HomeMy WebLinkAbout1987-02-24; City Council; 8902; Review of Draft SANDAG Report..
CIT'- OF CARLSBAD - AGEND,'-BlLL
TITLE:
MTG. 2/24/87 REVIEW OF DRAFT SANDAG REPORT ON
REGIONAL GOVERNMENT RESPONSI BI LlTlES
0 / c
RECOMMENDED ACTION:
Direct City's SANDAG representative to support the recommendation in the
report.
ITEM EXPLANATION:
A SANDAG Committee has been working on a study regarding the adequacy
and equity of local government revenues and the relationship between
revenue generation and land development in the San Diego Region.
City Manager served on the Committee.
The
The report is attached for Council review. Council should instruct its SANDAG representative as appropriate.
Following review and discussion,
EXH I BITS :
1. Draft report.
L - -
Sari Diw Association of GovernmenL
BOARD OF DIRECTORS
December 19, 1986
REGIONAL GOVERNMENTAL RESPONSIBILITIES
AND REVENUES - DRAFT REPORT
INTRODUCTION
The report attached to this agenda item describes the findings and recommended
actions resulting from the SANDAG-sponsored study of "Regional Governmental
Responsibilities and Revenues." The study addresses primarily the adequacy and
equity of local government revenues and the relationship between revenue genera-
tion and land development in the San Diego Region.
The study was financed by SANDAG, the cities, and the County. It was prepared by an advisory committee composed of administrators from cities, the County, special
districts, and the Local Agency Formation Commission, plus interested citizens an4
representatives of public and special interest groups. The Committee's memSers
and their affiliations are listed below.
John GOSS, City Manager, City of Chula Vista, Committee Chairman
Bob Acker, City ?.4anager, City of El Cajon
Frank Aleshire, City Manager, City of Carlsbad
Rick Gittings, City Manager, City of San Marcos
Vern Hazen, City Manager, City of Escondido
Jane Merrill, Executive Officer, LAFCO
Mark Nelson, Executive Director, San Diego Taxpayers Association
Dave Nielsen, City Manager's Office, City of San %ego Anne Omsted, San Diego County League of Women Voters
Lari Sheehan, Deputy CAO, County of San Diego
Glen Sparrow, School of Public Administration, San Diego State University
Gordon Tinker, General Manager, Fallbrook Public Utilities District
As part of this project, the Committee: (1) estimated the adequacy of the tax
bases of the cities, the County, and special districts to provide public services; (2)
investigated the equity of the distribution of existing sources of revenue among
local agencies; (3) evaluated the appropriateness and feasibility of enacting new
sources of revenue for local governments; and (4) discussed methods of improving
cooperation between the cities and the County on land use decision-making in the
region's urbanizing areas.
The Advisory Committee has held one public workshop on the draft rpeort and it is
now ready for review by City Councils, the Board of Supervisors, special and school districts, state legislators, interested groups, and others. Therefore, it is my
c
RECOMMENDATION
that the Board of Directors accept for distribution the draft report entitled "Regional Governmental Responsibilities and Revenues."
DISCUSSION
The major conclusions and recommended actions in the draft report are 1iste.l
below.
Major Conclusions
1.
2.
3.
4.
5.
6.
Local governments compete for tax revenues.
The County's revenue base is less adequate than that of cities.
County finances are negatively impacted by annexations/incorporations.
Delivery of local urban services is more expensive in the unincorporated area
than in the incorporated areas. Local governments are interested in resolving the County's revenue difficulties
and in cooperating on planning and service delivery.
The statewide property tax system is inequitable and ill-designed to meet the
needs of local government.
Recommended Actions
A. Local Government Finance
1. Reform the Statewide Property Tax
System
a.
b.
C.
d.
e.
Revise Property Tax Transfer for Annexations
Modify Property Tax Transfer to New Cities
Amend State Constitution to allow
Property Tax Overrides in New
Cities
Reallocate Property Tax Revenue
received by Water and Sewer Agencies
Eliminate Statewide Inequities in
Property Tu Support for School Dist ric t s
2. Support the County's Suit challenging the
State's Funding of County-prorided
Services.
3. Support Direct State Funding of Trial
Courts.
Allocate a Larger Share of State Sales Tu Receips to Counties 4.
Imp lem en t at ion ; Revenue Impacts
State legislation required; saves County
S400,000/yeu; cities gain Sb00,000/yeu.
State legislation required. County ultimately saves 36 miUion/yeu, assuming future new cities
account for lSO,O00+ people.
Constitutional amendment required. Offers revenue flexibility to new cities if l.b., above, is
enacted.
State legislation required. County would receive $7 million during first full year of implementation.
State legislation required. County claims it loses
up to $80 millionlyear.
State legislation required. County claims it loses $19-24 millionlyeu.
State legislation required.
State legislation required to distribute more of state's 5 cent share to counties.
3
5.
6.
7.
8.
9.
10.
Support 112 centaales Tax Increase for Courts and Jails.
Support 1 /Z cent Sales Tax Increase for Transport at ion.
Support "Home Rule" Authority for Charter Counties (e.g., San Diego
County).
Support Reimbursement for County by New Cities for First Year Costs.
Support County Expenditures of Excea
TDA Funds for Roads in Rural Areas.
Negotiate with County on Allocation of Tu Increment Revenues in City
Redevelop men t Areas.
B. Intergovernmental Phning and Cooperation
1. Improve Joint Plaaaing and Development
efforts in Cities' Spheres of Influence.
Retain Board of Supervisors' Policy 1-55 (Government Structure) in its present
form.
Coordinate positions on proposed legis-
lation when appropriate
Study the efficiency of Public Service
Delivery in the Region.
2.
3,
4,
Local 213 voter approval required. Tax would generate 5400,000 million over 5 years.
Local voter approval required (majority). Tax would generate $802 million in the first year; 51 billion in 10 years, 52.4 billion over 20 years.
Constitutional amendment required. Local voter
approval possible. County could generate 55-6
million /y e ar .
State legislation required. County could ulti-
mately save up to 532 million, assuming four new cities with lSO,OOO+ population.
State legislation required. County could use
S600,0OO+~'year on roads.
Local action required.
Local action required.
Local action required.
LocaI action required.
Local action required.
FJled to receive a 213 vote at the November, 1986 election.
** Legislation passed, 1986 session.
Minority Report
Mr. Gordon Tinker, General Manager of the Fallbrook Public Utilities District, and
special representative to the Advisory Committee, filed a "minority opinion"
opposing recommendation A.l.d., regarding reallocation of property tax revenues
from water and sewer agencies to the County. His comments are attached to the
report .
Executive @r
3
DRAFT REGIONAL GOVERNMENTAL RESPONSIBILITIES
AND REVENUES
DECEMBER 1986
San Diego
ASSOCIATIOX OF
GOI'ERISbfEAXS
1200 Third Avenue
Suite 524 Security Pacific Plaza
San Diego, California 92101
(619) 236-5300
MEMBER AGENCIES: Cities of Carlsbac. Chula Vista, Coronado. Del Mar, El Cajon, Encinitas, Escondido. Imperial Beach. La Mesa.
Lemon Grove, National City, Oceanside, Poway, Sen Diego, San Marcos, Santee, Solana Beach, Vista and County of San Diego.
ADVISORY/LIAISON MEMBERS: California Department of Transportation, US. Department of Defense and TijuandBaja California Norte
Board of Diractori
8AN DIEGO ASSOCIATION OF OOVERNMENTS
The San Diego Association of Government8 (SANDAG)is a voluntary public agency formed by
local governments to assure overall areawide planning and coordination for the San Diego region.
Voting members include the Incorporated Cities of Carlsbad, Chula Vista, Coronado, Del Mar, El Caion,
Encinitas, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside,
Poway, Sin Diego. Sin Marcos, Santw, Solana Berch, Vista and the County of Sln Diego.
Advisory and Liaison members include CALTRANS, USDepartment of Defense
and TijuanaIBaja California Norto.
CHAIRMAN Ernie Cowan
VICE CHAIRWOMAN Lois Ewen SICRWARYIXLCUTIVI DIRLCTOR: Kenneth E. Sulter
CITY Of CARLSBAD John Mamaux, Councilman (A) Ann Kulchin, Mayor Pro Tam
CITY Of CHULA VISTA Greg Cox, Mayor (A) Leonard Moore, Councilman
CITY Of CORONADO Lois Ewen, Mayor Pro Tam
(A) Robert G. Odiorne, Councilman
CITY Of DLL MAR Scott Barnett, Councilman
(A) John Gillies, Councilman
CITY OF EL CAJON HIrrist Stockwell, Councilwoman (A) Richard Smith, Mayor Pro Tam
CITY Of LNCINITAS Greg Luke, Councilman (A) Marjorie Gaines, Mayor
CITY Of LSCONDIDO Ernie Cowan, Councilman (A) Doris Thurston, Councilwornan
CITY OF IMPERIAL BEACH John Mahoney. Councilman
CITY Of LA MESA Art Madrid, Mayor Pro Tem
(A) Fred Nagel, Mayor (A) Ernest W. Ewin, Councilman
CITY OF LEMON GROVE Dan Kunkel. Councilman (A) James V. Dormrn, Mayor
(A) Karen O’Roufke, Councilwoman
CITY Of NATIONAL CITY Jess E. Van Doventer, Vice Mayor (A) Marion F. Coopor, Councilman
CITY Of OCllANSlDf Lawrence M. Bagley, Mayor (A) Sam Williamson, Councilman
CITY Of POWAY
Carl Kruse, Mayor (A) Robert Emery, Councilman
CITY Of SAN DlLGO
Ed Strulksma, Councilman
(A) Judy McCarty, Councilwoman
CITY OF SAN MARCOS
Lw Thibadeau, Mayor
(A) Mark Loxher, Vice Mayor
CITY Of $ANTIE
(A) Jack Doyle, Mayor
CITY Of SOUNA BEACH
Margarot Schlesinger, Mayor
(A) Richrrd Hendlin, Councilman
CITY Of VISTA Gloria E. McCIollan, M8yOf (A) Jeanette Smith, Councilwoman
COUNTY Of SAN DltOO George Bailey, Supervisor (A) Brian Bilbray, Supervisor (A) Susan Goiding, Supervisor
STAT@ DLPT. OF TRANSPORTATION (Advisory Momber) Loo TrOmbrtOre, Director (A) Bill Dotson, Dlrtrict Director
U.S.DLPARTMtNT Of Dff INS€ (Liaison Momkr) Captrin H. Roger Frruenfelder, U.S.N. C.O.. Public Works Conter, Sin Diego
TIJUACSUbMA CALIFORNIA NOR= (Advisory Member)
Rmne Trevlno Arrondondo.
Prosidonto Municipal
ABSTRACT
TITLE: Regional Governmental Responsibilities and
Revenues
AUTHOR: San Diego Association of Governments
SUBJECT: Analyses of Revenues, Expenditures, and
Revenue Sources for Local Governments in the San Diego Region
DATE: December, 1986
LOCAL PLANNING AGENCY: San Diego Association of Governments
SOURCE OF COPIES: San Diego Association of Governments
1200 Third Avenue, Suite 524
San Diego, CA 92101
NUMBER OF PAGES: 35 plus 5 Appendices
ABSTRACT: This report describes the findings and recom-
mended actions resulting from the SANDAG-
sponsored study of "Regional Governmental Responsibilities and Revenues." The study
addresses primarily the adequacy and equity of
local government revenues and the relationship
between revenue generation and land develop-
ment in the San Diego Region.
7
ACKNOWLEDGEMENTS
This study of Regional Governmental Respsonsibilities and Revenues was prepared
by an Advisory Committee appointed by the San Diego Association of
Governments. Its members were:
John GOSS, City Manager, City of Chula Vista, Committee Chairman
Bob Acker, City Manager, City of El Cajon
Frank Aleshire, City \4anager, City of Carlsbad
Rick Gittings, City Manager, City of San Marcos
Vern Hazen, City Manager, City of Escondido Jane Merrill, Executive Officer, LAFCO
Mark Nelson, Executive Director, San Diego Taxpayers Association
Dave Nielsen, City Manager's Office, City of San Diego
Anne Omsted, San Diego County League of Women Voters
Lari Sheehan, Deputy CAO, County of San Diego
Glen Sparrow, School of Public Administration, San Diego State University
Gordon Tinker, General Manager, Fallbrook Public Utilities District
In addition the following staff and consultant participated in the technical work:
Kenneth E. Sulzer, Executive Director
Stuart R. Shaffer, Deputy Executive Director
Ken Fabricatore, Consultant
Michael McLaughlin, Senior Planner
Ruth Potter, Senior Planner
Nan Valerio, Senior Planner
L
TABLE OF CONTENTS
INTRODUCTION ................................................. 1
Origins of the Study .......................................... 1
MAJOR CONCLUSIONS RESULTING FROM THE STUDY ............. 3
RECOMMENDED ACTIONS ....................................... 11
A. Local Government Finance ............................... 11
B. Intergovernmental Planning and Cooperation ................ 21
A SUMMARY OF REVENUE SOURCES NOT RECOMMENDED FOR
CHANGE IN THIS STUDY ......................................... 26
MINORITY REPORT ON RECOMMENDATION A.1.d. ................. 36
APPENDICES ...................................................
1. Public Services Identified by the Advisory Committee
for the Study of Regional Governmental Responsibilities,
November 21, 1985
2. Urbanized Areas in the San Diego Region as Defined for
the Study of Regional Governmental Responsibilities and Revenues
3. Legislation Affecting Issues Addressed in the
Report
4. Fiscal Impacts and Fiscal Equity
39
5. County of San Diego Board of Supervisors Policy 1-55,
Government Structure
DRAFT REGIONAL GOVERNMENTAL RESPONSIBILITIES
AND REVENUES
INTRODUCTION
This report describes the findings and recommended actions resulting from the
SANDAG-sponsored study of "Regional Governmental Responsibilities and Reve-
nues." The study addresses primarily the adequacy and equity of local government
revenues and the relationship between revenue generation and land development in
the San Diego Region.
The study was financed by SANDAG, the cities, and the County. It was prepared
by an advisory committee composed of administrators from cities, the County,
special districts, and the Local Agency Formation Commission, plus interested
citizens and representatives of public and special interest groups. The Commit-
tee's members and their affiliations are listed uner the "Acknowledgements."
As part of this project, the Committee: (1) estimated the adequacy of the tax
bases of the cities, the County, and special districts to provide public services; (2)
investigated the equity of the distribution of existing sources of revenue among
local agencies; (3) evaluated the appropriateness and feasibility of enacting new
sources of revenue for local governments; and (4) discussed methods of improving
cooperation between the cities and the County on land use decision-making in the
region's urbanizing areas.
Origins of the Study
In 1985, the County of San Diego began a reassessment of its Board of Supervisors'
Policy 1-55 "Government Structures). Policy 1-55 describes the principles the
County follows in its review of any municipal incorporation or annexation
proposal. It was intended to encourage
annexation of urbanizing lands to adjacent cities and to encourage urbanizing
communities to incorporate as new cities.
1-55 was adopted originally in 1974.
1
*- A
The policy had been amended previously in 1982, adding the consideration of
"financial impact of jurisdictional changes." As part of annexations and incorpo-
rations, the County supports "revenue allocations that equitably reflect the
County's regional service responsibilities," as well as the responsibilities of other
jurisdictions.
In response to a possible 1985 amendment, the Cities-County Managers' Asso-
ciation set up an ad hoc committee to review 1-55 and submit comments to the
County. Several city managers were concerned that additional changes to S-55
might make it more difficult to get County support for future annexations and
incorporations. More importantly, such changes might result in County land use
decisions in the fringe areas of cities which would be inconsistent with city plans
and policies.
The ad hoc committee decided that a review confined to potential changes to 1-55
would be addressing merely the symptoms of a problem rather than its causes.
The problem: local governments competing for tax revenues produced by urban
development. The cities were concerned that the County's need for additional
revenue would influence its land use decisions. Encouragement by the County of
urban development in the unincorporated area could conflict with the general
plans of cities. A cooperative effort might solve local revenue problems and
improve land use decision-making.
So, the Cities-County Managers' Association proposed that SANDAG, with the
financial participation of the cities and the County, conduct a study of the prob-
lem and ways of solving it. SANDAG agreed, appointed the advisory committee
mentioned in the Introduction, and the study described in this report began in
October, 1985.
