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HomeMy WebLinkAbout1984-03-13; City Council; 7671; AB 2468 SupportCl~F CARLSBAD -AGENDiBILL AB# 7G 7/ MTG. 3/13/84 AB 2468 SUPPORT C~ft.,. Uft i:r1. nu.~ DEPT. CM CITYATIY~ CITY MGR.~ RECOMMENDED ACTION: Endorse AB 2468, ACA 55, and SCA 23 which provides long-term stable financing for local government and authorize Mayor to support. ITEM EXPLANATION: League of California Cities is co-sponsoring AB 2468 CORTESE and is urging city officials to support the bill. League bulletin is attached. EXHIBIT: 1. League of California Cities Bulletin dated March 5, 1984 I ' I •••• 1111 ·••·· -••·· , ........ Cahfornia Cities Work Together TO: League of California Cities 1400 K STREET • SACRAMENTO, CA 95814 • (916) 444-5790 Sacramento, California March ? , 1984 «~7_0 .. · I'/. i:::l ... , u I) .;_i.... .A '-',). ..... ~ 'l' ,.::; ~•.,R ~ C-::J u.; 1984 '':'.. ci z~ :i City of ::1 ~-' CARLSBAD -..:,-; ~). Carlsbad "A· ,1:.-; <J~ I ),r\ • "-> ,?'-> • ., • '~ '·· C,-, "l.-::,.'-' •·, . .:c)n 1'.lf\cS• Gt,. 11.-.\J CITY MANAGERS OF CI HES WI TH IN ASSEMBLY DISTRICTS OF MEMBERS THE ASSEMBLY REVENUE AND TAXATION COMMITTEE (Assembly Members Hannigan, Hayden, Dennis Brow~, Condit, Cortese, Elder, Floyc, ·F'r.aie!=?·, Jones, Klehs, McCI lntock, Mol Ina, Moore, Nolan, Seastrand) FROM: Ken Emanuels, Legislative Director RE: URGENT. PLEASE CONTACT YOUR ASSEM~LY MEMBER AND ASK FOR SUPPORT OF tEAGUE :CO-SPONSORED· AB 246.8: '(CORTES,E.)_, ACA .55 (CORTESE), it-10· . SCA. 23 ,(·AYAIJ..)., . Hearing: Monday, March 19, Assembly Revenue and Taxation Committee, 1:30 p.m:, Room 4202 Background: What Are AB 2468 2 ACA 55, and SCA 237 These three bills represent the League's maJor effort to achieve I ong-term stab Iv funding for I oca I government. They ( a I ong with SB 1300, Marks, I n the Senate) were the focus for our "March On The Capito I" I ast week. · Briefly, AB 2468: repeals the AB 8 deflator (VLF is restored as a result); repeals bailout cutback formulas; repeals the business inventory subvention; replaces Inventory subvention with a property tax shift from schools; distributes supplemental rol I to local government beginning in FY 1984- 85 rather than FY 1985-86; apprjpriates $2,2 mi I lion to no-property-tax cities; in redevelopment agencies, the loss of the inventory subvention is replaced with the supplemental property tax rol I and property tax shift from schools; ~andates become inoperative if Legislature fails to appropriate suffi- cien-r fu:-:ding. ACA 55 reinstates the property tax to pay for the principal and interest of local general obligation bonds for acquisition and construction of r~al property if 2/3rds of ·the loca I voters approve. SCA 23 (Ayala) would estqblish the VLF and cigarette tax as a Constitutional revenue source for local government which could not be reduced by statute. f'm sure you are faml I iar with i·hese bi I ls be~ause they have been mentioned numerous times this year in the Legislative Bulletin. Status of Each Bi I I AB 2468 and ACA 55 we,e introduced in January and have been approved by the Assembly Local Gove.-nment Committee. If approved by the Assembly Revenue and Taxation Committee, they wi 11 go to Assen,b I y Ways and Means, then to the Assemb I y f I oor. Both r 11qu ire a 2/3rds vote on the f I oor. SCA 23 wa5 approved by the Senate last September and ~i II be heard for the first time in the Assembly on March 19, Prior Votes On AB 2468, ACA 55. Only two members of the Assembly Revenue and Taxation Committee have voted on these bil Is before: Cortese and Frazee in the Assemb I y Locs I Government Committee. Cortese suppor·~ed both as author. Frazee supported ACA 55 but opposed AB 2468 because it ls opposed by the Administration. Opposition to These Measures AB 2468, Opposition comes from two quarters: (1) the Administration and there- fore the Assembly Republican Caucu~, and (2) the 11 school lobby" led by State Superintendent Bi I I Honig. The Administration opposes AB 2468 because it Is