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Home My WebLink AboutItem 8.3 Local Fiscal Reform CITY CLERK File # 0660-40 AGENDA STATEMENT CITY COUNCIL MEETING DATE: May 16, 2000 SUBJECT: Status Report on SB 1982 and SB 2000, Local Fiscal Reform Prepared by: Jason Behrmann, Management Assistant ATTACHMENTS: 1) Letter from the City of Pleasant Hill 2) SB 1982 Bill Text 3) SB 2000 Bill Text RECOMMENDATION: ~ Receive the Report FINANCIAL STATEMENT: None DESCRIPTION: In August 1999, the State of California Controller's Office released the SMART report. The SMART report proposed a series of measures to rectify the imbalance between state and local revenue support. The most damaging aspect of the SMART report was the recommendation to gradually replace the current "point of sale" sales tax distribution formula with a new formula based on population. Following the release of the report, Council directed Staff to send a letter to the Controller's Office opposing any sales tax redistribution. The City argued that it is appropriate for sales tax revenues to be distributed based on a point of sale basis because of the expenses involved in providing and maintaining the infrastructure for a commercial development i.e. more traffic signals, pavement repairs, police services etc. People travel from other jurisdictions to shop in Dublin and use the City's facilities and infrastructure. Therefore it is reasonable for the City to expect a greater proportion of sales tax revenues to pay for these additional expenses. There is no nexus for distributing sales tax revenues based on population. While the Controller's Office received many letters of opposition from cities throughout the state, the Controller continued to push to implement the report's recommendations. SB 1982 and SB 2000 were recently introduced in the State Senate with many of the proposals contained in the SMART report, including language to modify the distribution of future local sales taxes. In addition to these two Bills there have been many other reports, proposals and legislation intended to improve the state-local fiscal relationship. All of these diverse efforts has prompted the Legislature to create a conference committee to address issues relating to local government finance in a comprehensive H/cc-forms/agdastmt. doc COPIES TO: ITEM NO. fashion. The committee members have been charged with the task of sorting out all of the many proposals and ideas and creating one comprehensive package. The appointment of this committee convinced the author's of SB 1982 and SB 2000 to reduce the Bills to "intent" legislation. The Bills were stripped to intent language in order to be part of the conference committee discussion. While the Bills have no legal significance, they will be used to craft a comprehensive local finance proposal in the conference committee. On April 28, 2000, the City received a letter from the City of Pleasant Hill urging the City's opposition to the intent language contained in the two Bills (Attachment 1). The City of Pleasant Hill objected to language that stated that the intent of the Legislature was to "Modify the distribution of future local sales and use taxes to address land use concerns arising from the current distribution method." SB 1982 contained similar language. Fortunately, since the City received Pleasant Hill's request, the Bills have been further amended to remove the objectionable language. Attached are the current Bills as amended May 9, 2000 (Attachments 2 & 3). While the language referring to sales tax distribution has been removed, it is still unclear what recommendations will ultimately come out of the conference committee. Staff will continue to monitor any proposal that would modify the current method of sales tax distribution and provide updates to the Council as needed. RECOMMENDATION: Staff recommends that the Council receive the report. Date: To; From: RE: City of Pleasant Hill FAX TRANSMITTAL April 28, 2000 Don Blubaugh, Walnut Creek (943-5812) Ed James, Concord (798-0636) Herb Moniz, San Ramon (866-1436) Gerald Peeler, Livermore (373-5061) Rich Ambrose, Dublin (833-6651) Joseph Tanner, City Manager (fax: 671-5238) Sales Tax Distribution, Senator Rainey Cities Senate Bill No. 1982, Senate Bill No. 2000 "HOUSTON, WE HAVE A PROBLEM" As you may know both SB 1982 and SB 2000 ere scheduled before the Local Government Committee next Wednesday at 9:30 a.m. Pleasant Hill's lobbyist, Anthony Gonsalves, has the vote count as 3 in favor and 3 opposed to changing the sales tax distribution formula. Since we are sales tax cities, we obviously want the Bradley Burns Act to stay status quo. Senator Rainey's vote is not"in the bag"' according to our lobbyist and my personal conversation with Diane Longshere, Dick's Chief of Staff. The Senator wants the conference committee to deal with the issue. Of course, we want the bills just "dead," killed in Committee. You need to tell Senator Rainey before Wednesday at 9:30 a.m, that your position is to kill the bills and-not ali~ any intent language to pass on to a conference committee. The intent language is extremely damaging to us: .... Attached are the following: Amendments to SB 1982 and Staff report Amendments to SB 2000 and Staff report You also need to be keenly aware that Senator Rainey is not in favor of