05 Staff Report - Protection of Local Government Revenues
•. I ' . DATE: TO: FROM: MEETING DATE: 09/20/94 ITEM NO. S COUNCIL AGENDA REPORT SEPTEMBER 13,2004 MAYOR AND TOWN COUNCIL DEBRA J. FIGONE, TOWN �
� SUBJECT: ADOPT RESOLUTION SUPPORTING PROPOSITI OF LOCAL GOVERNMENT REVENUES A: PROTECTION RECOMMENDATION: Adopt a resolution supporting Proposition 1A and authorizing
the campaign to list the Town ofLos Gatos as an official supporter in campaign materials (Attachment 1). BACKGROUND: Proposition 1A: Protection ofLocal Goverrunent Revenue is on the
November 2, 2004 ballot. The purpose OfPfOP lA is to protect local services from the continual taking afloeal taxes by the State goverrunent. Since 1981, the State has taken approximately
$15.5 million in local taxes from the Town cfLos Gatos. This revenue would have otherwise supported public safety services, library services, street and park maintenance, and other local
services. Prop lA has been placed on the ballot after months ofnegotiations between between representatives ofcities, counties, special districts, the Governor and the State Legislature
as part of the State budget deliberations. DISCUSSION: What Proposition lA Docs The official ballot language for Prop lA reads: "Ensures local property tax and sales tax revenues remain
with local government thereby safeguarding funding for public safety, health, libraries, parks, and other local services. Provisions PREPARED BY: PAMELA JACOBS ASSISTANT TOWN MANAGER
N:\MGR\PJacobs\Council Reports\9-20-04 Prop lA.wpd Reviewed by: __Assistant Town Manager Attorney __Clerk tC.... Finance __Community Development Revised:
9/10/04 3:12 pm Reformatted: 5/30/02
J, I PAGE 2 SUBJECT: ADOPT RESOLUTION SUPPORTING PROPOSITION IA: PROTECTIO OF LOCAL GOVERNMENT REVEN\JES (September 13, 2004) can only be suspended
if the Governor declares a fiscal necessity and two-thirds ofthe Legislature concurs." In addition to the restrictions noted in the ballot language, Prop lA: • Provides that the restriction
on future State takes is limited to the declaration by the Governor of a fiscal emergency, is limited to twice in a ten year period, and requires a two-third vote of the State Legislature.
Any local revenue taken would be capped at an amount not to exceed 8% of local property taxes and would need to be repaid, with interest, before another amount could be taken. • Requires
the State to reimburse local governments for the cost of programs and services it mandates cities, counties and special districts provide. If the State fails to provide reimbursement
to local governments for state-mandated local programs. the mandate must be suspended, except for specified employee rights and benefits mandated by the State. • Takes additional local
revenue for the next two fiscal years in return for the ongoing constitutional protection oflocal revenue. In Los Gatos, this two-year take is approximately $476,000 each year. Proposition
IA Replaces Need for Proposition 65 In February, 2004, the Town Council adopted a resolution supporting the Local Taxpayers and Public Safety Protection Act of2004, the purpose ofwhich
was to protect local government revenue from State takeaways. Earlier this year, a coalition of local government officials placed this proposition on the ballot (prop 65). A number ofLos
Gatos residents played a part in gathering over 1 million signatures to qualify this measure for the ballot. The qualifying ofProp 65 prompted the Govemorto initiate negotiations between
local and state representatives, which resulted in Prop 1A. Prop 1A is a stronger approach to protecting local tax doUars and the local services they support. All of the official official
proponents ofPfop 65 are now supporting Prop lA and opposing Prop 65, since only the proposition receiving the greatest support over 50% will be put in place. CQNCLUSION: To protect
local government from the continued redistribution of local revenue to the State, the League of California, California State Association of Counties, California Redevelopment Association,
California Special Districts Association and many others (see Attachment 2 for a partial list of supporters) are supporting Prop 1A. Since 1981, the State has taken approximately $15.5
million ofTownrevenue to fund State services. It is recorrunended that the Council adopt the resolution in support of Prop lA to prevent the further erosion oflocal revenue due to State
takes.