Although the County policy was the immediate impetus for this study, the funda-
mental causes the ad hoc committee was referring to were population growth and
its related public service costs for cities, the County, and special districts, and
the passage in 1978 of Proposition 13. As summarized by the California Tax
Foundation, "Proposition 13 permanently and deeply reduced local governments'
biggest local revenue source, the property tax." The Gann initiative, which limits
local government spending increases to the percent change in prices plus popula-
tion growth, will further constrain the ability of local governments to manage
2
their fiscal affairs. The initiative imposes a definite hardship on public agencies
facing major expenditures for capital improvement projects. While restraining
growth in revenue, neither measure reduced population growth; nor did they cut
local government's public service responsibilities. The Committee concluded,
therefore, that local governments would benefit from an analysis of local public
services and costs, and of existing and potential sources of local revenue. This
report describes the results of that analysis.
MAJOR CONCLUSIONS RESULTING FROM THE STUDY
1. Local governments compete for tax revenues produced by urban development.
Cities annex land for a number of reasons, including land use control,
improvement of service delivery, and the acquisition of tax revenues gener-
ated by urbanized property.
Many of the same kinds of tax revenues generated by urban development are
available to the County as well as to cities. Since the passage of Proposition
13 in 1978, some cities and the County have become more worried that, over
the long term, they will not have enough money to pay for mandated public
services. So, revenue producing land uses are attractive to both the County
and the cities. This is the basis for competition between agencies for new
development.
Viewed as a means of generating revenue, it is logical that the County would
plan for and encourage urban types of land development in the unincorporated
area. Just as the cities do within their boundaries.
However, cities have disagreed frequently with the County about the loca-
tion, type, or intensity of County-approved urban developments in the cities'
unincorporated fringe areas. These disagreements are manifestations of the
concern for land use control and, indirectly, of inter-agency competition for
revenue.
It is also logical that the County would consider amending its 1-55 policy, as it
did in 1982, to quantify the loss of tax revenue resulting from city annexa-
tions of unincoriorated territory and the formation of new cities. This study
3
resulted, in part, from the concern by cities that additional changes to 1-55
might position the County to oppose or recommend that revenue-related
conditions be placed on jurisdictional changes.
2. The County's revenue base is less adequate than that of cities, making it
relatively more difficult for the County to pay for local services in the unin-
corporated area while maintaining its regional service responsibilities.
The County performs the dual role of delivering local services to the unin-
corporated area while providing regional services for all residents of the San
Diego region. County-provided local services include law enforcement, road
construction/maintenance, library, and other municipal-type services.
Regional services, which account for nearly 90 percent of the County's
budget, include the courts, jails, social and health services, and other pro-
drams. Most County-provided regional services are mandated by the state.
State funding of mandated regional services is inadequate. As a result, the
County has had to use a major portion of locally-generated revenues to fund
its regional service responsibilities, leaving insufficient monies to pay for
local services in the unincorporated area.
The primary revenue sources that are available to the County (and cities) to
pay for local services are the property tax, sales tax, gas tax, motor vehicle
license fees, California vehicle code fines, cigarette tax, and other state
subventions. These revenues, referred to as "general revenues" in this study,
are paid by all residents or property owners in the region on the same basis.
They are distributed among local governments in accord with state law, with
each revenue source having a different allocation formula.
In FY 1984-85, the County received general revenues totaling nearly $300
million. After funding its regional service responsibilities, the County was
left with general revenue of about $23 million to pay for local services in the
unincorporated area. These local services cost the County nearly $100
million; thus, general revenues funded 23 percent of local service costs. The
region's cities had available general revenue of $325 million to pay for local
service costs of $768 million; thus, general revenues funded 42 percent of
4
local service costs in incorporated areas. Therefore, of those revenues paid
by residents or property owners throughout the region, the amount available
to the County to pay for local services was lower than that available to cities
as a proportion of local service costs (i.e., 23 percent VS. 42 percent).
In funding local services, the County is experiencing an estimated revenue
shortfall of $19-33 million annually. That is, extra revenue of this magnitude
would be needed to raise the County's funding capability to a level compar-
able to that of cities in the San Diego region. (See Appendix - for study
findings in support of this conclusion.) This revenue shortfall combined with
inadequate state funding of mandated programs detracts from the quality of
both local and regional services provided by the County.
Like the County, cities have become increasingly concerned about not only
the quality of regional services available to their constituents, but lack of
funding for local services in the unincorporated areas as well. Cities fear
that County development approvals in urbanizing areas surrounding cities will
not be accompanied with adequate services and infrastructure, such as
roads. Cities ultimately will have to assume the financial burden of up-
grading facilities in such areas when they annex or incorporate.
3. In peneral, County finances are negatively impacted by both city annexations
and new incorporations.
Although the County's local service costs are reduced as the result of juris-
dictional changes, its revenues tend to drop by a greater amount. The fiscal
effects of annexations and incorporations on the County will vary with the
particulars of each case, of course. But more times than not, they can be
expected to diminish the County's financial status.
During the course of the study, the fiscal impact of two scenarios was esti-
mated: (1) cities' annexation of the entire urbanized portion of the unin-
corporated area, and (2) new city incorporations encompassing all of the
urbanized unincorporated area. The likely outcome is that this area or a
portion of it will become incorporated through a combination of both types of
jurisdictional changes. In 1985, the urbanized unincorporated area had a
population of about 285,000 and an economic base employing 63,000 civilian
workers.
Were the entire urbanized area to annex to cities, the County would incur an
estimated net loss of $3-$9 million annually (1985 dollars), depending on the
extent of special district detachments. County expenditures on local services
would fall by $58 million, and its revenues would decline by $61-$67 million.
Under the incorporation scenario, County costs also would drop by $58
million, but its revenues would decrease by $78 million, yielding a net loss of
$20 million annually. New city formations tend to have a greater negative
impact on County finances than city annexations due primarily to the amount
of County property tax revenue that is transferred to newly formed cities.
Presented in Appendix 4 is a detailed analysis of the impact of jurisdictional
changes on County finances.
4. Local services in the unincorporated area, as currently delivered by special
districts and the County, are more expensive than the averwe cost of local
services provided in the incorporated area.
As a result of its discussions of this issue, the Committee concluded that the
higher service costs in the uaincorporated area are due primarily to generally
lower densities than exist in the region's cities, plus the larger number of
agencies - the County and special districts - providing unincorporated area
services.
In order to calculate these relative costs, the Advisory Committee identified
all public services provided by local governments in the San Diego Region. It
then classified them as either 'regional" or "local" services. (Appendix 1
contains a list and description of the public services identified in this study.)
Those public services usually associated with urban life, such as water distri-
bution, sewage collection and treatment, fire and police protection, and
garbage collection were classified as "local" services.
Then, using criteria provided by the U.S. Bureau of the Census, the Commit-
tee mapped the "urban" areas of the region; the remainder was classified as
'rural." (See Appendix 2 for details.)
6
.- I
The Committee then calculated the costs of providing all local urban-type
services to the cities and to the urbanized portion of the unincorporated
area. The results are presented in the table below. As listed in the bottom
row of the table, the figures indicate that the per capita cost of providing
local urban services in the unincorporated area, $652, is substantially higher
than the comparable figure, $552, the average of the entire incorporated
area.
LOCAL SERVICE COSTS PER CAPITA
SAN DIEGO REGION FY 1984-85
Unincorporated Area Incorporated Total
Area Reaion - Total - Urban Rural
Total Popuiation 284,927 121,213 406,140 1,677,233 2,083,373
(January 1, 1985)
Local Service Costsa $185.8 $48.7 $234.Sb $926.3' $1,160.8
(in Millions $1
Local Service Cost $652 $40 2 $577 $552 $557
Per Capita
a Includes operating and capital expenditures on local services, such as water
and sewer service, police (or sheriff) and fire protection, local parks and
recreation, libraries, garbage collection, and general government support of
these services.
Includes expenditures of the County and special districts which serve the
unincorporated area.
Includes expenditures of cities and special districts which serve the in-
corporated area.
5. Local governments in the San Diego Region are interested in resolving the
County's revenue difficulties and in cooperating on planning and service
delivery in the cities' spheres of influence.
This study of "Regional Governmental Responsibilities and Revenues" was
conceived as a result of the recognition that local governments must coop-
erate if they are to continue to provide public services efficiently and at the
7
A
lowest possible cost. All of the actions recommended in this report are
intended to help solve the County's revenue problems, correct inequities of
local government finance, and/or improve coordination on land use decisions
and jurisdictional changes, or both.
6. The statewide property tax system is inequitable and illdesigned to meet the
changing service responsibilities and fundins! needs of local Rovernment.
The Advisory Committee's initial work focused on local actions for dealing
with the fiscal issues raised in this study, It soon became apparent that local
measures would not raise sufficient funds, or would transfer monies to one
agency at the unfair expense of another, and would do little to offset the
inequities inherent in the statewide property tax system.
State legislation which implemented Proposition 13, aside from reducing tax
receipts, froze local agency and school district tax rates in proportion to
those they levied prior to 1978. That was nearly a decade ago. Public service
responsibilities have increased siace, particularly in response to state man-
dates. The revenue needs and structure of local government have changed
markedly as well. Frozen tax allocations have rendered the property tax
system rigid, unresponsive to evolving local needs.
The only flexible aspect of the existing system is that it allows the agencies
involved in annexations to set the amount of property tax revenue to be
exchanged among them. An equitable solution to property tax transfer,
however, is impossible through local efforts. All property owners in Cali-
fornia pay the same basic tax rate irrespective of the cost or level of service
they receive. Expanded service levels provided by cities to newly annexed
areas must be funded without extra property tax levies. Any extra property
tax revenue must come from county government or any detaching special
districts, School districts are not involved in tax transfers; their percentage
shares of the property tax are fixed under state law.
Throughout California, the typical effects of transferring revenue from
county government to an annexing city are twofold: (1) county government is
left with a lower portion of property taxes from annexed areas than it re-
a
ceives from other incorporated ateas, and (2) the annexing city ends up re-
ceiving a lower percentage of property taxes from annexed areas than it
receives from other areas in its jurisdiction. The outcome is double jeopardy:
funding is reduced for both county-provided regional services and municipal
services to annexed areas.
New incorporations pose similar problems. Under state law, property tax
revenue is transferred from county government to a new city. The amount
transferred is determined by multiplying the cost of services being trans-
ferred by the following ratio: total county property tax revenue divided by
total County revenues received for general purposes. Application of this
formula often reduces funding for county-provided regional services, even
though new incorporations do not diminish county government's responsi-
bilities for such services.
For the County of San Diego, for instance, the above ratio is nearly .4,
meaning the County transfers a property tax amount equal to almost 40
percent of the cost of services being transferred. County revenue "received
for general purposes" is substantially less than General Fund revenue, because
the latter includes additional revenue received for special purposes, such as
federally-funded regional services (e.g., health and welfare). However,
County property tax revenues accrue to the General Fund, which in turn funds
both local and regional services. The FY 1983-84 ratio of total property tax
revenue to General Fund revenue was about 21 percent, much lower than the
39 percent ratio determined pursuant to state law. Therefore, the existing
state formula reduces, appropriately, County property tax revenue available
for local services, but it also reduces, inappropriately, the amount available
for regional services.
The negative financial effects associated with annexations and new city
formations stem from the uniform, maximum property tax rate of one
percent. Unlike before Proposition 13, residents who become city dwellers
through jurisdictional changes benefit from municipal-level services without
paying more for them. The higher service levels afforded new city residents
are paid for by transfers froin non-city agencies and through reductions in
service levels for everyone. An arrangement whereby new city dwellers pay
9
a\
for higher service levels should be incorporated into the statewide property
tax system without dashing the spirit of Proposition 13.
Furthermore, the property tax system in tandem with the state's method of
school financing penalizes taxpayers and local agencies in those counties
where a relatively large share of property taxes was allocated to school
districts prior to Proposition 13. The state, in equalizing per-student
expenditures pursuant to the Serrano V. Priest decision, reduces aid to school
districts to compensate for high peritudent property tax receipts. The state
thus nullifies the local taxpayer's strong support for schools and does so at the
expense of other public agencies which share in the local property tax
dollar. Viewed another way, payers of the local property tax in half of
California's counties, including Saa Diego County, subsidize state funding of
public schools. The issue here is not equalization of school expenditures, but
rather the state's "reliance" on the local property tax in meeting its legal
obligation. In effect, the state has subtly usurped a hefty portion of the local
property tax - a revenue source which is the mainstay of local government
finance.
10
RECOMMENDED ACTIONS
The recommendations presented below are those of the Advisory Committee and
are subject to public review and comment. The recommended actions are grouped
into two categories: A.) Local Government Finance, and B.) Intergovernmental
Planning and Cooperation.
A. LOCAL GOVERNMENT FINANCE
The recommendations presented below are intended to help correct inequities
in local government finance, improve the County's financial status, or
accomplish both ends. Three of the recommendations pertain to the sales
tax, one of which calls on the state to remit a larger share of its sales taxes
to county governments as a means of eliminating disparities in state funding
of mandated services. The Advisory Committee regards this proposal as a
long-term, permanent solution to the problem of under-funded county
services. The Committee also supports two proposals which would raise the
local sales tax rate to provide funding for construction and refurbishment of
- courts, jails, and transportation facilities. Although the Committee regards
local sales tax increases as short-term solutions, it also recognizes that the
exigency of local public facility needs cannot await state action on a
perm anent solution.
1. Reform the statewide property tax system.
California's system of property taxation should be reformed. A new
system should be designed to redress the inequities and shortcomings
described in the conclusion statement above. More specific recommen-
dations on property tax reform and their relevance to local governments
in the San Diego Region are presented below.
11
a. Revise Method of Property Tax Transfer Upon City Annexation of
Unincorporated Territory
Existing local arrangements for property tax transfers should be
replaced by a new statewide method that provides for some state
funding and incorporates the provisions outlined below:
o A county government's property tax allocation from areas
annexed by cities should be reduced but not below the
average percentage that it presently receives from the tax
rate areas within the annexing city. (On average, the County
of San Diego now receives tax shares of 28.5 percent in
unincorporated areas and 26 percent in cities. Under this
proposal, the County would maintain a tax share of 26
percent from areas annexed; whereas, it could receive as
little as 15 percent under the existing property tax transfer
arrange ment .I
o A city's property tax allocation from newly annexed areas
should be set equal to the average percentage the city
presently receives from tax rate areas in its jurisdiction.
o The additional property tax revenue that would be allocated
to an aanexing city under this proposal should come from
three sources: (1) reduction in the county government's
property tax allocation from the area annexed (per a. above),
(2) the property tu allocation of any detaching special
districts, aad (3) lastly, reductions in the property tax allo-
cations of school districts serving the annexed area, with the
state making up the revenue loss through increases in aid to
education. An option would be direct state aid to annexing
cities with the amount of aid or "property tax supplements"
achieving the same result.
12
If implemented, the above recommendation would save the County
of San Diego an estimated $400,000 annually on average, while
cities collectively in the region would gain about $600,000 per
year.
b. Modify State Formula for Property Tax Transfer to Newly
Incorporated Cities
Local governments in the San Diego Region should support
County-sponsored legislation which would reduce the amount of
property tax transferred to new cities, yet provide an amount
commensurate with the cost of services transferred. A property
tax transfer of about 20 percent of the cost of services trans-
ferred seems reasonable in the San Diego Region. 1
One possible formula that would yield this result would be as
follows: multiply the cost of the services being transferred by the
FY 1985-86 ratio of total County property tax revenue to total
General Fund revenue. This approach would reduce the amount of
property tax revenue transferred to the extent property tax
revenue supports regional services. Also, setting the ratio as a
constant based on an historical year (Le., 1985-86) would help to
allay concerns that the ratio could be manipulated through
changes in accounting procedures. This concern has been a major
source of opposition to previous efforts to change the state
formula. Also for this reason, formulae which attempt to gauge
the level of property tax support for individual services being
transferred should be avoided, because most of these services are
financed with General Fund monies.
2
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'In FY 1984-85, poperty tax revenue funded approximately 15 percent of the
combined operating budgets of cities in the San Diego Region. For new cities, a
higher percentage transfer from the County is justifiable in that cities generally
provide higher service levels than previously provided by the County.
