HomeMy WebLinkAbout12 PROPOSITION 1-A 09-07-04
A G END A REPORT
Agenda Item 12
Reviewed: £
City Manager
Finance Director ~
MEETING DATE:
SEPTEMBER 7, 2004
FROM:
HONORABLE MAYOR AND MEMBERS OF CITY COUNCil
WilLIAM A. HUSTON, CITY MANAGER ~
PROPOSITION I-A
TO:
SUBJECT:
RECOMMENDATION
That the City Council adopt Resolution No. 04-80 supporting Proposition I-A.
BACKGROUND
Proposition I-A is on the November 2, 2004 statewide ballot. It reflects the result of
negotiations involving the Governor, State legislature and local government regarding
constitutional protection of local government revenue.
FISCAL IMPACT
If Proposition I-A is passed, the City of Tustin will have approximately $2.0 million of
General Fund revenue and $1.2 million of Redevelopment Agency funds shifted to the State
over two fiscal years. Proposition I-A provides that the State cannot divert additional funds
from local government unless it repays to cities and counties Vehicle License Fee (VLF)
revenue diverted to the State in fiscal year 2003-04. For Tustin this amounts to
approximately $1.3 million. If the VLF revenue is repaid, Proposition I-A would allow the
State to "borrow" funds from local government twice within a ten-year period. The funds
must be repaid with interest within three years. A borrowing cannot occur unless any prior
amounts have been repaid with interest. The borrowing would occur by diversion of local
property tax revenue. The amount that could be borrowed is capped at 8% of total property
tax allocated to cities, counties and special districts. The formulas for distribution of sales
tax and property tax would not change.
DISCUSSION
Proposition I-A affords local government the strongest constitutional revenue protections
possible given the circumstances. From a business standpoint, losing $3.2 million in City
funds over two years to the State in exchange for constitutional protection of future revenue
makes sense. If Proposition I-A does pass, there will be a degree of certainly about local
government revenue that has been missing for many years. There is the risk the State
could borrow City funds in the future; but with careful financial planning, that risk can be
taken into account as the City prepares its annual budget and sets its reserve requirements.
RESOLUTION NO. 04-80
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, SUPPORTING PROPOSITION 1A
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, these ongoing shifts and raids by the state of local 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 of local resources has continued even during periods
when the state's budget has been overflowing with surpluses; and
WHEREAS, Proposition 1A 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
government funding; and
WHEREAS, by protecting local government funding, Prop 1A would protect local
public safety, healthcare and other essential local services; and
WHEREAS, Prop 1A will not raise taxes and, in fact, will help reduce pressure for
local fee and tax increases by limiting state raids of local government funding; and
WHEREAS, Prop 1A does not reduce funding for schools or any other state
program or service, and Prop 1A was carefully written to allow flexibility in the event of a
state budget emergency; and
WHEREAS, Prop 1A is supported by a bipartisan, diverse coalition including
Governor Schwarzenegger, Democrat and Republican legislative leaders, local
government officials, public safety representatives, health care, business, labor and
community leaders;
NOW, THEREFORE, BE IT RESOLVED BY THE Members of the City Council of
the City of Tustin that we hereby express strong support for Proposition 1A, the
statewide ballot initiative that will prevent the state from further taking local government
revenues; and
Resolution No. 04-80
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RESOLVED FURTHER, that we will send a copy of this resolution to Yes on 1A
- Californians to Protect Local Taxpayers and Public Safety, Fax: 916-442-3510 or
1121 L Street, #803, Sacramento, CA 95814
PASSED and ADOPTED at a regular meeting of the City Council of the City of
Tustin held on September 7,2004.
TONY KAWASHIMA,
Mayor
ATTEST:
PAMELA STOKER,
City Clerk
STATE OF CALIFORNIA)
COUNTY OF ORANGE) SS
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 04-80 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on the 7th day of
September, 2004 by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
PAMELA STOKER,
City Clerk
Resolution No. 04-80
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