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HomeMy WebLinkAbout1986-05-06; City Council; 8607; June Ballot Proposition 47tl-tf OF CARLSBAD - AGE ML BILL AR* <F MTG. t«7 5/6/86 CM 1 ' JUNE BALLOT PROPOSITION 47: GUARANTEEING VEHICLE LICENSE FEE AS LOCAL GOVERNMENT REVENUE SOURCE (SCA 23) DEPT HD.^-«— CITY ATTY\|££L CITY MGR._J2^£*r ui Otra.Q- 3 .J Oz3 OO RECOMMENDED ACTION: Council review and consider taking a position on Proposition 47. If Council wishes to support Propsition 47, your action is to adopt Resolution No. /">5~3C< . ITEM EXPLANATION: Current state statutes provide that the Vehicle License Fee (less the cost of collection by the State Department of Motor Vehicles) be distributed to cities and counties. However, the Legislature suspended this law for three years from 1981 through 1984. During that time, the Legislature withheld more than $727.8 million of those local funds to balance its own budget. Proposition 47 would guarantee the Vehicle License Fee would go to cities and counties on a permanent basis, ensuring the Vehicle License Fee as a local government source. The League of California Cities supports this proposition. FISCAL IMPACT: None. EXHIBITS: 1. Analysis of Proposition 47 from League of California Cities. 2. Resolution No. League of California Cities 1400 K STREET • SACRAMENTO, CA 95814 • (916)444-5790 • • ~ Califon Work Together ' March 1986 QUESTIONS AND ANSWERS PROPOSITION #47: GUARANTEEING THE VEHICLE LICENSE FEE AS A LOCAL GOVERNMENT REVENUE SOURCE 1. What would Proposition #47 do? Current statutes provide that all of the Vehicle License Fee (less the cost of collection by the Department of Motor Vehicles) be distributed to the cities and counties of California. However/ during the years from 1981 through 1984, the Legislature withheld many millions of dollars of those funds for its own use. Proposition #47 would prevent future use of VLF funds in the Legislature by constitutionally guaranteeing the Vehicle License Fee would continue to be distributed to cities and counties on a permanent basis. 2. What is the Vehicle License Fee? The Vehicle License Fee is an excise tax imposed for the privilege of operating a motor vehicle on the public roads of California. In 1935 the Legislature consolidated this local government fee and took over its collection with the provision that fees collected (less administrative costs) be returned to cities and counties. 3. Why is Prop. #47 necessary? While current statutes provide that the Vehicle License Fee be distributed to cities and counties, this rule was suspended from 1981-1984 when the Legislature gave itself the authority to withhold these funds from cities and counties to balance the state budget. Consequently, during the years the law was in effect, the state used $727.8 million* from the Vehicle License Fee fund to balance its own budget. Besides reducing the amount of money available to pay for city services, this action by the state Legislature also threw the local government budget planning process into disarray. Year after year, local officials had to plan city and county budgets without knowing how much of the Vehicle License Fee eventually would make its way to the local community. For three years in a row, the Legislature failed to pass legislation authorizing disbursement of the VLF to cities and counties in time for local government to complete their budget plans by July 1, when the fiscal year begins. In fact, during 1983, the action was delayed until September 15 — two-and -a-half months after the July 1 deadline. EXHIBIT 1 - 1 - *Source: Assembly Revenue and Taxation Committee The loss of funds impaired local governments' ability to meet their obligations to their citizens. Uncertainty regarding how much money ultimately would be available made financial planning in cities and counties an exercise in guesswork/ rather than the disciplined, rational process it should be. In 1984/ the state stopped dipping into local revenues to balance its own budget. Since then, cities and counties have received the full amount of the Vehicle License Fee (less the cost of collection), and city and county officials have been able to accurately estimate how much money would be coming in from this source. However, without a constitutional guarantee that the VLF is a local government revenue source, the Legislature could — whenever state revenues fail to meet state spending plans — pass another law allowing itself to use local funds to balance its own budget. It happened once, and it can happen again — unless the Constitution specifically protects the VLF as a revenue source for local needs. 4. Would Prop. #47 increase taxes? No. It would only designate a current tax as a permanent source of revenue for cities and counties. 5. How will Prop. #47 impact local citizens? Californians would see no change in their bills for the Vehicle License Fee, but they could count on the money collected through the VLF being used at home, where they have the greatest degree of control over how it is spent. 6. What is the Vehicle License Fee used for? The Vehicle License Fee is a general purpose revenue source for cities and counties. 