2This ratio was about 21 percent in FY 1983-84.
13
C.
The above recommendation would ultimately save the County of
San Diego about $6 million per year, assuming newly formed cities
take in 150,000 residents over the next fifteen years.
Amend State Constitution to Enable General Property Tax “Over-
rides“ in Newly Incorporated Areas
Local governments should seek legislative support for a state
constitutional amendment to enable newly formed cities to levy a
property tax override - in addition to the one percent basic
rate. Simple majority approval by affected voters should be
required. Revenues raised from the tax should be usable for any
municipal purpose. (Proposition 46, recently approved by Cali-
fornia voters, also enables local governments to levy a property
tax override, but the use of revenues is restricted to debt service
on capital facility financing and two-thirds voter approval is
required to impose the tax.)
Residents and property owners in newly formed cities benefit
from municipal-level services without paybg more property taxes,
as explained previously in conclusion $6. The new city govern-
ment is able to pay for the expanded services in part because of
the amount of property tax revenue transferred annually to it
from county government. Recommendation l(b) above would
reduce the amount transferred. This recommended action is
intended to give new cities the flexibility to raise additional
revenue in lieu of the reduced property tax transfer.
d. Reailocate Property Tax Revenue Received by Water and Sewer
Agencies
Local governments should support legislation which would reallo-
cate all future property taxes (excluding debt levies in excess of
the one percent general tax rate) which otherwise would accrue to
water and sewer agencies. This recommendation is predicated on
the generally accepted equity principle that water and sewer
14
services ought to be operated on an enterprise basis, funded
entirely through user fees, and capacity and standby charges.
Property tax allocations to multi-purpose districts should be
reduced but only to the extent that property tax revenue supports
their water and sewer services. That is, special districts should be
allowed to retain property tax support for services they provide
other than water and sewer operations, such as fire protection,
paramedics, and road maintenance. General purpose governments
should provide assurances that they too will operate water and
sewer operations on an enterprise basis.
Full implementation of tax reallocation should be phased over a
period not to exceed five years. In the San Diego Region,
revenues should be redistributed to the County by adjusting up-
ward the property tax percentages that it currently receives from
tax rate areas served by water and sewer districts which now levy
a property tax. In this way, taxes paid by property owners in an
area would continue to accrue to public agencies that serve that
area. During the first year of full implementation, the extra
revenue to the County would be more than $7 million.
e. Eliminate Statewide Inequities Relating! to Inter-County Dis-
parities in Property Tax Support for School Districts
The State of California should eliminate disparities that exist
among counties in their level of property tax support for local
schools. Additional state funding should be allocated to local
governments in those counties where a relatively high share of
local property taxes has been contributed to schools.
The County of San Diego expects to file a lawsuit claiming it is
being penalized by as much as $80 million annually because it
allocated a greater percentage of property taxes to schools prior
to passage of Proposition 13. In implementing Proposition 13, the
state locked in preexisting property tax allocations which has
perpetuated the inequity ever since.
15
2. Local governments should support the County of San Diezo's lawsuit
challenginp the state's method of fundha County-provided services.
Local governments in the Saa Diego region and elsewhere should support
the County of San Diego's lawsuit challenging the state's method of
funding mandated county services throughout California. The suit is
directed toward the state agencies responsible for funding county-
administered mental health, drug abuse, and alcohol programs. San
Diego County claims it should receive at least $19 million more and
possibly as much as $24 million if the state's funding formulae
accounted for either population or identified needs.
3. Local governments should suupport direct state funding of trial courts.
Local governments should support passage of legislation which enacts
direct state funding of trial courts. The criminal justice system is one
of every California county's most expensive regional responsibilities.
The system's cost is one of the main reasom why the state legislature is
considering assuming direct fiscal responsibility for trial courts. In its
next session, the legislature will again consider transferring the budget-
ary responsibility for the trial courts from counties to Sacramento. If a
bill is passed in the next session, the state would assume authority in
1988 or 1989.
Trial courts are an important part of the justice system, but the net-
work includes other components as well. kr addition to administration
of four municipal court districts and one superior court district, the
County also operates the District Attorney's office, the local jails, the
probation department, the public defender, the Grand Jury, and Marshal
services. The County's law enforcement activities are provided through
the Sheriff's department. The Sheriff provides police protection in nine
cities and throughout the unincorporated area. Ia FY84-85, the County
budget included $94.7 million for criminal justice services plus $60.4
million for the Sheriff's Department. Together, these two activities
accounted for more than 17 percent of the County's FY84-85 budget.
16
They represented the second largest budget category, after expendi-
tures for social services.
4. The state should allocate a larger share of sales tax receipts to county
governments.
The state shoilld rectify inter-county funding disparities by allocating a
larger share of the state sales tax to appropriate counties.
The State of California remits one-sixth of the 6 percent sales tax to
cities and counties on the basis of taxable sales transacted within their
jurisdictions. The jurisdiction of counties is defined as the unincorpo-
rated area for purposes of sales tax allocation.
After the property tax, the sales tax is the second biggest revenue
source for local governments in the San Diego Region. In FY 1984-85,
the County received sales taxes of $17 million, or $42 per unincorpo-
rated resident. The region's cities received $129 million.
A larger allocation from the state's 5 percent share would benefit
substantially those counties having problems funding state-mandated
public service responsibilities.
********
As indicated in the introduction to these "Recommended Actions," the first
four proposals - reforming the statewide property tax system, revising state
formulae for funding certain health and social services, state funding of trial
courts, and allocating more sales tax revenue to counties - represent efforts
directed toward long-term solutions to local government fiscal problems.
However, the Committee realized that implementation of these kinds of
proposals is likely to take a few years or perhaps longer. Therefore, immedi-
ate public service needs must be met with short-term solutions. Accordingly,
recommendations 5 and 6 address two public services, criminal justice and
transportation, which require more money now if the region is to meet the
growing demands for we of these facilities.
17
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..
5. Support a local sales tax increase of 1/24 for up to five years to finance
courts and jails.
The Advisory Committee recommends public support for this proposal
by the County of San Diego. If approved by the voters in November,
1986, the l/2Q sales tax increase would raise an estimated $400-$500
million over the next five years. The money would be used for con-'
struction of new court and jail facilities and remodeling of some exist-
ing ones. For a summary of the County's Master Plan for criminal
justice facilities, see Appendix 3. *
6. Support a local sales tax increase of 1/2Q to finance regional and local
transgortation improvements.
The cities and the County of San Diego should support the enactment of
a 1/2$ sales tax increase for local and regional transportation purposes
in the region, and should work toward its approval by the County's
voters.
On May 23, 1986, SANDAG, acting as the San Diego County Regional
Transportation Commission, agreed to work toward a ballot measure for
a l/2$ increase in the local sales tax. The revenue derived from the
measure would be used for improvements in local streets and roads,
highways, and transit.
The Commission (SANDAG) is currently considering a schedule for
taking this issue before the voters. The measure, if passed, would
provide money for at least one of the major public services, transporta-
tion, requiring additional revenue. (A more complete description of the
proposal and existing and future transportation needs is presented in
Appendix 3.)
*- The County's proposal for courts and jails was supported by a majority of the
voters in the November, 1986 election. The measure failed, however, because it
required a 2/3 affirinative vote for approval.
18
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*.
7. Local zovernments in the San Diego Region should support the efforts
of San Diego County and other California charter counties to obtain
constitutional authority to levy business license and utility users' taxes.
Cities in California have the statutory authority to levy taxes for
revenue purposes on utility users and businesses. Counties are
empowered to issue business licenses only for those commercial activi-
ties subject to regulation. Consequently, the cost of a county business
license may be no more than the county's cost of regulating the enter-
prise. The fee schedules, therefore, would not necessarily reflect the
business' size, revenues, or ability to pay. Rather, they would reflect
the intensity of government supervision. Consequently, a nightclub,
massage parlor, or hazardous waste treatment operation would likely
pay a higher business license fee than a supermarket or office-type
business.
In the unincorporated area, the County (along with special districts) has
some of the same service delivery expenses for businesses as cities do in
incorporated areas. These kinds of taxes would help pay for the costs of
both regional and local public services and would give the County the
same kinds of "home rule" or "charter" powers available to cities. It is
estimated that the County could generate approximately $5-6 million
(in FY86) per year if it had access to these sources of revenue. Enact-
ment of such powers for charter counties would require voter approval
of a state constitutional amendment. Additional voter approval at the
local level might be required.
8. Local governments should support legislation which would permit the
County Board of Supervisors to request new cities to reimburse the
County for services provided to the area during the remainder of the
fiscal year in which the incorporation occurs.
The Committee recommends legislation which would apply only to
incorporation proposals filed with the Local Agency Formation Commis-
sion on or after January 1, 1987. LAFCO could impose this requirement
as a condition of its resolution of approval of the incorporation.
19
..
-.
Reimbursement should occur within 5 years of incorporation or longer if
the Board of Supervisors agrees to a longer period.
It is estimated that the County could save approximately $32 rnillion
over the next several years, assuming four new incorporations involving
150,000 people.
9. Local zovernments should support passage of legislation which would
permit expenditure by the County of excess Transportation Develop-
ment Act funds for roads in certain rural unincorporated areas.
Residents of rural areas outside the jurisdictions of the Metropolitan
Transit Development Board and North County Transit District generate
$900,000 in Transportation Development Act (TDA) funds annually. It is
estimated that this amount exceeds transit needs in such areas by
approximately $600,000 each year. Legislation of the type recom-
mended here would permit the expenditure of these TDA funds for other
purposes, such as roads, if SANDAG determiner that the transit needs
of the area can be met with an amount less than its TDA apportion-
ment. Such legislation ah should condition release of TDA funds for
road purposes in rural areas upon the filing of a claim in the same
amount from the TDA apportionment for the unincorporated portion of
the MTDB area for such transit capital projects as agreed to by the
County and MTDB.
10. Cities planninn to designate redevelopment areas under the state re-
development act should negotiate the allocation of tax increment
revenues with the County as a method of reduciw the loss of County
property tax revenue that would otherwise result from the project.
The state's current enabling legislation regarding redevelopment calls
for negotiations on the allocation of tax increment revenues between
the redevelopment agency and the other taxing agencies within the
project area It is the Committee's conclusion, therefore, that the
problem of short-term revenue loss for taxing agencies resulting from
municipal redevelopment projects can be meliorated through the use of
the existing provisions of the law.
20
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-. As $art of the negotiation process, cities also should consider working
with the County to identify mutually beneficial public facilities that
could be located in planned redevelopment areas. Such projects could
reduce County costs and provide necessary public services.
B. INTERGOVERNMENTAL PLANNING AND COOPERATION
1. The County and the cities should improve and formalize joint planning
and development efforts in cities' spheres of influence.
As described previously in the section entitled, "Origins of the Study,"
this report on "Regional Governmental Responsibilities and Revenues"
was prepared in response to a request by the Cities-County Managers'
Association. The Association was seeking a forum to identify and
analyze methods of solving the problem of local governments competing
for tax revenues produced by urban development. One of the Associa-
tion's main objectives for this study was to prevent disputes between
the cities and the County over annexations and incorporations; to find a
way that would allow the County to continue its support of jurisdic-
tional changes following establishment of spheres of influence by the
Local Agency Formation Commission.
The Committee discussed several steps that could be taken to increase
cooperation between the cities and the County on land development
matters and jurisdictional changes. It was decided to recommend that
the affected parties work out the improvements based on guidelines
presented below. It also was decided that any costs associated with
these efforts should be funded jointly.
a. A task force composed of representatives of the San Diego County
Planning Directors' Association and the local Public Works
Directors should prepare, for review by the Cities-County
Managers' Association, and approval by the cities and the County,
a set of procedures intended to increase coordination among the
cities and the County in regard to planning and land use regulation
in the unincorporated portion of the spheres of influence of
cities. These procedures should include:
21
..
o Continuation and, if necessary, improvernent in the oppor-
tunity now provided by the County for affected cities to
review and comment on all developments proposed within
their spheres of influence, which require County approval;
o An analysis of the consistency among the cities and the
County of development regulations affecting spheres of
influence areas, such as subdivision regulations, development
engineering standards, and building code requirements;
o A review of, and, if appropriate, recommendations for
changes to the Board of Supervisors' Policy 1-55 (Government
Structures) ;
o Coordination of general plan proposals and updates in spheres
of influence.
b. The task force should coordinate its efforts with:
o The County of San Diego's recent action (7/9/86) regarding
coordination of fringe area planning and public works
standards.
o The County's Growth Management Review Task Force, pre-
liminarily approved by the Board of Supervisors in August,
1986.
2. The Board of Supervisors' Policy 1-55 (Government Structures) should be
retained in its present form.
The currently adopted version of the 1-55 Policy is included with this
report as Appendix 5. As described above in the section entitled,
"Origins of the Study," this project was undertaken in part as a result of
a proposal by County staff to amend the Board of Supervisors' Policy
1-55. Included among the proposed revisions were:
22
a. A paragraph stating the following:
"When analyses of costs and benefits indicate that certain land
uses will provide a benefit to residents of the unincorporated
County due to the nature of the land use, the sensitivity of an
environmental resource, or the fiscal or operational benefits
involved, their development and retention in the unincorporated
County will be compared with the benefits of annexation. As part
of the case-bysase review of significant annexation proposals,
staff will consider regional needs in addition to the reasons for the
proposed annexation."
b. The underlined additions to the first sentence in the 'Purpose" of
the Policy:
'The County of San Diego supports the concept that urbanizing
areas should have the option to attain municipal status through
annexation or incorporation, if so desired by area residents and
not in conflict with County interests.''
The Cities-County Managers' Association was concerned that amend-
ments of this type would result in County opposition to future jurisdic-
tional changes based primarily on economic factors. As a result of its
work on this study and its discussion of the 1-55 Policy, the Committee
concluded that it should be retained in its present form primarily
because: (a) the County will continue to review annexations and incor-
porations on a case-by-case basis; (b) the cities most affected by it are
familiar with, understand, and support the Policy in its present form;
and (c) LAFCO is assisted by the County's review of proposed jurisdic-
tional changes using the criteria contained in the Policy.
3. Whenever possible, local governments should develop coordinated
positions on proposed state and federal legislation and administrative
actions.
23
-.
-.
. Several of the conclusions and recommendations presented in this report
require state legislative action. This fact reinforced the Committee's
view that development of unified positions at the local level on regional
issues prior to state and federal legislative sessions would lead to a
greater likelihood of success. Debate should take place locally rather
than in Sacramento or Washington. Because the San Diego Region's
legislative delegation in Sacramento is smaller in number than other
regions (Le., the Los Angeles and the San Francisco Bay areas), this
region benefits when the delegation has a unified position.
Most senera1 and special purpose local government agencies in the
region review and, where appropriate, take positions on state and
federal legislation which impact their jurisdictions. The extent of an
agency's involvement in legislative activity usually depends on its size
and the revenues available to finance legislative activity.
Local agency legislative affairs staff members should meet prior to the
start of legislative sessions and as necessary to coordinate positions and
work out any differences early in the legislative process and, if appro-
priate, develop and refine legislative proposals on key regional issues
which are consistent with the legislative programs of their agencies.
Local general and special purpose agencies should be surveyed to iden-
tify the staff assigned to legislative analysis.
4. The Cities-County Manamrs' Association should appoint a task force to
study the efficiency of the delivery of public services in the San Dieno
Reaion.
Appendix 1 contains a list of all public services provided by local gov-
ernments in the San Diego Region, a description of each service, plus a
classification of each as either "regioial" or "local."
During the inventory and classification of these services, the Commit-
tee discussed the issues of efficiency and appropriate providers of
service. It was suggested, for example, that cities might be able to
provide some local urban services, on a contract basis, to nearby unin-
corporated areas. The Committee's discussion led to the proposal
presented above.
24
-.
Tne Committee recommends that the group should build on the many
past efforts in this area and should concentrate on local urban services,
improvements that could be made to inter-agency agreements, possible
agency consolidations, and other methods of cooperation, and region-
wide institutions that could help provide economies in service delivery.
Reports by the group should be made to the cities, the County, the
special districts, LAFCO, SANDAG, the League of California Cities,
and other appropriate agencies and organizations.