more generous 1-han SB 1300 (the Administration proposal) in providing 11 new" funding to local government. For cities, AB 2468 and SB 1300 are nearly identical except that the so-cal led "supplemental rol (11 ls distributed for the first time to cities In FY 1984-85 rather than in FY 1985-86. For counties, AB 2468 provides substan- tially more 1'riew revenue 11 than SB 1300. The new revenue is not new local taxing authority but funding which otherwise would be retained by the State General Fund. ror schools, there is opposition on two grounds: First, that local government funding should not be settled before school funding is decided (specifically 2nd year of SB 813). They argue that to the extent local government funding is dee! ded, options for schools wi 11 be narrowed. Secondly, schools argue -~hat the property tax sh i f1· to cities and counties to rep I ace the bus I ness Inventory sub- vention represent~ an erosion of their local tax base in spite of the provisions of law which guarantee reimbursement for this revenue source. ACA 55. No expressed opposition yet. SCA 23. Opposition to this proposal comes from legislators who want to protect the state's Interest in maintaining future state programs or expenditures at the expense of these local government revenue sources. They argue that if an unanti- cipated fiscal crisis hit the state, the Legislature would have fewer alternative means to cut back local revenues and that the Constitution should be as flexible as possible to accommodate unforeseeable events. League Position Support al I three bil Is. We wil I continue to work with the Administration and the school lobby and wi I I undoubtedly agree to amendments relating to school finance in order to move AB 2468 on to Ways and Means. Our Specific Request of You Please contact your Assembly Member wel I before March 19. Ca) Ask for an "Aye 11 vote on each of these three bi I Is. (SCA 23 wt 11 have the most opposition and must be lobbied the most aggressively.) -2- (b) Report +he response you receive from your Assembly Member to the League staff as soon as possible. (c) If you have already lobbied your Assembly Member on these bills, such as at lart week's March On The Caplto,I, please pass on your rPsults to us immediately. (If you have already done both of the above, the rest is up to us.) Enclosures Are Included For Your Reference The briefing handouts which were distributed i"o city officials at last week's "March 11 are enclosed. Note especially the briefing paper on "Criticisms and Responses. 11 Thanks for your help. Please call us if you have any questions. KE:ft -3- ~ I • "March on the Capitol" February 28, 1984 Leag11e of California Cities BRIEFiNG PAPER CRITICISMS OF BOTH AB 2468 and SB 1300 (ACA 54 and SCA 23) and Suggested Responses 1. Criticism: Neither bill is enuinel Ion -term or ermanent. More dramatic change is needed, sue as maJor oca option revenue ra1smg ab1 ity and county program shift or realignment with state. Response: Because SB 1300 and AB 2468 are incremental and based on historic revenue sources, it is politically realistic and "do-able." More dramatic proposals are not. A major local option revenue source such as local property tax or sales tax option is not supported by the Administration. 2. Criticism: Constitutional amendment is too inflexible. Future emergencies cannot be foreseen today. Resot>nse: This inflexibility is what assures local government's protection against repeated cutbacks to help balance a future state budget. (T~ere were four cuts in VLF between June 1981 and September 1983!) Without a Constitutional amendment, what guarantee do we have that the VLF will not become a "budget-balancer" when the next recession arrives? 3. Criticism: A property tax shift from schools to local gover.'