7. Won't Prop. #47 take money away from transportation financing? No. While the Vehicle License Fee is not dedicated to transportation financing, cities typically spend far more on transportation than they receive from the VLF. In fact, during the five years after the passage of Proposition 13 when city budgets were severely restricted (the same period when the state Legislature gave itself the authority to use the VLF for its own purposes), cities spent more on transportation every year than they received from the proceeds of the Vehicle License Fee. One year — 1981-82 — cities spent three-and-a-third times as much on transportation financing as they received from the VLF. more. - 2 - City General Purpose Revenue Expended for Transportation* (millions of dollars) 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 $317,440 $403,570 $476,292 $495,370 $536,085 $570,370 Vehicle License Fee Revenues to Cities* $239,800 $296,800 $313,600 $208,400 $122,600 $144,000 *Source: State Controller - 3 - March 1986 REASONS OTHER GROUPS MAY SUPPORT PROPOSITION 47 (SCA 23) Current state statutes provide that the Vehicle License Fee (less the cost of collection by the state Department of Motor Vehicles) be distributed to cities and counties. However/ the Legislature suspended this law for three years from 1981 through 1984. During that time, the Legislature withheld more than $727.8 million of those local funds to balance its own budget. Proposition 47 would guarantee the Vehicle License Fee would go to cities and counties on a permanent basis, ensuring the VLF as a local government revenue source. People concerned about sound government at the local level — Proposition 47 will provide stability and predictability in local government financing, allowing cities and counties to more effectively plan their budgets for current and future years. — Proposition 47 will ensure that revenues from the vehicle license fee will be returned to cities and counties, where the taxpayers have the most say over how it is spent. — Over the years, the vehicle license fee has been an important source of money to pay for police and fire services, build streets and roads, maintain parks and playgrounds and provide other local services. Proposition 47 ensures this money will continue to be available to meet such local needs. Taxpayers — Since the 1930s, the Vehicle License Fee has been a source of revenue for California's cities and counties. It's an important part of the package of taxes and fees that pay for local services and facilities. If the legislature once again started using these funds to finance its own budget, cities and counties would have to replace that money from some other source or cut local services. The taxpayers would still be paying the Vehicle License Fee, but they'd also be paying a new tax — or they'd be getting less for their money at the local level. — Proposition 47 ensures that revenues from the Vehicle License Fee will be returned to cities and counties, where the taxpayers have the most say over how it is spent. — Planning ahead is an important aspect of efficient, economical budget planning. Yet, during the years the Legislature used the Vehicle - 1 - License Fee to pay its own bills/ cities and counties had to wait — sometimes for months — to see how much of the VLF would eventually make its way to local government. (One year/ the state government couldn't decide how much of the local taxpayer's money to keep for itself until mid-September — two-and-a-half months after most city budgets are supposed to be determined for the coming year I) This threw local government budget planning into disarray — and undoubtedly cost the taxpayers money. Motorists — Proposition 47 ensures the money you pay to the Department of Motor Vehicles each year to register your car will return to your city and county where you do most of your driving - and where you have the most control over how it is spent. (While the VLF is not specifically dedicated to transportation uses/ cities typically pay far more to build and maintain local streets than they receive through the VLF. See Questions and Answers on Proposition 47 for specific figures.) Business owners and other users of public facilities and services — Proposition 47 means more stability in local government funding and greater likelihood that the services and facilities the residents of our cities count on will be available from one year to the next. This was not true during the years 1981-1984 when already tight city budgets were reduced further when the Legislature used Vehicle License Fee revenues to balance its own budget. Parents and Teachers — Zoos/ parks/ playgrounds/ libraries and other facilities used by children have suffered disproportionate budget cuts during the recent years of tight public finances. By guaranteeing the Vehicle License Fee as a local government revenue source/ Proposition 47 makes funding for recreation and library programs more stable and predictable/ as well. Public Employees and public employee unions — Since salaries and benefits make up the largest single budget item