25
37
A SUMMARY OF REVENUE SOURCES NOT RECOMMENDED
F3R CHANGE IN THIS STUDY
The Advisory Committee analyzed and discussed several revenue sources during
the course of its deliberations. For various reasons, the Committee decided to not
include most of these in the recommendations presented in the previous chapter.
However, in order to provide an accurate record of the scope of the Committee's
work, this section of the report contains a summary of the analyses conducted on
those revenue sources not recommended for change as a result of this study.
1. Proposals Related to the Property Tax
a. Modify Existing Local Agreement on Annexation/Property Tax Transfer
Existing state law allows the agencies involved in annexations to
negotiate the amount of property tax to be exchanged among them. To
this end, the County of San Diego and the region's cities have entered
into a Master Agreement, which specifies the percentage of property
taxes received by the County from annexing areas that will be trans-
ferred to the annexing city.
The Committee considered two amendments to the Master Agreement:
Allow the County to retain a larger percentage of property taxes
it receives from annexed areas;
Exclude from the purview of the agreement undeveloped annexa-
tions having the potential to contain substantial amounts of
commercial or industrial uses. For these exceptions, the total
revenue-producing potential of the annexing area would be con-
sidered in property tax transfer negotiations.
Committee rejected both proposals; the first because it would
unduly penalize cities in their attempts to finance municipal-level
services in such areas; the second because it would likely complicate
26
34
and thereby hinder annexation activity, contrary to the intent of the
Master Agreement. Further, the Committee recognized that the terms
of the existing Master Agreement, recently renegotiated, are satis-
factory given the constraints of state law. But most important, the
Committee concluded that an equitable solution to the fiscal problems
attendant to annexations will require reform of the statewide property
tax system, as explained previously.
b. Reallocation of Property Tax Revenue Received by Water and Sewer
Aizencies
In recommending removal of water and sewer agencies from the prop-
erty tax roll, the Committee proposes that the released revenues in the
San Diego Region be distributed to the County. The Committee dis-
cussed the proposal to redistribute the revenues to other local agencies
am well, but it considered the County's fiscal needs to be more pressing.
C. Increase the Property Tax Rate Countywide to Finance Regional Facili-
ties, Pursuant to Proposition 46
This proposal would increase the current one percent basic property tax
rate on a countywide basis to support bond financing of regional capital
projects, such as courts and jails. Subject to two-thirds voter approval,
this financing method is authorized by Proposition 46, approved by
California voters in 1986.
Although the Committee felt that this proposal might be a viable option
in the future, it concluded that other recommended actions should take
precedence, including: statewide reform of the property tax system and
local sales tax increases to fund court, jail, and transportation facili-
ties.
d. Analysis of the Effects of the Williamson (Abcultural Preserves) Act
on Property Tax Revenues
The Williamson Act authorizes the reduction in property taxes on agri-
cultural property provided that the owner enters into a contract with
27
c
the general purpose taxing agency (county or city) to retain agriculture
on the property for the length of the contract (at least 10 years). The
Committee considered the fisal impacts of the Williamson Act on local
property tax revenues in the San Diego Region. It decided that it was
of little consequence in this area.
2. Local Sales Tax Redistribution
The Committee evaluated two basic options for redistributing the local sales
tax among the County and the region's cities. While the two alternatives
were designed to give the County a larger share of local sales taxes, both
were rejected. Sales tax increases, including 1/2$ for County-provided jails!
courts, and a larger state sales tax allocation to the County, were preferred
to redistribution of existing local revenues.
The State of California remits one-sixth of the 6 percent sales tax to cities
and county governments on the basis of taxable sales transacted within their
jurisdictions. The jurisdiction of counties is defined as the unincorporated
area for purposes of sales tax allocation.
After the property tax, the sales tw is the second biggest revenue source for
local governments in the San Diego Region. In FY 1984-85, the County
received sales taxes of $17 million, or $42 per unincorporated resident;
whereas the region's cities garnered $129 million, or $77 per city dweller.
This disparity in per capita revenue is due largely to the relatively high
concentration of retail facilities in cities which attract the patronage of
unincorporated residents and tourists as well.
One proposal considered by the Committee was allocation of sales taxes
partly on the basis of point of sale and partly on a population basis. Such a
formula would increase the County's allocation to more accurately reflect
sales taxes paid by residents of the unincorporated area. A shortcoming of
this proposal, aside from reducing the cities' revenue, is that future annexa-
tions and incorporations would entail a greater financial loss to the County
than the existing arrangement - an outcome that might impede jurisdictional
changes. The potential financial incentive that the County would have to
28
4
encourage development and population growth in the unincorporated area was
also cited as a drawback of this sales tax redistribution method.
.
A second proposal considered by the Committee would have provided the
County with a constant percentage of total sales tax revenue allocated by the
state to San Diego County. This percentage would equal the actual propor-
tion received by the County during a previous fiscal year. Under this
formula, the balance of local sales taxes would be allocated to cities on the
basis of taxable sales registered in their jurisdictions, as done under existing
law. This proposed formula was designed to yield a level of County sales tax
revenue that would not vary as the result of jurisdictional changes.
3. A Countywide Assessment District to Finance Criminal Justice Services and
Facilities
This proposal was an extension of assessment district financing methods pre-
sently authorized by state law, including the 1911 and 1913 improvement acts
and the Mello-Roos Community Facilities District Law. It would levy an
annual countywide assessment on the beneficiaries of regional criminal
justiceielated services and facilities. Revenues raised from the assessments
would be used to secure bond financing on capital projects or to pay operating
expenses.
The Committee did not recommend the near-term use of assessment district
financing in support of regional services/facilities. However, the Committee
agreed that such a financing method should be considered in the future if its
recommended actions fail to be effective and provided that potential legal
and equity problems related to countywide assessment districts can be over-
come.
4. Reallocation of Tax Increment Revenues from Redevelopment Projects
State law entitles a city's redevelopment agency to receive future allocations
of property tax revenues which are a function of increases in the assessed
value of property within the project area. Even without redevelopment
efforts, an area's assessed value would normally increase due to the County
29
Assessor's annual adjustment of 2 percent and reappraisals of property with
change of ownership. Tax increment financing thus might divert to the
redevelopment agency some increases in property tax revenue that would
have otherwise accrued to county government and other taxing agencies that
snare in the project area's tax base.
Eleven of the region's cities have established redevelopment projects, and
during FY 1984-85, there were allocated tax increment revenues of $11.1
million. Of this revenue, a maximum of $3 million would have accrued to the
County in the absence of redevelopment projects. Over a period of years, the
actual loss to the County could be much less because redevelopment efforts
stimulate revitalization and property value increases which otherwise would
not have occurred. However, the revenue losses to the County and other
taxing agencies begin in the first year of the project. Recouping such losses
usually takes several years.
Concerned about the impact of tax increment financing on its tax base, the
County proposed that it be allocated a share of city tax increment revenues.
The Advisory Committee did not support the County's position. It concluded
that any tax sharing among the agencies affected by redevelopment projects
should be negotiated on a case-by-case basis as required by existing redevel-
opment law. (Refer to Recommendation No. A.lO. regarding voluntary
negotiations.) Further, the Committee believed that a statutory approach to
resolving this issue would likely pit cities against counties statewide, which
would greatly diminish the likelihood of enactment.
Finally, proposed revisions to federal tax law could affect public redevelop-
ment projects, primarily because of the likely restrictions on public agency
bonds for housing and redevelopment activities. For example, under the
proposed law, for a bond issue to be treated as "qualified redevelopment
bonds," at least 95 percent of the proceeds would have to be spent for eligible
redevelopment activities in a locally designated blighted area. Additional
property tax revenues generated in the area would have to be reserved for
debt service payments on the bonds, and the real property tax rate and
manner of application for the area would have to be similar to property
located elsewhere in the same jurisdiction.
30
..
..
5. The Real Property Transfer Tax
The real property transfer tax - levied at a rate of $1.10 per $1,000 of the
value of property sold - will produce about $9 million regionwide this year.
The County will receive $6 million; the remainder will accrue to cities.
Revenues generated by property sold within city limits are split evenly
between the city and the County. The County receives the entire amount
from property transactions in the unincorporated area. The tax originally was
instituted to defray expenses of the County Recorder.
As a potential source of additional revenue, the transfer tax offers two
advantages: (1) revenues are tied to the location of property and thus could
be redistributed among agencies to facilitate annexations and incorporations,
aad (2) most taxpayers do not pay the tax on a recurring basis.
State legislation would be required to change the distribution formula, and
two-thirds voter approval might be needed to raise the tax rate.
The Committee considered a distribution formula that would protect the
County's transfer tax base from further reductions as the result of annexa-
tions. The County presently loses 50 percent of transfer taxes from areas
annexed by cities, even though this tax originally was targeted to support
County functions. The approach considered retaining the existing formula,
but allowed the County to keep the entire amount from areas annexed in the
city. This arrangement could be specified in new state law or incorporated
into the local Master Property Tax Transfer Agreement. In this latter case,
all of the transfer taxes received by cities from newly annexed areas would
be transferred to the County.
With a higher tax rate of, for example, $3.50 per $1,000 sales value, the
proposed distribution formula would generate additional annual revenues of
roughly $13 million for the County and $7 million for the region's cities. City
revenues would further increase in the future to the extent property trans-
actions expand within existing city boundaries; County revenues would rise to
the extent property transactions expanded regionwide. Only new city for-
mations would diminish the County's receipts, aside from reduced real estate
transactions.
31
..
-.
Following the analysis of this tax, the Committee concluded that the direct
effect on housing costs of an increase was sufficient reason to not recom-
mend it as a part of this study.
6. Motor Vehicle License Fees
The State of California allocates revenues from vehicle registrations equally
between cities and county governments. Revenues are subdivided among
cities based on each city's share of the total statewide population within
cities. Revenues are subdivided among counties on the basis of each county's
portion of the total statewide population.
In FY84-85, San Diego County received $47 million under this formula; the
region's cities, as a group, received $37 million. State law enacted in 1984
earmarked motor vehicle license fees as the means of providing local gov-
ernment with a secure funding source in the wake of Proposition 13. In June,
1986, the state's voters approved a constitutional amendment (Proposition 47)
guaranteeing that all of the proceeds from the fee are allocated to local
governments.
The Committee considered a revision to the distribution formula which would
allocate more money from the current cities' share to counties based on their
unincorporated population. It also considered recommending an increase in
the fee. Each $1.00 increase in the fee per registered vehicle would produce
about $1.5 million annually in San Diego County.
The Committee ultimately decided to not recommend a change in the fee,
although it agreed with the principle of considering fee increases for specific
motorist-related programs, such as highway emergency medical service.
In deciding to not recommend a change in this revenue source, the group con-
sidered the following factors: A fee increase would be viewed as duplicating
the one-half cent sales tax increase proposed for regional transportation.
Also, it would not help accomplish the objectives of this study, primarily
because the level of revenue presently allocated to the County is not affected
by jurisdictional changes. Furthermore, the chances of enactment are slim
because the state recently passed laws which greatly increase the amount of
motor vehicle license fees allocated to local governments in this region.
32
..
7. Transient Occupancy TE
All but two general purpose governments in the region impose a tax on hotel/
motel room bills. Last year, this revenue source raised approximately $25
million, of which the County received about $1 million from the 8 percent tax
rate it levies in the unincorporated area. Tax rates vary by jurisdiction from
6 to 8 percent, and revenues are used primarily to support and promote
tourism in the region. If the rate were uniformly 8 percent across the region,
an additional $4 million would be raised annually.
The Committee considered recommending an increase in the rate and allo-
cating the incremental rise to the County. The advantages of this revenue
source are: (a) it is subject to action by the local councils and Board of
Supervisors; and (b) it is imposed primarily upon visitors rather than local
residen ts.
The decision to not recommend a change in the tax was based on these con-
siderations: The County stands to lose a rather insignificant amount of
revenue from this source as the result of jurisdictional changes, and the
additional revenue raised by a reasonable increase in the tax rate regionwide
would be relatively small as well. Furthermore, use of transient occupancy
taxes to mitigate the problems identified in this study would conflict with the
intended use of these monies - funding of tourist-related projects and ser-
vices.
8. Fines/Forfeitures, and Other Court-Generated Revenues
The Committee considered a potential reallocation of revenue generated by
court fines and forfeitures based on the possibility that the current arrange-
ment does not adequately reflect the County’s regional responsibilities in the
criminal justice system. A survey of the current cities-County agreements
revealed a wide variance in the revenue split. As a result, the group agreed
that a uniform allocation among jurisdictions should be applied to this source
of revenue.
33
The Committee also discussed the possibility that the legislature would enact
direct state funding of trial courts. If such a bill passes in the next session of
the legislature, the state would, in effect, "take over" the trial court system
in 1988 or 1989, including the collection of fines and forfeitures.
The County suggested the possibility of raising certain court fees as a means
of generating additional revenue. This proposal would require state legisla-
tive authority. The County proposed increasing filing fees for corporate
plaintiffs, and increased surcharges for parking and criminal penalties. It did
not suggest fee increases that would make court costs higher for those least
able to pay.
As a result of its discussions on these issues, the Committee decided to
postpone a recommendation until the legislature has a chance to act on the
trial court "takeover" in its next session.
9. The Effects of the Gann Initiative and Proposition 62 (November, 1986) on the
Recommendations Contained in This Report
The Advisory Committee discussed the effects of both the Gann Initiative
(Prop. 4) and Proposition 62 (November, 1986) on the potential revenue
methods discussed during the preparation of this report.
Proposition 4 generally limits the annual appropriations of California's local
and state governments to the appropriations of the prior year adjusted for
changes in the cost-of-living and population. The Advisory Committee con-
sidered the requirements of Prop. 4 primarily during its discussions of possible
reallocations of existing revenue sources (e.g., sales tax redistributions). The
Committee concluded that Prop. 4 could be a limiting factor in the reallo-
cation of revenues among agencies. Nevertheless, in no case in this study was
it used as a reason for recommending or rejecting a revenue source.
Proposition 62 states that no local government may impose any "special tax"
(a tax used for a specific purpose) unless and until such tax is submitted to
the electorate of the local government and approved by a two-thirds vote of
the voters voting in an election on the issue. (Proposition 62 apparently will
not apply to chartered cities and counties.)
34
Y7
In its discussions, the Committee concluded that Prop. 62 could affect efforts
to increase several existing revenue sources, such as the real property
transfer tax. However, as with Prop. 4, the Committee did not use Prop. 62
as a reason for recommending or rejecting any item in the report.
35
& .*
BOARD OF DIRECTORS
C J Xolk. Jr. Pretrdenr
blerritt S Dunlap. I r( P Preitdt,)>/
Eluin Fuller
Randall Jones
' .A Spencer Lehmann
990 E. Mission Road - Telephone 728-1 125
FALLBROOK, CALlFORNlA 92028
December 9, 1986
San Diego Association of Governments
1200 Third Avenue, Suite 524
San Diego, CA 92101
Re: Draft Report, Regional Government Responsibilities and Reviews,
October 20, 1986
For the past year, I have served on the Advisory Committee to SANDAG in
the preparation of the subject report representing the 79 Special Districts
throughout the County. It has been an educational and enlightening experi-
ence to examine the details of the financial problems facing the county
in light of post Proposition 13 revenue distribution, policy 1-55, and
continuing increases in State-mandated programs without the revenue base
to meet these obligations.
After analyzing the final draft and the comments received in response to
requested public input at the November 20 workshop, I must submit this
minority report for your consideration.
"Delete recommendation 1.d. on page 14, which proposes to reallocate
Property Tax Revenue received by Water and Sewer Agencies. Transfer this
item to Section 1.b. on page 27, under the Section on revenue sources con-
sidered, but not recommepded, for change."
This is the only specific issue that was commented on during the period
for public input on the draft report.
from:
Letters of objection were received
San Dieguito Water District
Santa Fe Irrigation District
San Marcos County Water District
Vista Irrigation District Rincon del Diablo Municipal Water District
Costa Real Municipal Water District
Oral presentations objecting to this recommendation were heard at the Nov-
ember 20 public workshop from:
--
December 9, 1986
Page 2
Valley Center Municipal Water District
Padre Dam Municipal Water District
Lakeside Water District
Conclusion #2 on page 4 of the draft report states,
"State funding of mandated regional services is inadequate. As a result, the county has had to use a major portion of locally generated
revenues to fund its regional service responsibilities, leaving insufficient
monies to pay for local services in the unincorporated area."
