critical services you need and deserve. Remember that our spending limit and that proposed under the 'Spirit of 13' initiative requires that any extra revenue would have to be returned to you or be used for much needed public improvements. No wonder that Paul Garni, coauthor of Proposition 13 and the new spending limit, sup- ports Proposition C. San Diego Taxpayers Association supports Proposition C. To assure essential local services, to reduce that massive surplus in Sacramento, vote for local, control and for Proposition C. PETE WILSON CARLETON LICHTY Mayor President City of San Diego - San Diego Chamber of. Commerce BILL LOWERY JACK PEARSON Councilman President City of San Diego " San Diego Police Officers Association" J. BRUCE HENDERSON President Association of Concerned Taxpayers "ARGUMENT AGAINST PROPOSITION C "Opposition to diversion of sales tax. In passing Proposition G & J, 75% of the voters in San Diego voted to establish spend- ing limits in the county and city respectively. Proposition 13 was overwhelmingly passed by the voters in an effort to tell government to cut back their spending, not increase it. Proposition C asks you the voters, whether or not you want to have the - 6 - MEMORANDUM DATE: December 17, 1979 TO: CITY MANAGER FROM: FINANCE DIRECTOR SUBJECT: ANALYSIS OF THE IMPACT OF THE PROPOSED DISTRIBUTION OF ADDITIONAL SALES TAX TO CITIES BACKGROUND According to the attached letter, the League is asking the City of Carlsbad to support a proposal that would, if enacted by the State Legislature, allocate an additional 1<£ sales tax from the State share of the 6<f: sales tax to cities. Since the City currently receives an allocation of 1<£, the distribution of the additional 1<£ would double the total sales tax revenue received by the City of Carlsbad. Since Proposition 4 places a limit on the amount of tax revenue a City can collect, any decision to support or oppose this issue should have some grounds in the ability of Carlsbad to keep and use this additional revenue. An analysis of the City's position over the next five years has been prepared to illustrate the estimated impact of this legislation. ANALYSIS According to a review of the City's Proposition 4 position prepared by the Finance Department, the 1978-79 base for expenditure limit calculation is about $10,216,000. This base can increase annually by the sum of the change in population (assumed to be city pop- ulation change - 9.7% average) and the change in the consumer price index or per capita income. (A rate of 12% has been used for these calculations). This combined factor for the City of Carlsbad should be approximately 21.7% per year. If the difference between the maximum limit allowed under Propo- sition 4 and the City's appropriations from proceeds of taxes for a particular year is relatively small, little or no benefit would be received by doubling the sales tax revenue since a considerable amount of tax dollars would have to be returned to the state or the local taxpayers. If there is a large margin, the greater portion of the additional sales tax revenue could be used by the City without exceeding the Proposition 4 limit. ANALYSIS OF THE IMPACT OF THE PROPOSED December 17, 1979 DISTRIBUTION OF ADDITIONAL SALES TAX TO CITIES Page 2 In the attached Table it can be seen that if the City were to experience a 26% increase in annual sales tax revenue as well as a 20% increase in all other proceeds of taxes, a small margin would still exist between the total tax revenue and the Proposition 4 limit. This comes about due to the relatively high base experienced by the City during 1978-79. The City appropriated a considerable amount more than the actual 1978-79 revenue to establish the M§0 and construction reserve funds. CONCLUSION Based on the stated assumptions, the City would be able to legally make use of at least most of the additional revenue generated by this proposed redistribution of the sales tax. The sales tax has historically been a dependable source of revenue for the City. A doubling of the total sales tax revenue would certainly strengthen the City's fiscal position. It should be noted that if the proposed income tax cut initative passes, the state will probably eliminate the bail out funds distributed to the cities (about 648,000 for Carlsbad). The sales tax redistribution would be a means of recovering that loss in very important revenue. JAMES F. ELLIOTT Finance Director JFE:lw Attach. ^ ^pr* CD OO3cr H- 3 CDPb Hpj rt CDUl OHi H-3n*i CD Ptn CD HI O Ul P(—* CDUl rtPX P pu 6rttr* CD H, rtP XCD Ul X H- CD h-*». 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