in nearly all California cities/ city employees are vulnerable when budget losses occur. Proposition 47 prevents such unexpected budget cuts as those which occurred from 1981-1984/ ensuring greater stability in personnel budgets in the process. Businesses which contract with local government — Proposition 47 guarantees greater stability and predictability in local budgets/ making it easier for local officials to finance and plan for purchases. If Proposition 47 passes/ local government will be able to count on that source of revenue on a permanent basis/ and vendors who supply cities can count on a more stable market for their goods and services than has existed in recent years. - 2 - March 1986 REASONS OTHER GROUPS MAY OPPOSE PROPOSITION 47 (SCA 23) People who believe the VLF should be dedicated to transportation — While the Vehicle License Fee is not dedicated to transportation financing/ cities typically spend far more on transportation than they receive from the VLF. In fact/ during the five years after the passage of Proposition 13/ when city budgets were severely restricted (the same period when the state Legislature gave itself the authority to use the VLF for its own purposes)/ cities spent more on transportation every year than they received from the proceeds of the Vehicle License Fee. One year — 1981-82 — cities spent three-and-a-third times as much on transportation financing as they received from the VLF. (See Questions and Answers on Proposition 47 for figures.) People who would prefer to see the VLF funds be controlled by the Legislature — During debate on this amendment in the Legislature/ some groups opposed the amendment on the grounds that the money should be a part of the statewide financing "pie"/ so that the money could be used for some other purpose than financing cities and counties. This argument usually was presented by people advocating money for some specific government agency. But/ cities and counties traditionally have had the use of this money, except during the years 1981-1984. Using a three-year aberration in that tradition as an excuse to take away funding from cities and counties is nothing more than strategic ploy to get attention for other financing needs. Constitutional purists — Some Californians object to placing such specifics as Proposition 47 into the Constitution. They would prefer to see the California Constitution be more like the federal Constitution/ which outlines rights and responsibilities in a general way/ but does not deal with such details as which taxes shall be permitted and where they would be used. However, the California Constitution is not currently like the federal Constitution in that respect; it includes many specifics regarding taxation and other mundane aspects of government. In fact, year after year/ the people have used the initiative process to amend the Constitution to make permanent changes in the way California government business is conducted. It probably is not realistic to expect the state's Constitution to mirror the federal Constitution in this manner. 7 RESOLUTION NO. 85361 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, IN SUPPORT OF PROPOSITION 3 47: GUARANTEEING THE VEHICLE LICENSE FEE AS A LOCAL GOVERNMENT REVENUE SOURCE 4 5 WHEREAS, the Vehicle License Fee has been a major source of Q general fund revenues for local government since 1935; and 7 WHEREAS, the California State Legislature gave itself the 8 authority during the period 1978 to 1984 to withhold funds from 9 the VLF to balance its own budget; and 10 WHEREAS, during fiscal year 1981-82, state government kept 11 $270 million of these traditionally local government revenues for 12 its own use; and 13 WHEREAS, during fiscal year 1982-83, state government 14 appropriated $318.1 million to balance its own budget; and 15 WHEREAS, during fiscal year 1983-84, state government kept 16 $374.3 million for its own use, for a total loss to local 17 government of $727.8 million; and 18 WHEREAS, during each of those years, the Legislature was 19 unable to determine how much of these traditionally local 20 government revenues it would need to balance its own budget until 21 after the fiscal year began; and 22 WHEREAS, such delays in determining how much revenues 23 ultimately would be available to local government threw the 24 local government budget planning process into disarray; and 25 WHEREAS, the citizens of California's cities and counties 26 are best served when government is funded throught reliable, 27 secure and very predictable revenues; 28 /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California as follows: 1. That the above recitations are true and correct. 2. That the City Council does hereby support Proposition 47, which will constitutionally guarantee the Vehicle License Fee as a local government revenue source. PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad City Council held on 6th day of May 1986, by the following vote to wit: AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine NOES: None ABSENT: None C V . / S~, *Jb MARY H./CASLER, Mayor ATTEST: Aletha L.Rautenkranz, City Clerk (SEAL)