Recommendation 1.d. would remove property tax revenues from property owners
in the unincorporated areas that currently remain in their area in the
form of system capital improvements, and transfer them to the county to
solve a State-County problem. Most urban areas, including all incorporated
cities, have used property taxes as a foundation for water and sewer capital
financing, as system capacity has to be built, to a great extent, in advance of need. Good economic planning does not install 18" water mains and replace
them with 24", 30", 36" capacity as growth occurs. Future users (undeveloped
land) should pay its fair share of capital facilities when constructed
because they will someday provide a direct benefit to those lands. as they
develop and become water users. To shift all costs to current users is
inequitable.
same purpose. Some districts cannot, by law, use standby charges.'for the
Another conclusion in the report, 84, page 6, states:
"Local services in the unincorporated area, as currently served by
special districts and the County, are more expensive than the average cost of local services provided in the incorporated area."
Recoxnendation 1.d. would further exacerbate this problem and widen the
cost of service'' gap. It is really a tax increase without voter approval. It
The statement on Page 15 (last sentence, top paragraph) that "General purpose
governments should provide assurances that they too will operate water
and sewer operations on an enterprise basis" is totally unacceptable to
the Special Districts. The opening words of recomndation 1.d. on page
14, "Local Governments should support legislation which would reallocate all future property taxes (excluding debt levies in excess of the one percent
general tax rate) which otherwise would accrue to water and sewer agencies"
is not a realistic recommendation in light of the couunents received to
date. After a thorough period of public review, I would estimate that
there are in excess of 70 local governments that would 5 support such
legislation.
December 9, 1986
Page 3
In conclusion, it appears to me that a concentrated effort on recommendations
l.e., 2, and 3 should be the focal point for the county in dealing with
the basic issue.
Once again, I have enjoyed the privelege of serving with a unique group
of talented, dedicated, professionals trying to cope with an extremely
complex and controversial issue. The report is an excellent piece of work
that should guide us to some equitable solution for the benefit of all
San Diego County residents.
Sincerely,
J Gordon W. Tinker
General Manager
and Chief Engineer
Fallbrook Public Utility District
Special Districts Member, Advisory Committee
cc: Advisory Committee
I.
- APPENDIX 1 -
I
PUBLIC SERVICES IDENTIFIED BY THE ADVISORY COMMITTEE FOR THE STUDY
OF REGIONAL GOVERNMENTAL RESPONSIBILITIES
NOVEMBER 21, 1985
(As Noted, Some Services Excluded from Further Study)
Public Services
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Air Pollution Control
Water Supply
a. b.
Importation (excluded from further study)
Filtration & Distribution (excluding services fully funded by user fees)
Sewage Collection, Treatment & Disposal (excluding services fully funded by
user fees)
Drainage & Flood Control
Solid & Hazardous Waste
a.
b. Solid Waste Disposal
c. Hazardous Waste Disposal
Solid Waste Collection (excluding services fully funded by user fees)
Public Health Services
Hospital (excluding hospital districts)
Law Enforcement (excluding the San Diego Unified Port District Harbor
Patrol)
Criminal Justice, Courts and Jails
Fire Protection
Emergency Services
a. Paramedic Services
b. Disaster Preparedness & Other Emergency Services
Animal Control
Public Welfare/ Social Services
Transportation
a.
b. General Aviation
c. Road Construc tion/Maintenance d. Transit
e. San Diego Trolley
Harbor/Port/Major Air Carrier (San Diego Unified Port District
activities excluded from further study)
15. Parks & Recreation
L Regional Parks/Lakes
b. Local & Community Parks c. Lifeguards/Beach Maintenance
d. Sports Arenal
e.
Special Facilities (San Diego Zoo, Wild Animal Park, Museums, Stadium,
Open Space Maintenance (excluded from further study)
16. Libraries
17. Publicly Assisted Housing
18. Lighting and Light Maintenance (excluded from further study)
19. Mosquito Abatement (excluded from further study)
20. Fiscal Protection
a. Assessor
b. Recorder
c. Tax Collector/Treasurer
21. Resource Conservation (excluded from further study)
22. Registrar of Voters
23. Cemeteries (excluded from further study)
24. Coroner
25. Public Administrator
26. Agriculture Commissioner (also includes Weights & Measures Commissioner)
27. General Government
a.
b. Plaaning/Engineering/Development Services/Economic Development
d. Redevelopment
Adminis tr a tion/Managem en t
uISTRIBUTION OF REGIONAL (R) AND LOCAL (L) PUBLIC SERVICE RESPONSIBILITIES AMONG LOCAL PUBLIC AGENCIES
SAN DIEGO REGION
(NOVEMBER 21, 1985)
Special Distric ts county
R+
Citier - Public Services
1. Air Pollution Control
2. Water supply
a. b.
Sewage Collection, Treatment & Disporal (excluding serricer fully
Importation (excluded from further rtudy)
Filtration 81 Distribution (excluding rerricea fully fundad by uaer feed
3. funded by uaer feed
4. Drainage and Flood Control
5. Solid k Hazardous Wute a.
b. Solid Wute Dirpord c, Hazudous Wute Disposal
Solid Wute Collection (excluding Services fully funded by uaer feed
6. Public Health Services
7.
8.
Hospitals (horpital districts excluded from further rtudy)
Law Enforcement (the Ssn Diego Unified Port Dirtrict Harbor Patrol
excluded from further rtudy)
9.
10. Fire Protection
Criminal Jurtice, Courtr & Jails
R L L
Le
L*
L
L
L
L
R
L
R
R
R R
L R/t
R
L
L L
L 11. Emergency Services
a. Paramedic Services b. Diruter Preparedness & Other Emergency Servicer
It. Animal Control
13. Public Welfare/Socid Services
14. Tranaportation a.
b. General Ariation
c. Road Construction/Maintenrnce d. Transit
e. San Diego Trolley
Hubor/Port/Major Air Curier (San Diego Unified Port Dirtrict
actiritier excluded from further rtudy)
15. Pub & Recreation
a. Regional Parks/Lakes
b. Local & Community Parka
c. Lifeguuda/Beach Maintenance d.
Sportr ken4
e.
Special Facilities (Sa Diego Zoo, Wild Animal Puk, Muaeuma, Stadium,
Open Space Maintenrnce (excluded from further rtudy)
16. Libruier
I?. Publicly Adrted Housing
18. Lighting k Light Maintenance (excluded from further study)
19. Morquito Abatement (excluded from further rtudy)
20. Fiscal Protection
a. Ameuor b. Recorder c. Tu Collector/Treuurer
21. Resource Conservation (excluded from further study)
22. Registrar of Voters
L++ R R
L L R
R
L L
R
L L
R
L L
R
L L
R
L L
R L L
L
L
L L
L
R
R R
L
R
Public Services
23. Cemeteries (excluded from further study)
24. Coroner
25. Publlc AdmlPistrator
26. Agriculture Commissioner (.Lo kcludu Weights & Meuurn Commissioner)
27. G.nerd Gorumment a. Admiaistratlon/M.nagement k Plmntng/Eo~neertng~eTelopm~t krrlca/Eeonomic Dewelapment e. Rederelopmeat
Tbe County of s.0 My0 provides thh aadce aper8tiag a8 a specid district.
*+ me City of Oceanside operates Oceaaside Hubor ut- u a special district.
R
R
R
xn R/L L
Special - Districts Cities -
L L
RIL
R/L L
- -
7 h
DISTRIBUTION OF PUBLIC SERVICE RESPONSIBUmS AMONG LOCAL PUBLIC AGENCIES SAN DIEGO REGION
(NOVEMBER 21, 1985)
Types of Agencies Responsible for Service Deliverp
Special County - Cities Districts Public Services
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Air Pollution Control
Water Supply a. Importation (excluded from further study)
b. Filtration & Distribution (excluding services fully funded by uer fees)
Sewage Collection, Treatment
funded by user feed
Drainage urd Flood Control
Solid & Hazudous Wute
L
b. Solid Waste Disposal
c. Hazudous Wute Disposal
Public Health Services
Hospitals (hospital districts excluded from further study)
Law Enforcement (the San Diego Unified Port District Hubor Patrol
Disposal (excluding serrices fully
Solid Wute Collection (excluding services fully funded by user fees)
excluded from further study)
Criminal Justice, Courts & Jails
Fire Protection
X+
X+
X+
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X X
X X
x 11. Emergency Services
a. Paramedic Services b. Disaster Preparedness & Other Emergency Services
12. Mmal Control
13. Public WelfuelSocial Services
X
X
X
X
X X
X X
14. Trmarportation
a.
b. General Aviation c. Road Conrttuction/Mlintenrnce
d. Transit
e. Sur Diego Trolley
a. Regiohd Puks/Lrker
b. LDcJ & Community Parks
c. LifeguardsfBeach Maintenance d.
e.
Hubor/Port/Major Air Curier (5.n Diego Unified Port District activities excluded from further study)
15. Parks P Recreation
Special Facilities (Sur Diego Zoo, Wild Animal Puk, Mwums, Stadium,
Open Space Maintenance (excluded from further study) Sports Arena)
16. Libraries
17. Publicly kristed Housing
18. Lighting & Light Maintenance (excluded from further study)
19. Mosquito Abatement (excluded from further study)
20. Fiscal Protection a. Aasessor b. Recorder
c. Tax Collector/Treuurer
X ++ X
X
X
X
X
X
X
X
X
X X
X
X X
X
X X
X
X
X
X
X
X X X
Public Services
21. Resource Coararvatioo (exeluded from further study)
22 Reglstru of Vote-
23. Cemeterloa (neluded from further study)
24 coroner
25. FubUe Admlabtrator
26. -culture Commiuionu (.to tncluda Weights 81 Me- Commissioner)
27. GmnaJOorunm.at
I Admiaistration/M~yement b. Pluraing/taglneerky/Developm.nt Serdcer/Ecanomic Development
e. Redevelopmest
The County of S.n Diego prorider this service operating u 8 $pedal district. ** 'Ibe City of Oceanaide opuatr Ocemride Hubor acting u a rp.ci.l district.
mer of Agencies Rmonsiblc for Serricc Delivery
Special COCtnQ - Cities Districts
x
x
X X X
X
X
X
X
X
X X
X
X
X
DESCRIPTION OF EACH PUBLIC SERVICE
IDENTIFIED FOR THE REGIONAL GOVERNMENTAL RESPONSIBILITIES
AND REVENUES STUDY
(As Revised on November 21, 1985)
1. Air Pollution Control - As mandated by the state Health and Safety Code,
Section 40002, the San Diego County Board of Supervisors sits as the Board of
Directors of the Air Pollution Control District (APCD) of San Diego County.
The APCD is responsible for attaining and maintaining Federal and State air
quality standards within the region, enforcing State air pollution control law,
enacting and enforcing local air pollution control regulations, the monitoring
and analyzing air quality in San Diego County, and is jointly responsible for
planning for air quality improvement.
2. Water Supply - For purposes of this study water supply service is divided into
these categories: (a) importation, and (b) filtration and distribution. The San
Diego County Water Authority (composed of 24 member agencies, which
include 6 cities, 17 special districts, and Camp Pendleton) is solely respon-
sible for importing water from the Metropolitan Water District (MWD) of
Southern California. The County Water Authority takes delivery of imported
water from MWD in northern San Diego County, and delivers it through five
water pipelines to its member agencies. Because of its unique nature and
organizational arrangement, water importation and all other functions of the
County Water Authority are excluded from analysis in this study.
The filtration of raw water, distribution of water to consumers, maintenance
and repair of all facilities, and planning, design, construction, and main-
tenance of new facilities are carried out by several cities and special districts
in the Region. These functions are included in the study except those fully
funded by user fees.
3. Sewage Collection, Treatment and Disposal - The provision of sewage collec-
tion, treatment, and disposal is provided by 37 agencies, including cities,
special districts, and the County operating as a special district. There are
five ocean disposal treatment plants. All of them provide treatment capacity
and/or disposal to other agencies in the respective watershed areas. There
1
are also numerous small inland plants. Sewage service also consists of plan-
ning, design, construction, and maintenance of all facilities.
4. Drainage and Flood Control - This service is provided by the cities and the
County of San Diego operating as the San Diego County Flood Control Dis-
trict. It consists of the planning, design, construction, and maintenance of all
drainage and flood control facilities, plus the monitoring of stream flows and
sedimentation rates in watercourses.
5. Solid and Hazardous Waste - This service is provided by the County, the cities
(either directly or through franchise haulers), and special districts. The
County and the cities of San Diego and Oceanside operate landfill disposal
sites. The service consists of solid waste collection, disposal at the landfill
sites, maintenance of the landfills, administration of franchise haulers' con-
tracts (where appropriate), planning, design, construction, and maintenance of
all facilities and equipment. A hazardous waste treatment, transfer, and
disposal site, though temporarily c10sed, is located at the County's Otay
landfill. Solid waste collection fully fuuded by user fees is excluded from
further analysis in this study.
6. Public Health !Services - This service is provided by the County of San Diego
and includes public, physical, and meatal health programs. It consists of the
enactment and enforcement of local public health regulations and enforce-
ment of applicable state health laws. Programs include public health testing,
public immunization, psychological services, inspection and licensing of
restaurants and related public places, prevention of and response to potential
and known public health hazards.
7. Hospitals - Hospital8 and convalescent hospitals are operated by special
hospital districts and the County of San Diego. Hospital districts are ex-
cluded from urdpia in this study.
8. Law Enforcement - Police protection is provided by 9 cities and by the
County Sheriff in the unincorporated area of the County and in 7 cities which
contract with the County for police service. The function includes regular
2
patrols, arrest of suspects, crime prevention, general administration, plan-
ning, design, construction, and maintenance of all facilities and equipment.
(This service does not include the Sheriff's court and jail-related functions,
accommodated below. It also does not include the harbor police operated by
the San Diego Unified Port District.)
9. Criminal Justice, Courts and Jails - This service is provided by the County. It
includes administration and operation of four municipal court districts and
one superior court district, county jails, the District Attorney's office, the
probation department, the Public Defender, and the Marshal services.
10. Fire Protection - This service is provided by the cities and by special fire
protection districts. It consists of firefighting, fire prevention, related
emergency services, administration, and the planning, design, construction,
and maintenance of all facilities and equipment.
11. Emergency Services - This service includes ambulance and other paramedic-
type services, whether provided directly by the public agency or through a
franchise operator. It also includes disaster preparedness planning and opera-
tions provided by the County and the cities.
12. Animal Control - This service is provided by the County to nine cities and the
unincorporated area and by the other nine cities within their jurisdictions.
Services include operation of animal shelters, enforcement of animal control
ordinances, licensing of dogs and kennels, rabies control, spay-neuter and
adoption programs.
13. Public Welfare/Social Services - These services consist of both the County's
mandated welfare responsibilities, plus the additional social service programs
offered by the County and several cities for families, children, and elderly
persons.
14. Transportation, Ports, Harbors - These services include the planning, design,
purchase, construction, and maintenance of streets, roads, traffic controls,
transit facilities and equipment, and airports. These services are provided by
3
15.
16.
17.
18.
19.
the County, the cities, and some statutorily created transit agencies. These
categories also include the aiqort and harbors operated and maintained by
port .@am Diego Unified Port) and harbor districts (City of Oceanside). The
San Diego Unified Port District and its activities are exluded from this study.
Parks, Recreation, and Open Space - These services are provided by the
County, cities, and some special districts. They include the provision of all
recreational facilities, their operation, programs, and maintenance, plus the
planning, design, construction and purchase of all facilities and equipment. It
includes the construction and operation of special facilities such as the San
Diego Zoo and Stadium. It also includes the maintenance of designated open
space areas. Open space maintenance has been excluded from further analy-
sis in this study.
Libraries - This service is provided by the County and by some of the cities
and consists of books, films, tapes, records, and video loans, reading programs
for adults and children, and arts and crafts exhibits.
Publicly Aasisted Housing Services - This service is provided by the County
(on behalf of several cities) md by some cities. It consists of the establish-
ment and administration of assistance programs for low income households
urd the provision of housing for such households where possible, by providing
financial incentives to developers of low and moderate income housing, and
rental and home repair assistance. Some local housing agencies operate and
maintain some publicly assisted housing.