}ment is a more appropriate permanent revenue sources than the VLF. ~- Restonse: Whi e the property tax has long been identified with local government and many local services are indeed property related, there are several good reasons why the VLF is preferable to additional property tax for cities. (1) Schools oppose an additional property tax shift. (2) Retaining tile VLF gives cities a highly desirable diversity of revenue sources. (3) Property tax may well be subject to future initiative Constitutional amendments, reducing this revenue source aga}n. (4) VLF has been a city revenue source since the l 930's. (5) VLF has low visibility and high taxpayer acceptance. 4. Criticism: Local overnment officials want uaranteed revenues --somethin no other eve o government enJoys. ~esponse: No! What local officials are asking for is a guaranteed source of revenue (VLf-) and not a guaranteed level of funding. The state itself already enjoys what amounts to a guarantee of revenue source~ inasmuch as Constitutional, statutory and case law prevent local government from competing with and disrupting the State's major revenue sources: personal income tax, sales tax and bank and corporation tax. __...._ Remarks for LE. :ie March on the Capitol Tuesday, February 28, 1984 AA":) .. ,...i,.. "'"' +h....,. r"-,,-:+-1 ..... _ .. ,._,, VII .. , ....... '-"ur::::.1.1.v,1. Long-Term Local Government Finance Lobbying Strategy !. Four City Lobbying Goals a. Resolution of issue in 1984 session b. Permanent solution (Constitutional amendment) which leaves int ..:, local control over general purpose taxes. c. Adequate level of permanent ful\ding d. Constitutional status for VLF is preferable as source of permanent funding to a property tax shift. 2. 1984 is the most likely year to achiev~ success. a. Legislature committed itself in AB 895 (1983) to creating a permanent system of Local finance in 1984. b. If we fail in 1984, many Legislators may believe that the1( commitment can be forgotten, c. A maximum lobbying effort must be made between February and June 1984. 3. Build on and emphasize areas of consensus where there is no significant Legislative disagreement. a. Repeal AB 8 deilator permanently b. Repeal all statutory references to "bail-out.11 (AB 8 property tax shift is retained however) c. Permanently restore VLF ci:ts of past three years to full entitlement level (approximately $24 per capita in FY 1984-85). d. Return general obligation bonding a1!thority to local voters with 2/3 voter property tax override. e. Replace business inventory subvention with permanent revenue source 4. Su ort in conce t both Democratic and Re ublican Administration ro osals (AB 2468 an S8 1300. a. Wo,:k to amend each bill to fit League policy. b. Discourage any partisan advantage for either proposal. Act to reconcile the two bilJs rather than to support one and defeat the other. 5. Avoid lobbying competitions between city/county long-term funding and school fundi..!JB.. a. Some critics are suggesting that early passage of SB 1300 or AB 2%8 will prevent schools from being fully funded in FY 84-85 per SB 813 (1983 school finance legislation). b. Adopt position that adequate school funding is at least as important as city and county long-term funding. c. 1'.either bill harms schools or removes any funding which is not replaced in the Administration's proposed budget. 6. Demonstrate the widest possible base of community support for permanent long-term local government fin::mce. a. Many legislators believe that only council members and management staff are concerned, not local business and community leaders, local media, employers, taxpayers, etc. b. City officials must demonstrate that resolving this issue is politically advantageous in an election year. 7. City officials need to be both firm and spec1Iic in requesting a commjtment from their Legislators. a. Ask for a commitment to these principles: -Repeal AB 8 deflater -Constitutional guarantee of a permanent source of revenue -Constitutional amendment returning general obligation bonding authority to local voters -Guarantee that state mandated programs will be funded bv the state or thev will not be operational. · b. Be sure to report results of your lobbying to League staff.