iI PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: ADOPT RESOLUTION SUPPORTING PROPOSITION IA: PROTECTION OF LOCAL GOVERNMENT REVENUES (September 13, 2004) ENVIRONMENTAL ASSESSMENT: Is not a
project defined under CEQA, and no further action is required. FISCAL IMPACT: It is anticipated that the adoption ofaresolution supporting Prop 1Awould not have anegative fiscal impact
on the Town or its residents. Prop lA does not raise taxes, reduce funding for schools or any other state programs or services, or increase funding to local government. IfProp IA is
approved, the Town will have constitutional protection that prevents any future taking of additional revenue beyond the two-year taking contained in the measure. The Town is utilizing
one-time funding from reserves to offset the two-year loss of revenue. IfProp IA failed, cities, counties and special districts would have 110 protection against future State revenue
takes. Attachments: 1. Resolution Supporting Proposition IA: Protection of Local Government Revenue 2. Proposition lA: Partial List of Supporters Distribution: Yes on IA Californians
to Protect Local Taxpayers and Public Safety; 1121 L Street, Suite 803, Sacramento, CA 95814
I\ RESOLUTION NO. RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS SUPPORTING PROPOSITION lA: PROTECTION OF LOCAL GOVERNMENT REVENUES WHEREAS, state government currently seizes
more than $5.2 billion annually in local property tax funds statewide from cities, counties and special districts, costing local governments more than $40 billion in lost revenues over
the past 12 years; and WHEREAS, state government has taken approximately $15.5 million from the Town aiLas Gatos since 1981; and WHEREAS,these ongoing shifts and raids by the state oflacal
property tax funds and other funding dedicated to local governments have seriously reduced resources available for local fIre and paramedic response, law enforcement, public health and
emergency medical care, roads, parks, libraries, transportation and other essential local services; and WHEREAS, these funding raids also add pressure for local governments to increase
fees and taxes to maintain basic local service levels; and WHEREAS, this drain oflocal resources has continued even during perIods when the state's budget has been overflowing with surpluses;
and WHEREAS, Proposition IA is a historic measure that will appear on the November 2004 statewide ballot that would limit the State's ability to take and use local govenunentftxnding;
and WHEREAS, by protecting local government funding, Prop lA would protect local public safety, healthcare and other essential local services; and WHEREAS, Prop I A will not raise taxes
and, in fact, will help reduce pressure for local fee and tax increases by limiting state raids oflocal goverrunent :funding; and WHEREAS, Prop IA does not reduce funding for schools
or any other state program or service, and Prop lA was carefully written to allow flexibility in the event of a state budget emergency; and ATTACHMENT 1
WHEREAS, Prop lA is supported by a bipartisan, diverse coalition including Governor Schwarzenegger, Democrat and Republican legislative leaders, local govermnent officials, public safety
representatives, healthcare, business, labor and community leaders; NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF LOS GATOS that we hereby express strong support
for Proposition 1A, the statewide ballot initiative that will prevent the state from further taking local govermnentrevenues; and RESOLVED FURTHER, that we authorize the Prop lA campaign
to list the Town 9fLos Gatos as an official supporter of Prop IA in campaign materi<;\ls. PASSED AND ADOPTED at a regular meeting of the Town Council ofthe Town ofLos Gatos, California,
held on the day of , 2004 by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAlN: SIGNED:MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF
LOS GATOS LOS GATOS, CALIFORNIA I N:\MGR\AdminWorkFiles\cnclrpts\Proposition IA resolution.wpd 2
, PROPOSITION lA Partial list of supporters Fire and Emergency Services California Fire Chiefs Association California Professional Firefighters California State Firefighters' Association
Law Enforcement California Police Chiefs Association California State Sheriffs' Association Peace Officers Research Association of California Statewide Local Government Orgs. California
Special Districts Association California State Association of Counties League of California Cities California Association of Sanitation Agencies California Public Parking Association
California Redevelopment Association Regional Council of Counties Water Association of California Water Agencies Elsinore Valley Municipal Water District Olivenhain Municipal
Water District Rancho California Water District Health Care Organizations California Association of Public Hospitals and Health Systems Health Officers Association of California Senior
Groups California Senior Action Network Business Organizations California Business Properties Association California Retailers Association N:\MGR\AdminWorkFiles\cncIrpts\PropositionlASupporters....-v
pd • ATTACHMENT 2