Ughting md Light Maintenance - This service is provided by the cities and by
specially established lighting districts. The service consists of the financing,
krstallatioa, .nd maintenance of public street lights. Lighting and light
maintenance districts are excluded from further study.
Mosquito Abatement - This service is provided through specially established
rnaaauita abatement districts. It is excluded from analysis in this study.
4
20. Fiscal Protection - This service is provided by the County and consists of the
unique functions of County tax assessor, recorder, clerk, auditor, and tax
collector and treasurer.
21. Resource Conservation - This service is provided through specially established
districts whose purpose is to maintain and enhance soil and water quality in
the established district area. Resource conservation is excluded from analy-
sis in this study.
22. Registrar of Voters - This unique regional service is provided by the County.
It consists primarily of maintaining official rolls of qualified electors and
conducting public elections.
23. Cemetery - This service is provided by a few cities and special districts for
the purpose of maintaining established public cemeteries.
24. Coroner - The coroner is a regional service provided by the County. Among
other duties, the coroner determines the cause of all violent, sudden, and
unattended deaths, and assures burial of the deceased when no other person
takes charge of the body.
25. Public Administrator - The Public Administrator is a regional, County-
provided service. Among other duties, the Public Administrator takes charge
of the property of persons who die without leaving a will, the property of
alien indigent9 returned to their native land, and assumes conservatorship of
the property of persons declared mentally incompetent to conduct their
affairs and arranges for burials of deceased persons without families.
26. Agriculture Commissioner - The Agriculture Commissioner is a regional
service provided by the County. Duties of the Commissioner include prep-
aration of reports on the condition of agriculture in the County, and the
condition and control of agricultural pests, both present and potential.
27. Weights and Measures Commissioner - The Weights and Measures Commis-
sioner is a regional service provided by the County. "he Commissioner's
5
primary responsibilities are the certification of accuracy of devices used to
weigh and measure commodities sold by weight, and the identification of
persons willfully misusing such devices.
.
28. General Government - For the purposes of this study, general government has
been divided into the following categories: (a) administration/mMagement:
management staff of cities, the County, and special districts, including
personnel management, agency clerks, and legal cowel. Expenditures in this
category can be both "regional" and "local" because agency management can
administer both kinds of service. (b) muuring/Engineering/Developmen t
Services/Eeonomic Development: planning and engineering staff services not
otherwise accounted for; building inspection, and community development;
also can be both "regional" and "local." (c) Redevelopment, as governed by
state law.
6
APPENDIX 2
.-
URBANIZED AREAS IN THE SAN DIEGO REGION AS DEFINED FOR THE STUDY OF REGIONAL GOVERNMENTAL
RESPONSIBILITIES AND REVENUES
This study of governmental responsibilities and revenues requires a working defi-
nition of which lands in the Region will be considered "urbanized," and which will
be considered "rural." This distinction is needed in order to allocate costs of
services, as shown in local budgets, to the served populations.
SANDAG staff identified a preliminary split of "urban" and "rural" to use in pre-
paring the report for the Committee 'meeting of January 23, 1986. The split was
based on the U.S. Bureau of the Census definition of "Urbanized Areas" and urban-
ized places, and the Census Bureau's map of the San Diego Urbanized Areas as of
the date of the 1980 Census.
The Census Bureau uses the following criteria to determine the eligibility for definition of an urbanized area:
"An urbanized area comprises an incorporated place and adjacent
surrounding area that together have a minimum popula- densely settle
tion of 50,000. The densely settled surrounding area consists of:
1. Contiguous incorporated or census designated places having:
a. A population 2,500 or more; or,
b. A population of less than 2,500 but having either a population
density of 1,000 persons per square mile, closely settled area containing a
minimum of 50 percent of the population, or a cluster of at least 100
housing units.
2. Contiguous unincorporated area that is connected by road and
has a population density of at least 1,000 persons per square mile.
3. Other contiguous unincorporated area with a density of less
than 1,000 persons per square mile, provided that it: a. Eliminates an enclave of less than 5 square miles that is sur-
rounded by built-up area.
b. Closes an indentation in the boundary of the densely settled
area that is no more than 1 mile across the open end and encompasses no
more than 5 square miles.
Links an outlying area of qualifying density, provided that the
outlying area is:
!
2
c.
'The Census Bureau excludes from the urbanized area the rural portions of
extended cities, as defined in the Census Bureau's extended city criteria, In
addition, for an urbanized area to be recognized, it must include a population of at
least 25,000 that does not reside on a military base.
2The Census Bureau excludes the area of extensive non-residential urban land
uses, such as railroad yards, airports, factories, parks, golf courses, and cemeteries, in computing the population density.
(1)
(2)
Connected by road to, and is not more than 1-1/2 miles from,
the main body of the urbanized area; or is
Separated from the main body of the urbanized area by water
or-other undevelopable area, is connected by road to the main body of the
urbanized area, and is not more than 5 miles from the main body of the urbanized area
4. Large concentrations of non-residential urban area (such as
parks, office areas, and major airports) that have at least onequarter of
their boundaries contiguous to the main body of the urbanized area."
The Census Bureau's delineation of the San Diego urbanized area as of 1980 is
shown on the two attached maps labeled "Sin Diego," sheets 1 and 2. On these
maps the urbanized area is shown as the cumulative total of the three shades of
gray. The darkest shade represents the composite of all incorporated areas? as of 1980 (prior to the incorporation of Poway, Santee, Encinitu, and Solana Beach). The two lighter shades represent unincorporated places which meet the Bureau's
criteria for "urbanized."
Staff used estimated/actual expenditures for 1984-85 for the cities and the
County in carrying out Tasks 2.4 and 2.5. Therefore, it was necessary to update
regional population and employment data in 1985. The population and civilian employment data used for each interval from 1985 to 2000 are shown below:
POPULATION AND WAN EMPLOYMENT
FOR URBAN AND RURAL AREAS
SAN DIEGO REGION
1985 - 2000
Region
Urbaaized Area
krcorporat ed-Urban
Unincorporated-Urban Unincorpor at ed-Rur al
Unincorporated-Tot al
Region
Urbrnlzed Area
Inc orpor a t ed-Urban
Unincorpor at ed-Urban
Unincorpor at ed-Rural Unincorpor at ed-To t al
Total Papulation
1985l - 19902
2,083,373 2,33 5,046
1,962.1 60 2,166,466
1,677,233 1,799,846
284,927 366,620 121,213 168,580 406,140 53 5,200
-
Civilian Employment - 198S3 - 1 9904
826,152 930,146
798,470 896,374
73 5,674 81 8,920
27,682 33,772
90,478 11 1,226
62,796 77,454
- 19952
2,526,940
2,3 3 3,223
1,909,940
423,283
193,717
6 17,000
- 199S4
1,O 1 0,2 55
970,999
87 9,6 92
91,307
39,256 130,563
- 20002
2,699,179
2,477,430
2,O 11,279
460,151
221,749 681,900
- 2000~
1,087,409
1,042,557
937,817
104,740 44,852
149,592
... .. ..
..
0s %f
3 a
.. .
67
Recom mendat ion 4 is "Support a local sales tax increase of 1/24 to finance re-
gional and local transportation improvements." The enabling legislation is SB 361
(Deddeh), 1985 session.
This bill has become law and authorizes SANDAG acting as the SM Diego Re-
gional Transportation Commission to place on the ballot up to a 1C sales tax in-
crease for transportation purposes which will require approval of a majority of the
voters.
The committee is developing the proposal now. Currently, SANDAG staff is
recommending 1/24 for 20 pears to be divided equally among transit, local streets
and roads, and highways. Below is amount of local streets and road revenues
which would be raised based on this recommendation.
NOTES
1. Information for 1985 was obtained from SANDAG "INFO" bulletin, No. 3,
May-June, 1985, "January 1, 1985, Population and Housing Estimates."
2. Information for 1990, 1995, and 2000 was obtained from SANDAG's Series 6
Regional Growth Forecasts.
3. Linear interpolations were prepared (between 1980 and 1990) to obtain
civilian employment for 1985.
4. Civilian employment for 1990, 1995, and 2000 was obtained from SANDAG's Series 6 Regional Growth Forecasts.
The third map, entitled "Urbanized Area, San Diego Region, 1985-2000," was
prepared by SANDAG staff. It uses the Census definition of "urbanized areas" as
a base, but adds the following to the areas shown as urbanized:
1. LAFCO-approved spheres of influence for cities;
2. Unincorporated places which are not contiguous to the urbanized area but
which meet the Bureau's population density criteria for such places. Parts of
Fallbrook, Ramona, Valley Center, and Alpine are included among these
places.
This map was prepared to illustrate that, in future years, most of the region's
urbanized areas, as defined by the Census Bureau in 1980, will become part of the
incorporated area. The recent and on-going approval of expanded spheres of
influence for cities and potential incorporations will reduce the County's need to provide local urban services.
APPENDIX 3
LEGISLATION AFFECTING ISSUES
ADDRESSED IN THE REPORT
Two Recommendations of this report call for support of a sales tax increase. Both
require state legislation and approval of local voters. These are discussed here in
greater detail.
Rccommendation 3 advocates "Support of a local sales tax increase of 1/2$ for up
to five years to finance courts and jails and support direct state funding of trial
courts." The arabling legislation is:
AB 3339 (Bradley
This bill has become law, and authorizes the County of San Diego by a 2/3 vote of
the public to increase the sales tax for up to 5 years, at a rate of 1/2$ to finance
the regional justice sytem. The measure is on the November 1986 ballot.
Following is a summary of the need expremed by the County, how much money the
measure would raise, and other projected sources of revenue for this purpose.
.9 P
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71
APPENDIX 4
FISCAL IMPACTS AND FISCAL EQUITY
This Appendix contains excerpts from two interim reports prepared for the
Advisory Committee to the study. These excerpts provide the data and analysis
for the development of the first recommendation of the report and its subparts:
1. Reform the statewide property tax system
&
b.
C.
d.
Revise method of property tax transfer upon city annexation of
unincorporat ed te rrit ory
Modify State formula for property tax transfer to newly incorporated
cities
Amend State Constitution to enable general property tax "overrides" in
newly incorporated and annexed areas
Reallocate property tax revenue received by water and sewer agencies.
All interim reports are available for review at SANDAG.
The first section is Fiscal Equity and the Distribution of Local Government
Expenditures in the SM Diego Region. This report was originally reviewed by the
Advisory Committee at its meeting in January, 1986. The first part of this
section details expenditures and revenues for the County, cities, and special
districts, presenting the existing distribution and comparing expenditures in the
incorporated and unincorporated areas. The second part discusser two alternative
methods for allocating revenues. Both alternatives show that the County's
reveaue base is less adequate than that of the cities combiaed.
The second section, Fiscal Impacts of Annexations and Incorporations, was part of
a larger report presented to the Advisory Committee on March 6. The part
inchded in this Appendix discusses specifically the fiscal impact on the County,
the cities, and special districts caused by annexations and new city formations.
This section shows that these jurisdictional changes have generally negative fiscal
impacts on the County.
FISCAL EQUITY AND THE DISTRIBUTION
OF LOCAL GOVERNMENT EXPENDITURS
AND REVENUES IN THE SAN DIEGO REGION
In this report, fiscal 1984-85 expenditure and revenue amounts for the County of
San Diego and several cities are actuals or "estimated actuals." For the City of
San Diego and other cities, budgeted amounts for FY 1984-85 are reported be-
cause actual amounts were not available. Budget documents serve as the primary
sources of data for this report.
For special districts, revenue and expense figures are actuals for FY 1983-84 and
are taken from Financial Transactions Concerning Special Districts2 published by
the State Auditor and Controller's Office. Included with special districts are
redevelopment agencies and transit districts but excluded are the San Diego
Unified Port District, San Diego County Water Authority, and hospital, cemetery,
mosquito abatement, resource conservation, and lighting maintenance districts.
To avoid double-counting arising from local inter-agency financial transactions,
"reimbursements/revenues from other local agencies" are subtracted from both
the revenues and expenditures of the recipient agency. For example, cities'
payments to the County for Sheriff service, while counted as a cities' expenditure,
were deducted from the County's expenditures as well as revenue totals. In addi-
tion, an agency's appropriations for reserves were deducted from the expenditure
total, and yearend surplus revenues were subtracted from each agency's revenue
total. The exclusion of reserve appropriations and revenue surpluses makes each
agency's expenditures on public services equal to its revenues.
73
c -\
I !
DISTRIBUTION OF LOCAL GOVERNMENT EXPENDITURES
AND REVENUES
Expenditure Distribution
During FY 1984-85, local governments - districts,' cities, and the County --spent
an estimated $1.97 billion on regional and local services, including operations and
capital improvements (see Table 1). Over $1.16 billion or 59 percent of total
spending went for local services, while regional services accounted for nearly $808
million or 41 percent of total expenditures.
Regional services provided by cities cost $49.6 million and included refuse dis-
posal, regional parkspakes, airport operations, and special attractions (e+, S.D.
Jack Murphy Stadium and Zoological Exhibits). Regional services delivered by
special districts cost $33.6 million, including $30.8 million spent on the S.D.
Trolley rad $2.8 million spent on air pollution control. County-rovided local
services to the incorporated area include libraries and housing assistance. Expen-
ditures on regional and local services by individual general purpose government
and b.r special district service are shown in Tables 2 and 3.
The per capita expenditure on local services in the unincorporated area is slightly
higher than that in the incorporated area as identified below:
EXPENDITURES ON LOCAL SERVICES
Unincorporated Hcorporated Tot a1 - Area - Area Region
Total Expenditures on
Local Services $234.5 million $926.3 million $1,160.8 million
Total Population 406,140 1,6 77,233 2,083,373
Total Expenditure Per Capita $577
Expenditure Per Capita Excluding Redevelopment $577
$552 $557
$532 $54 1
'Special district expenditures are for FY 1983-84.
a 4 Y
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W d
TABLE 2
OPERATING AND CAPITAL EXPENDITURES (ADJUSTED)~
OF CITIES AND THE COUNTY
FISCAL YEAR 1984-85
Jurisdiction
Culsbad
aula Vista
Coronado
Del Mar
El Cajon
&condido
Imperial Beach
La Mesa
Lemon Grove
National City
Oceanside
Fbrq
SIP Diego
Sm Martos
htee
Vista
TOTAL CITES
Regional Senices
$ 4
-0-
4
-0-
4
103,000
-0-
-0-
-0-
-0-
4.6 68,000
1,109,000
43,3 46,O 00
-0-
-0-
378,000
$ 49,604,000
County of San Diego 724,704,000
TOTAL $714,308,000
Local Services
$ 40,407,000
22,263,000
9,7 66,000
4,2 89,000
27,110,000
45,670,000
7,9 56,000
16,822,000
5,263,000
23,449,000
57,185,000
14,843,000
44330 1,000
19,06 2,000
16,466,000
14,268,000
$768,320,000
99,156,000
$867,476,000
Total
S 40,407,000
22,263,000
9,766,000
4,289,000
27,110,000
45,773,000
7,9 56,000
16,822,000
5,263,000
23,449,000
6 1,8S3,000
15,952,000
486,847,000
19,062,000
16,466,000
14,646,000
$ 817,924,000
823,860,000
$1,641,784,000
-
1. Expenditures exclude appropriations for resarvea, contributions to redevelop- ment projects, and reimbursements/reoenue~ from other local agencies.
Source: SANDAG
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77
Excluding redevelopment expenses of $33.2 million - all of which was incurred in
:he incorporated area - provides more comparability in the array of services
delivered to each area. With this adjustment, the per capita expenditure for local
services becomes S532 in the incorporated area compared to $577 in the unincor-
porated are&
Aside from residents, non-residential development places demands on local
services and relatively more of it exists in the incorporated area. Area dif-
ferences in the amount of non-residential development are considered sub-
sequen tly.