changing the distribution, but he has not stated a negative position on the intent language. This issue is too important not to act. 100 Gregory Lane - Pleasant Hill - California 94523-3323 - (925) 671-5270 ATTACHMENT 1 ~ SB 1982 Senate Bill - AMENDED Page 1 of 2 BILL NUMBER: SB 1982 AMENDED BILL TEXT AMENDED IN SENATE MAY 9, 2000 AMENDED IN SENATE APRIL 27, 2000 INTRODUCED BY Senasor Alpert FEBRUARY 25, 2000 An ac5 relating to local government finance. LEGISLATIVE COUNSEL'S DIGEST SB 1982, as amended, Alpert. Local government finance: reform. Existing law sets forth various authorizations, requirements, and limitations with respect to local government finance. This bill would make legislative findings and declarations with respect to the fiscal difficulties of local governments, and declare the intent of the LegislatBre to address local government issues involving, among other things, property tax revenue allocations, state-mandated local programs, and tho allocation cf !c~ ............ ~^~ ~'- revenues the consideration of all local government revenue sources ~n reforming the fiscal relationship between the state and local governments Vote: majority. Appropriation: no. State-mandated local program: no. Fiscal committee: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature hereby finds and declares all of the following: (a) As a result of the ongoing shift of properEy tax revenues from counties, cities, and special districts to Educational Revenue Augmentation Funds, local governments continue to face serious fiscal difficulties. (b) The fiscal health of local governments is critical to the economic well-being of the state as a whole. (c) It is th~ intent of the Legislature in enacting this ac5 to do all of the following: (1) Ease the fiscal burdens on local governments by requiring the state ~o provide for the paymen5 of the schools' fair share of propersy tax administrative costs. (2) Ensure the efficient delivery of public services to Californians by requiring the state to enter into a negotiated compact with any local government that ms responsible for implementing a state-mandated program. (3) Improve the coordination, quality, and delivery of public services to California residents by establishing a cabinet level position mn the office of the Governor that is responsible for local government issues and will create a productive partnership between local and state governmens. {4) Streamline the process for resolving financial disputes between local governments and the state by requiring the Commission on State Mandates to render a decision on a local reimbursement claim within 180 days of ~he date that claim is s.ubmitted. This streamlining will facilitate the smoother, more prompt deliver,, ~ services to California residents. http ://info. sen. ca.gov/pub/bill/sen/sb_ 1951-2.../sb_ 1982_bi11_20000509_amet ATTACHMENT 2 ~ SB 1982 Senate Bill - AMENDED Page 2 o£2 by ohanTin7 thc allcvation of futurg 7rc:.:th ir. ox!cz ta:: revenues. ......... ~_~ty ~.~ rovonuog to local agcnczcs, v:ill allow and (d) Include the consideration of all local government revenue sources, including sales taxes, in a meaningful discussion of the reform of the fiscal relationship between the state and local governments. http:/lin£o.sen.ca.gov/pub/bill/sen/sb_1951-2.../sb_1982_bill_20000509_amended_sen.htm 05/11/2000 ~. SB 2000 Senate Bill - AMENDED Page 1 of 1 BILL NUMBER: SB 2000 AMENDED BILL TEXT AMENDED IN SENATE MAY 9, 2000 AMENDED IN SENATE APRIL 27, 2000 INTRODUCED BY Senator Po!anco FEBRUARY 25, 2000 An act relating to local government. LEGISLATIVE COUNSEL'S DIGEST SB 2000, as amended, Polanco. Local government. Existing law provides local government with funds through various means, including revenue derived from local sales and use taxes and property taxes. This bill would declare the intent of the Legislature with respect to local government, including identifying stable and reliable revenue sources, delivering vital services, mitigating state-mandated local costs, recommending land use policies, considering all local revenue sources ~n reforming fiscal relationships , and improving the efficiency and effectiveness of government programs Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. It is the intent of the Legislature in enacting this act ~o do all of the following: (a) Identify a stable and reliable source of revenue for local governments that is not susceptible ~o diversion or preemption by the state. (b) Identify budgetary and auditing processes that will ensure the delivery of vital local government servmces and fully mitigate the expense of complying with state-mandated local programs. (c) Recommend local government land use policies that can promote long-term growth without jeopardizing local government finances. address land usc conccrns arising from ~ ........ + ~6~R,,~ (d) Include the consideration of all local government revenue sources, including sales taxes, in a meaningful discussion of the reform of the fiscal relationship between the state and local government s. (e) Improve the efficiency and effectiveness of government programs by establishing bilateral compacts between state and local governments to clarify the state/local relationship. ATTACHMENT 3 http://info.sen.ca, gov/pub/bill/sen/sb_ 1951-2.../sb_2000_bill_20000509_ame~