Revenue Distribution
The distribution of FY 1984-85 revenues among the three types of local govern-
ments is shown in Table 4.' Total revenue for each type of government equals its
total expenditure. Revenues that accrued to each type of government are divided
into three groups for purposes of considering alternative revenue allocation be-
tween cities ad the County. These three groups are as follows:
1. Regional Revenue - Includes federal and state funding and grants that were
received by local governments for the purpose of paying for or defraying the
expense of regional services. Examples of regional revenue are federal aid
for AFDC recipients, state aid for adoption services, state grants for general
aviation, ad state aid for civil defense. Also included in regional revenue
are fees, rents, and service charges related to the delivery of regional
services, such as document recording fees (Le., County Recorder), court
fibs, regional park fees and concession revenue, and rent payments from
users of S.D. Jack Murphy Stadium.
2. General Revenue - bcludes revenues which are paid by all residents or
property owners in San Diego County on the same basis ad are available to
pay for local services. In addition, most of the revenue included in this
category potentially could be used to fund regional services Revenue sources
included in General Revenue are as follows:
'Special district revenues are for M 1983-84.
0
0
0
0
0
0
0
0
0
0
0
0
0
Property Tax (ercluding debt service taxes)
Sales & Use Tax
Sales & Use Tax - Transportation Development Act
Property Transfer Tax California Vehicle Code Fines *
Highway Users Tax (Le., Gas Tax)
Motor Vehicle License Fees
Trailer Coach Tax
Homeowners' Property Tax Exemptions,
Business Invenfory Property Tax Relief
Cigarette Tax
Federal Revenue Sharing
Com munity Develop men t Block Grants
*
* St at e-c ollec t ed, locally -shared revenues; i.e., st at e subvent ions
3. Local Revenue - Includes all revenues collected, earned, or applied for at the
discretion of individual local governments such as: user fees and charges for
local services, licenses and permits, transient lodging tax, franchise fees,
property assessments, debt service property tax revenue, public facility fees,
interest, sale of property, local ordinance fines, and state and federal grants
for local services (excluding CDBG and Revenue Sharing).
The estimated amount of revenue that accrued in each of the three groups is
summarized by type of local government in Table 4. (The same data for individual
cities and the County are shown in Table 5.)
As shares of total local government revenue, Regional Revenue was 26 percent,
General Revenue was 36 percent, and Local Revenue was 38 percent.
Revenue vs. Expenditure Distribution
The County of San Diego's expense for regional services of $724.7 million far
exceeded its Regional Revenue of $448.9 million, meaning, of course, that the
County used $275.8 million of its noniegional revenue to pay for regional
services. A lack of Regional Revenue also plagued cities; they spent $49.6 million
on regional services and received $22.9 in Regional Revenue, a shortfall of $26.7
million. Regional services provided by special districts were fully funded from
Regional Revenue.
7'5
TABLE 4
LOCAL GOVERNMENT REVENUE (ADJUSTED)~ BY TYPE OF GOVERNMENT AND CLASSFICATZON OF REVENUE, FISCAL YEAR 1984-85 (DOLLARS IN MnONS)
Regid G.nWal toed Twe of Government Revenue Revenue Revenue TOTAL
COUNTY $448.9 $298.6 S 76.4 $ 823.9
QTIES 22.9 352.1 U2.9 817.9
326.9 - 233.7 - 59.6 - 33.6 SPECIAL DXSTRICTS' -
TOTAL $505.4 $710.3 $153.0 $1 ,968.7
1. Rereaues exclude reimburremeats/reoeaues recefoed from other local gar- erameats u well u marplus revmum that accrued during FY 198445.
2. Revenues are for FY 1983-84. Special Mstricb tnclude redevelopmunt
agcndes urd trrruft districts but exclude S. De Waifid Pott District, Sm Diego Cortnty Water Authority, rad cemetery, hospitd, resource ccmser- vation, mosquito abatemeat, aad light m~tenrnca dhtrictr.
.. TABLE 5
Jurisdiction
Cubbad
Chula Vista
Coronado
Del Mu
El Cajon
Escondiao
Imperial Beach
La Mesa
Lemon Grove
National City
Oceanside
Poway
San Diego
San Marcos
Santec
Vista
REVENUES (ADJUSTED)~ OF CITIES
AND THE COUNTY FISCAL YEAR 1984-85
Regional Revenue
$ 4-
4
4-
4-
4-
73,000
-0-
4
4-
4
4,666,000
298,000
17,523,000
-0-
-0-
3 7 8,000
General
Revenue
$ 13,721,000
15,608,000
4,99 2,000
1,435,000
15,348,000
16,708,000
3,173,000
1 1,428,000
3,298,000
13,880,000
18,369,000
6,993,000
208,6 23,000
4,090,000
8,344,000
6,122,000
Local
Revenue
$ 26,686,000
6,655,000
4,774,000
2,854,000
11,762,000
28,992,000
4,783,000
5,394,000
1,96 5,000
9,569,000
38,8 16,000
8,661,000
260,701,000
14,972,000
8,122,000
8,146,000
Total -
$ 40,407,000
22,263,000
9,766,000
4,289,000
27,110,000
45,773,000
7,956,000
16,8 22,000
5,263,000
23,449,000
6 1,6 53,000
15,952,000
486,847,000
19,062,000
16,466,000
14,646,000
TOTAL CITIES $ 22,940,000 $3 52,13 2,000 $442,a52,000 $ 817,924,000
County of San Dicgo 4$8,889,000 298,558,000 f6,4 13,000 823,860,000
TOTAL $471,829,000 $650,690,000 $519,265,000 $1,641,784,000
1. Revenues exclude rcimburoementr/rcveauer from other focal governments and surplus
revenues that accrued during FY 1984-85.
PI
a. A key consideration in this study is the extent to which local governments are
paying for local services from their Local Revenue. The following data show each
jurisdiction's Local Revenue as a percentage of its expenditures on local
services:
Juridic t ion
Carlsbad
Chuh Vista
Cor onado
Del Mar
El Cajon
Escondido
Imperial Beach La Mesa
Lemon Grove
National City Oceanside Poway
S.n Diego
San Mucor
Santee Vista
TOTAL CITIES
County of San Diego
Special Distric tr
TOTAL REGION
Local Revenues
as a Percent of
Local Service
Expcndi tures
66.0%
29.9
48.9
66.5
43.4
63.5
60.1
32.1
37.3
40.1
67.9
58.4
58.8
78.5
49.3 57.1
57.6
77.1
79.7
64.9
As expected, special districts had the highest ratio of Local Revenue to local
sewkc costs (79.7 percent). Except for the property tax and related state sub-
ventions, districts rely on property usewnrents and user fees to fund their local
serricea The County of San Diego ab had a high ratio (77.1 percent), substan-
tially higher than the ratio for cities combined (57.6 percent) ?he City of San
Mucor hd tbe highest ratio among cities (78.5 percent) owing to the prevalence
of assessment districts in that city.
FISCAL EQUITY IN THE DISTRIBUTION OF
LOCAL GOVERNMENT REVENUE
Presented below are two revenue allocation methods which attempt to expose
whether or not the existing distribution of local government revenues is equitable
in consideration of the expenditure distribution. Method two is a refinement of
the first. Both methods have the following elements in common:
1.
2.
3.
4.
No new revenue sources or tax rate increases are considered; that is, revenue
reallocation is limited to the existing level of local government revenue, as
estimated for FY 1984-85.
Regional services are funded first, not as a matter of priority but to make it
possible to assess whether the balance of local government is distributed
more or less equitably between the County and cities.
By design, special districts are unaffected by the revenue reallocations for
two reasons. Regional services provided by districts are fully funded from
Regional Revenue, and their local services largely are self-supporting through
user fees and other sources of Local Revenue.
Only General Revenue of the County and cities is subject to reallocation.
Because Regional Revenue is not sufficient to fund regional services provided
by the County or cities, it is not reallocated between them. Local Revenue
also is not reallocated, because it is raised exclusively through the efforts,
policies, and ordinances of individual agencies.
Method One: Reallocate General Revenue in Proportion to Local Service Costs
Incurred in the Unincorporated vs. Incorporated Area
Following are the steps involved in deriving the General Revenue reallocation as
summarized in Table 6:
1. Exclude Local Revenue. In FY 1984-85, estimated local government revenue
totaled $1,968.7 million and total Local Revenue was $753.0 million. The
difference is $1,215.7 million, including Regional Revenue of $505.4 million
and General Revenue of $710.3 million (refer to previous Table 4).
83
2. Fund Regional Services from Regional Revenue and from a Portion of General
Revenue. The cost of regional services totaled $807.9 million during FY
1984-85 while Regional Revenue totaled $505.4 million, leaving a shortfall of
$302.5 million. Funding this shortfall from the region's total General
Revenue ($710.3 million) would result in the following allocations:
Existing Regional Services (S Mils.) Regional Reglanai General Revenue
cost Revenue Shortfall Allocation ($ Mils.) -
County Cities
Districts
$724.7 $448.9 $275.8 $275.8
49.6 22.9 26.7 26.7
33.6 -0- S30t.5 - 33.6 $801.9 $505.4
-0- $302.5
3. Allocate Balance of General Revenue to the Incorporated and Unincorporated
Areas for Local Services. After funding of regional services, General
Revenue of $407.8 would be available to pay for local services. Shown below
ia an allocation of this revenue beta- the unincorporated and incorporated
areas in the proportion that each area's existing local service cost bears to
total local service coats:
Existing
Local Service
Costs ($ Mils.) Percent
Unincorporated Area
Incorporated Area
Total Region
$234.5 20.2
926.3 m 79.8 rn
General Revenue
Allocation (S Mils.) Pert en t
Unincorporated Area $ 82.4
Incorporated Area 325.4
Total Region 33m
20.2
79.8 m
Alternatively, the level of General Revenue available for local services could
be allocated between the two areas on the basis of population; in which case,
unincorporated area's revenue share would be $79.5 million instead of $82.4
3 3
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*. million. The incorporated area's allocation would increase from $32 5.4
million to $328.3 million. The incidence of local service costs is considered a
better allocation criterion than the population distribution, however, because
service costs vary with density of development. (Revenue allocation Method
Two, below, combines both criteria and allocates General Revenue on the
basis of cost per capita.)
4. F'und the General Revenue Requirement of Special Districts. The General
Revenue requirement of special districts was $59.6 million during FY 1983-84
(see previous Table 41, of which approximately $29.7 million was attributable
to the unincorporated area and $29.9 million to the incorporated area. The
balance of special district funding for local services came from Local
Revenue. To satisfy the existing General Revenue requirement of special
districts would result in the following allocations:
General Districts' Balance Available General Revenue for County
Require men t and Cities
Revenue
Allocation
($ Millions) ($ Millions) ($ Millions)
1
Unincorporated Area $ 82.4
325.4 3xm
$29.1 S 52.7
295.5 3mx
1. Per step 3 above
5. Allocate Balance of General Revenue Between the County and Cities. From
step 4 above, the balance of Generrl Revenue available for local services in
the unincorporated area ($52.7 million) would be allocated to the County. In
keeping with the allocation method inOolved in step 3, the County also would
receive 1.3 percent of the $295.5 million available for local services in the
incorporated area, or $3.8 million. Thk is because the County's existing local
service costs in the incorporated area (libraries and housing assistance)
account for 1.3 percent of local service costs incurred in the incorporated
area (excluding special districts). Thus the County would end up with a
General Revenue allocation of $56.5 million for local services while the
cities' share for local services would be $291.7 million.
The reallocation of General Revenue resulting from Method One, as outlined in
steps 1-5 above, is shown in Table 6. Compared to the actual FY 1984-85 revenue
allocation, the County would receive additional revenue of $33.7 million while the
cities' revenue would be reduced by an equal amount.
The primary reason for the additional revenue allocation to the County is that the
County presently relies more heavily on Local Revenue to pay for its local service
costs than do cities collectively. That is, because General Revenue was reallo-
cated in proportion to existing service costs and independently of Local Revenue,
the County ended up with a higher proportion of General Revenue (as a share of
its local service costs) than is currently the case.
Method Two: Reallocate General Revenue on the Basis of Local Service Costs Per
Capita
As indicated in Table 7, combined County and special district expenditures for
providing local service to the unincorporated area is $234.5 million, or $577 per
resident, compared to a per resident cost of $552 in the incorporated area. In the
urban portion of the unincorporated area the per capita cost is $652.
Because Method One allocated General Revenue available for local services
($407.8 million) on the basis of local service expenditures, the resulting revenue
allocation in effect compensated the County for the higher cost per capita in the
unincorporated area.
The following revenue allocation method shows what would have been the final
reallocation derived in Method One had the per capita cost for local services in
the urban portions of the unincorporated area been equal to that of the incor-
porated area (Le., $552). The steps are as follows:
1. Exclude Local Revenue - Same as Method One.
2. Fund Regional Services from Regional Revenue and from a Portion of General
Revenue - Same as Method One.
TABLE 7
LOCAL SERVICE COSTS PER CAPmA SAN DIEGO REGION FY 1984-85
Unkrcorporated Area hcoaporattd Total Arc8 Region - Total - Urban Rural -
Local Service Costs $185.8 $48.7 $234.5 $9263 $1,160.8
Local Service Cost Per C.pita $652 $402 $577 $552 $557
1. J~rw 1,1985
. '.
TABLE 8
METHOD TWO ALLOCATION OF GENERAL REVENUE (MILLIONS OF DOLLARS)
Distribution of Local Service Costs Allocation of Actual Adjus ted General Revenue
Dollars Percent Dollarr Percent Dollars Percent
Unincorporated Area Rural $48.7 S 48.71
Urban 185.8 164.4 Total $234.5 20.2 $rn 18.7 $ 76.3 18.7
Iacorporated Area $9263 79.8 $926.3 813 $331.5 81.3
TOTAL REGION $1,160.8 100.0% $1,139.4 100.0% $407.8 100.0%
1. Equals the urban unincorporated population of
284,927 times a per capita cost of $577.
-. 3. Allocate Balance of General Revenue to the Incorporated and Unincorporated
Areas for Local Services, with Adjustment for the Cost Per Capita. After
. -funding of regional services, General Revenue of $407.8 million would be
available to pay for local services as derived in Method One. Shown in Table
8 is the allocation of this revenue between the unincorporated and incor-
porated areas on the basis of relative shares of local service costs. The
actual level of local service costs incurred in the urban portion.of the un-
incorporated area, however, is adjusted downward so as to yield a cost per
capita equal to that of the incorporated area. An adjustment is not made for
the rural portion of the unincorporated area because rural areas receive
fewer services than urbanized areas; therefore, service costs are not compar-
able.
Compared to Method One, the above per capita adjustment has the effect of
reducing the unincorporated area's General Revenue allocation from $82.4
millioa to $76.3 million. If special district financing is to remain unaffected
in the process, then the County's allocation of General Revenue as derived in
Method One would be reduced by approximately $6.1 million while the cities'
share would increase by an qual amount.
FISCAL IMPACTS OF ANNEXATIONS AND INCORPORATIONS
Jurisdictional changes - annexations and new city formations - that will result
from continuing urbanization and the establishment of spheres of influence will
alter markedly the distribution of both service costs and revenues among public
agencies. Evaluated below is the fiscal impact of jurisdictional changes on local
government - the County, cities, and special districts.
COUNTY OF SAN DIEGO
In general, County finances are negatively impacted by both city annexations and
new incorporations within urbanized areas. while the County's local service costs
are reduced as the result of such jurisdictional changes, it revenues tend to drop
*- by a greater amount. The fiscal effects of annexations and incorporations on the
County will vary with the particulars of each case, of course. But more times
than not, they can be expected to diminish the County's financial status.
The basis for this conclusion, as explained below, is a financial analysis of two
scenarios: (1) cities' annexation of the entire urbanized portion of the unincor-
porated area, and (2) new City incorporations encompassing all of the urbanized
unincorporated area. (See the attachment to the report prepared for the com-
mittee meeting of January 23, 1986 for an illustration of the "urbanized area,
198 5-2000.")
Impact of City Annexations
In 1965, the urbanized portion of the unincorporated area had a population of
about 285,000 and an economic base employing approximately 63,000 civilian
workers. It encompasses Lakeside, Spring Valley, Mt. Helix, the San Dieguito
area, Solana Beach, Castle Park, and other developed areas on the periphery of
cities.
Had the entire urbanized area been annexed by cities during FY 1984-85, the
County would have experienced a net revenue loss in the range of $3.3 - $8.8
million annually, as shown in Table 1 (more detail is presented in Table 2).
TABLE 1
SUMMARY OF FISCAL IMPACT ON THE COUNTY OF SAN DIEGO CITIES' ANNEXATTON OF THE ENTIRE URBANIZED
UNINCORPORATED AREA
($ MILLIONS, FY 1984-85)
No Special District' Complete Special District 1
De tachmen ts Detachments
Reduction in County
Local Service Costs $57.12
66.5 Reduction in County Revenues
Net Fiscal Impact 48.8
- S57.12
61.0
-$3.3
-
1. lncludes the following types of special districts which receive an allocation of
the general property tu levy (1%): water and sewer agencies, SD. County
Flood Control District, fire protection districts, County Service Areas, and
community service districts.
2. Assumes that cities will take over responsibility for library service and
housing assistance now provided by the County.
The estimated net loaa to the County of $3.3 to $8.8 million per year should not be
viewed as a one-time setback. Everything eke being the same, this loss would be
incurred in subsequent years as well. Viewed in a relative sense, the County would
be better off by $3.3 - $8.8 million annually in perpetuity if no annexations of
urbanized property occurred.
To the extent that cities assume the service responsibilities of special districts in
newly annexed areas, the County would experience less of a revenue reduction.
The reasons for this relate to the master property tax exchange agreement
between the County and cities. Under the agreement, the County as well as the
annexing city receive a share of any detaching special district's property tax
revenue. Were cities to annex the entin urbanized unincorporated area with no
change in the existing service areas of special districts, the County's revenue
reduction would be $5.5 million higher ($66.5 vs. $61.0 million) than would be the
case if cities took over the services of special districts.
-a
The special districts listed in Table 3 receive over $9.3 million from the urbanized
unincorporated area. Cities would be allocated an estimated $3.8 million, or 41
percent of this revenue with the balance of $5.5 million or 59 percent accruing to
the County in the event the districts transfer service responsibilities to annexing
cities.
The estimated County cost reduction of $57.7 million per year assumes that cities
would take over the responsibility of all local services now provided by the
County, including library and housing assistance. This assumption is consistent
with the proposal to transfer from the County the responsibility for library service
and housing assistance within a number of cities at a combined annual cost of
$10.5 million, which is accounted for in the $57.7 million cost reduction presented
in Tables 1 and 2.
As shown in Table 2, County revenue sources that would undergo the largest
reductions are the property tax ($8.4 - $13.9 million), the sales tax ($12.2 millionl,
revenue sharing ($11.4 million), state and federal grants for local services ($6.1
million), planning and engineering fees ($5.0 million), CDBG funding ($4.1 million),
and licenses and permits ($3.5 million).
The actual reduction in County property tax revenue attributable to annexations
varies by individual city. Under terms of the master agreement, the annexing city
receives a specified percentage of the property tax revenue that the County
receives from the property being annexed. This percentage ranges from a low of
23 percent for San Marcos to a high of 53 percent for Oceanside and Coronado.
Of the cities that are likely to extend their boundaries in the future, the median
percentage is 41 percent, which is used for purposes of estimating the County's
property tax loss in Table 2. No attempt was made to estimate the property tax
loss that would be associated with each city's annexation activity.
43
-.
. TABLE 3
Special District
1984-85 PROPERTY TAX REVENUEi
OF SELECTED SPECIAL DISTRICTS
Total2
S.D. County Flood Control 1,680,000 Water Agencies 6,3 06,000
Sewer Agencies 547,000 Fire Protection 8,423,000
County Service Areas 988,000 Community Service 48,000
$ 17,992,000
Estimated Taxes Collected From:3 Incorporated Unincorporated Area
Area Urban Rural
722,000 67 1,000 287,000
2,817,000 2,442,000 1,047,000
596,000 5,479,000 2,348,000
-0- 692,000 296,000
-0- 34.000 14.000
506,000 29,000 12,000
$4,641,000 $9,347,000 $4,004,000
1. Excludes hospital, cemetery, mosquito abatement, resource conservation, and
light maintenance districts.
2. Source: County Auditor & Controller
3. Estimated by SANDAG
Impact of Incorporations
In general, the formation of new cities imposes a greater financial loss on the
County than annexations by cities. The estimated costfrevenue effects that would
have resulted from incorporation of the entire urbanized area during FY 1984-85
are summarized in Table 4 (see details in Table 5).
TABLE 4
SUMMARY OF FISCAL IMPACT ON THE COUNTY OF SAN DIEGO
SNCORPORATION OF THE ENTIRE URBANIZED UNINCORPORATED AREA
($ MILLIONS)
FY 1984-85
$57.7 Reduction in County Local Service Costs
Reduction in County Revenuer
Net Fiscal Impact
77.5
-519.8
-
Relative to annexations, new city formations impact the County differently with
respect to three revenue sources: (1) a greater loss of property tax revenue, (2) a
greater reduction ia homeowners' property tax redemptions, and (31 less of a
reduction in revenues from vehicle code fines.
Under state law, a share of the property taxes apportioned to the County from the
area being incorporated is transferred to the new city. ?his share is determined
by multiplying the cost of services being transferred by the ratio of total property
taxes received by the County to all revenue receival by the County for general
purposes during the previous fiscal year. During FY 1983-84, the County Auditor
determined that the ratio was 0.388. Therefore, had all of the urbanized unineor-
porated area incorporated during 1984-85, property tax revenue of $22.4 million
($57.7 million times 0.388) would have been truuferred from the County to the
. aewly incorporated area. Unlike aanexations, the County would receive no
property tax revenue from detaching special districts; all of it would accrue to the
newly incorporated area.
kr addition, County revenues from state-bvented homeowners' property tax
redemptions would drop in proportion to the decrease in County property tax
revenue bared on the state's allocation formula. ?he estimated decrease in this
revenue source would be about $850,000 annually, or about 14 percent of total
revenues from this source. Under the annexation sceaario, the loss was estimated
at $500,000.
The County presently collects 100 percent of the revenue derived from vehicle
code citations issued within the unincorporated area and about 10 percent of
4 W d < 8 a
I Id
h
M
*% revenue from citations issued in the incorporated area.' According to state law,
newly incorporated cities are to receive 75 percent of this revenue source with 25
percent going to county government, unless a different percentage is negotiated
by them. Under a 75/25 percentage split, the County of San Diego would forego
about 51.7 million in vehicle code fines attributable to the urbanized unincorpo-
rated area, if the area incorporated. The reduction was estimated at $2 million
under the annexation scenario.
cms
h general, jurisdictional changes that have negative fiscal impacts on the County
will most likely translate to fiscal benefits for cities. ViFtually all of the County's
revenue reductions attributable to amexations and new incorporations will be
transferred to exirtiag and nevu cities, la addition, annexing cities will receive
additional property tax revenue from detaching special districts. Furthermore,
local service costs per capita are significantly lower in the incorporated area that
in the urbanized unincorporated area. For every dollar saved by the County and
special districts as the result of their service responsibilities being reduced, cities
should be able to provide the same level of service at a lower cost or provide a
higher level of service at the same cost.
The above conclusions, however, need to be qualified in two important respects.
First, no attempt waa made in this study to assess the impact of annexations on
individual cities. The type of development and land use mix within the spheres of
influence of some cities might have major negative fiscal consequences when
these areas are annexed. Second, the fiscal impact on cities of specific annex-
ations can have widely varying effects depending on the circumstances of each
case.
I. The percentage varies by city.
~"JNTY OF SAN DIEGO, CALII 'RNIA
Policy
,, Number
1-55
Subject
Government Structure Pol i cy
Page
1 of 5
Purpose
The County of San Oiego supports the concept that urbanizing areas should attain
municipal status through annexation or incorporation. However, there may be come unique territories within the unincorporated area that should remain unincorporated due to their special regional significance or their role in retaining the financial or operational i ntegri ty of the County. Each regi onal ly si gni f icant reorgani zati on proposal will be reviewed by the County on its own merits under the guidance of this policy.
Background
There are three general categories of local government services:
1.
2.
3.
Regional services are provided by the County 'at a standard level to a1 1 County residents and properties. Regional services include pub1 i c health, we1 fare and social services programs, the criminal justice system, property assessment, tax col 1 ec ti on, and many others.
Basic services are available Countywide, but are provided by cities within their
boundaries and by the County in unincorporated areas. These basic services incl ude 1 aw enforcement, road maintenance, animal control , 1 and use pl anning, zoning and building inspection, and others. Although service levels differ among jurisdictions, all cities and the County provide at least a basic level of these services.
Extended services are additional services beyond the basic service level. An extended service may either be a non-basic type of service (e .g., emergency medical service) or a higher service level (e.g., additional police protection).
Extended services are provided by cities and by special districts, both dependent (governed by the Board of Supervisors) and independent (governed by an independently elected body). The County generally does not provide extended services out of general tax revenues, but can administer dependent taxing districts to support extended services. The cost of providing extended services
should be fully borne by the benefiting property owners or residents, not by the
general County taxpayers.
While counties provide basic services to unincorporated communities, the major role of county government is the provision of regional services. When annexations and
incorporations occur, only a mi nor portion of the County's service responsi bil i ties are re1 ieved; regional services and their associated costs are unaffected. There- fore, it appears appropriate for the County to carefully consider the financial impact of jurisdictional changes to insure that its ability to deliver regional services is not impaired.
BOARD OF SUPERVISORS POLICY
Subject Policy Page Number
Government Structure Pol i cy 1 1-55 I 2 of 5
Traditionally , city governments have been formed or have expanded their boundaries
to encompass urbanizing areas. Cities have a wide range of powers to provide basic and extended services and capital improvements within their incorporated juri sdic- tions and to finance those activities. Furthermore, a city provides a mechanism for local resolution of land use issues, prioritization of services, and establishinent of service levels. The County of $an Oiego recognizes this role of cities and general ly supports ci ty annexa ti ons and i ncorporati ons as descri bed in this pol i cy.
One of the primary motivations for the incorporation or annexation of an urbanizing
area is the attainment of increased types or levels of governinental services. Proponents frequently cite the need for sewer service or increased police protection
as the goal of the incorporation or annexation proposal.
that the cost of providing these extended services be borne by the benefiting
property owners or residents and not by the general taxpayers throughout the
County.
It appears appropriate
1.
1.
2.
3.
4.
11.
5.
General Pol icfes
The County wi 11 review regional ly signi ficant reorgani ration proposal that are
submitted to the San Dicgo Local Agency Formation Comission and provide
comments at the Local Agency Formation Comnission hearings on the consistency of proposals to this policy and other related County plans and policies.
As resources allow, the County may perform or partfcfpate In government
structure or service financing studies to faci 1 i tate pl anning or reorgani za-
tion to inake services more efficient. However, the County will not initiate
any Incorporation studi es or proposal s .
In implementing this policy, the County may encourage or discourage specific
reorganization proposals based on the land use planning, pattern of develop-
ment, and adopted spheres of influence so as to avoid premature annexations or
i ncorporati ons which would prejudice more favorable government structure
patterns in the longer run.
The County supports revenue a1 1 ocations that equitably ref1 ect the County' s regi onal servi ce retponsi bi 1 i ti es as we1 1 as the responsi bi 1 1 ties of ci ties , the County, and special districts for basic and extended services.
Annexation Policies
Annexation of developed or developing areas which am adjacent to cfties 1s
general ly encouraged when the fol 1 owl ng conditions are present:
I
0.
Subject
Governinen t Structure Pol i cy
r -" * C 3NTY OF SAN DJEGO, CALIk,??NIA
Policy Page Number
1-55 3 of 5
BOARD OF SUPERVISORS POLICY
6.
a.
b.
C.
d.
e.
f.
9.
For cities having an adopted sphere of influence, the territory is within the sphere of influence.
There is no natural geographical separation between an existing city and the unincorporated territory. z
The existing city can efficiently provide basic and extended services to
the annexing area at the present or higher level.
The size of the area being annexed is in scale with the existing city (i .e., the existing city is sufficiently larger than the annexation).
The community identity of the annexing area is compatible with the city.
Annexing will not be a detriment to a future incorporation that would
i ncl ude thi s territory.
Annexation will result in an equitable distribution of the revenues.
Master Property Tax Agreement provides the basis for distribution of property tax revenues, and State law provides the basis for distribut
of subventions. Benefiting residents and property owners should fund
new or extended service which results from the annexation.
The
on
any
When any tentative map, tentative parcel map, or request for major use permit
is submitted to the County which is adjacent to a city limit and meets the criteria below, the approving authority shall determine whether to impose the following condition in the Resolution of Approval for the Tentative Map, the
Notice of Approval for the Tentative Parcel Map or the Conditions of Approval
for a Major Use Permit: "This map/pennit shall not be finalized/vested until this site is annexed to the City of , unless the application for annexation is denied by the Local Agency kormation Commission or by the
conducting authority."
The approving authority shall consider re1 evant planning considerations in
making the determination on whether to impose the condition above. Develop-
ment proposal s wi 11 general ly be made contingent on appl icati on for annexati on when a site is adjacent to a city, when annexation is encouraged under Policy #5 above, when the County cannot efficiently provide an adequate level of services to the project, and when all the following factors exist:
a. the site is within the city's sphere of fnfluence if the city has an
adopted sphere, or the adjacent city has preplanned or prezoned the site if a sphere of influence has not yet been established; or the site is an
'Ii sl and" substanti a1 ly surrounded by a city,
c
A -
C NTY OF SAN DIEGO, CALIF,RNIA
BOARD OF SUPERVISORS POLICY
Subject Policy Page
Government Structure Pol i cy 1 1-55 I 4 of 5
7.
8.
9.
111.
10.
b. a mutually acceptable agreement has been established for the distribution of citylcounty tax revenues; and
c. the site could efficiently receive all basic and some extended services
from the city.
There may be some territories in the unincorporated area that should remain
uni ncorporated due to their speci a1 signi fi cance to a1 1 resi dents throughout
the County. The regional significance may be due to the nature of the land use, the sensitivity of an environmental resource, or an adverse impact on the financial or operational integrity of the County or other agency if the area attained municipal status. As part of the casetby-case review of regionally significant annexati on proposal s, staff wi 11 consider the regi onal needs in
addition to the reasons for the proposed annexation and will make a decision
on the County's position based on a balancing of the relative merits of the regional and local needs.
Spheres of influence which are adopted.by the San Diego Local Agency Formation Commission pursuant to Government Code Section 54774 are an effective plan for annexations. San Diego County encourages the Local Agency Formati on Comni s- $ion to complete the spheres of influence program within San Diego County and to keep the spheres updated.
San Diego County will use adopted spheres of influence in the following ways:
a. The County General Plan shall recognize adopted spheres of influence.
b. The County will provide advance notice of all private planning proposals to each city within its adopted sphere of influence. Specifically, these
proposals include General Plan Amendments, Specific Plans, Tentative Maps, Tentative Parcel Maps, Major Use Permits, and 2erones. The notices will be sent in sufficient time to allow the city to provide input. The
comments of the affected city shall be considered and when feasible,
incorporated into the staff anaysis.
IncorDoration Policv
Generally the County supports the principle of incorporation when the follow- i ng condi ti ons are present:
a. Incorporation is fiscally viable without raising taxes or benefit fees to
maintain the current level of basic services.
b. Incorporation would increase the efffciency of service provision.
c
CI, .NTY OF SAN DIEGO, CALIF lNlA
BOARD OF SUPERVISORS POLICY
Policy Page Number Subject
Government Structure Policy I 1-55 I 5 of 5
11.
c . Incorporation wi 11 result in an equi tab1 e distribution of revenues to reflect service responsibilities and the impact on operations of all agencies acqui ri ng and re1 i nqui shi ng service responsi bi 1 i ties.
d. An incorporation proposal should include all territory within a logical
service ared sharing a community identity. City boundaries should be
based on geographical features wherever possible.
Areas which are sparsely developed or developed in a rural or agricultural setting and lack a strong economic base will be discouraged from pursuit of incorporation. However, communi ties with d strong identity and geographic cohesiveness will be encouraged to consider eventual incorporation in long- range planning and in analyses of government structure alternatives.
Related Board Policy: 8-45
Resoonsibl e Deuartments
1.
2. Chief Administrative Office
Oepartment of Planning and Land ilse
Sunset Date
This policy will be reviewed for continuance by 1-1-88.
References B/S Action 5-30-74 (9) B/S Action 12-8-82 (8) *