RPVCCA_SR_2010_10_19_07_Reso_Supporting_Prop_22CITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
HONORABLE MAYOR &MEMBERS OF CITY COUNCIL
CAROLYNN PETRU,DEPUTY CITY MANAGE~
OCTOBER 19,2010
RESOLUTION SUPPORTING PROPOSITION 22-THE
LOCAL TAXPAYER,PUBLIC SAFETY AND
TRANSPORTATION ACT OF 2010
REVIEWED BY:CAROLYN LEHR,CITY MANAGER 0.9--.
Project Manager:Sara Singer,Senior Administrative Analyst ~
RECOMMENDATION
ADOPT A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES IN SUPPORT OF PROPOSITION 22 THE LOCAL TAXPAYER,PUBLIC
SAFETY AND TRANSPORTATION ACT OF 2010.
BACKGROUND AND DISCUSSION
In November 2004,California voters overwhelmingly passed Proposition 1A with 84
percent of votes cast in support of this measure.Proposition 1A was intended to protect
revenues collected by cities,counties,and special districts from being transferred to the
State of California for statewide use.The measure included a provision (beginning in
2006)enabling the State to suspend the protections of Proposition 1A if the Governor
declares a fiscal necessity and two-thirds of the California State Legislature approves the
suspension.While the State subsequently exercised the option to "borrow"local
government property taxes funds per the provisions of Proposition 1A,local government
revenues continue to be at risk.
Over the years,California voters have passed separate ballot measures to dedicate local
funding sources to essential local services and to prevent the State from shifting or raiding
local government,transit and transportation funds.Despite the safeguards of Proposition
1A and other measures,in 2009-10,the State passed a budget that borrowed and
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RESOLUTION SUPPORTING PROPOSITION 22-THE LOCAL TAXPAYER,PUBLIC
SAFETY AND TRANSPORTATION ACT OF 2010
October 19,2010
Page 2
redirected approximately $5 billion in city,county,transit,redevelopment and special district
funds on a statewide basis.
Based on the repeated "takes"of local government revenue by the State of California,there
is cause for significant concern that the State will take billions more in local government
funding in future years unless additional safeguards are implemented.In Rancho Palos
Verdes,the largest single threat to our city's financial stability has been adverse action by
the State of California.Without question,the State's continuing efforts to borrow and
redirect traditional local government funding has jeopardized local government services on
a statewide basis.
Based on these continuing concerns,a broad coalition has been developed by the League
of California Cities to qualify Proposition 22 for the November 2,2010 statewide ballot.As
described in more detail in the attached Questions and Answers (see Attachment A)
prepared by the coalition,Proposition 22,the Local Taxpayer,Public Safety and
Transportation Protection Act,would:
•Prohibit the State from taking,borrowing or redirecting local taxpayer funds
dedicated to public safety,emergency response and other vital local government
services.Prop 22 would close loopholes to prevent taking local taxpayer funds
currently dedicated to cities,counties,and special districts.It would also revoke the
State's authority to borrow local government property tax funds.
•Protect vital,dedicated transportation and public transit funds from State raids.
Prop 22 would prohibit the State from redirecting,borrowing or taking the gasoline
excise tax (HUTA)allocated to cities and counties for local street and road
maintenance and improvements.Prop 22 also prohibits the State from taking or
redirecting public transportation account revenues dedicated to public transit.
•Protect local taxpayers by keeping more of our local tax dollars local where there's
more accountability to voters,and by ensuring once and for all that our gas taxes go
to fund road improvements.Prop 22 also reduces pressure for local tax and fee
increases that become necessary when the State redirects local funds.
The Official Title and Summary of Proposition 22 (see Attachment B)prepared by the
Attorney General has been included in the attachments of this report.
The State budget appears to rely on the receipt of billions of dollars in federal assistance
which is far from certain.As a result,the State budget will remain only very tenuously
balanced,and there is little doubt that the $19 billion dollar deficit that has loomed over the
State budget will resurface shortly.
Based on the past practice of the State to redirect local government funding,staff has
prepared the attached Resolution (see Attachment C)supporting the passage of
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RESOLUTION SUPPORTING PROPOSITION 22-THE LOCAL TAXPAYER,PUBLIC
SAFETY AND TRANSPORTATION ACT OF 2010
October 19,2010
Page 3
Proposition 22 for Council review and recommended adoption.
FISCAL IMPACT
The exact fiscal impact of this measure is unknown;however,if Proposition 22 fails,and
the state's budget continues to remain volatile,then the state could likely raid local funds
again.
Attachments:
Attachment A -Questions and Answers Concerning Proposition 22
Attachment B -Official Title and Summary of Proposition 22
Attachment C -Resolution No.2010-XX
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ATTACHMENT A
Questions &Answers
PROTECT LOCAL SERVICES.STOP STATE RAJOS!
www.savelocalservices.com
WHAT IS PROP.22 AND WHAT WOULD IT DO?
Prop.22,the Local Taxpayer,Public Safety and Transportation Protection Act is a proposed constitutional amendment on
California's November 2010 statewide ballot.The initiative would stop the State from raiding or borrowing funding used for
local public safety,transportation,transit and other essential local government services.Specifically,Prop.22 would:
./Prohibit the State from taking,borrowing or redirecting local taxpayer funds dedicated to public safety,
emergency response and other vital local government services.Prop.22 would close loopholes to prevent taking
funds currently dedicated to cities,counties,special districts and redevelopment agencies.It would also end the State's
fiscally irresponsible practice of borrOWing local government property tax funds .
./Protect vital,dedicated transportation and public transit funds from State raids.Prop.22 would prohibit the State
from redirecting,borrowing or taking the gasoline excise tax (HUTA)allocated to cities and counties for local street and
road maintenance and improvements.Prop.22 also prohibits the State from taking or redirecting Public Transportation
Account (PTA)revenues dedicated to public transit.
./Protect local taxpayers by keeping more of our local tax dollars local where there's more accountability to voters,and
by ensuring once and for all that our gas taxes go to fund road improvements.Prop.22 also reduces pressure for local
tax and fee increases that become necessary when the State redirects local funds.
WHY IS PROP.22 NEEDED?
The State has continued its irresponsible practice of taking and borrowing local taxpayer dollars and dedicated
transportation funds.The 2009/10 state budget borrowed and took approximately $5 billion in city,county,transit.
redevelopment and special district funds despite the fact that voters have overwhelmingly passed ballot measures to keep
local funding at the local level to provide essential local services.These raids and previous,ongoing state raids and
borrowing jeopardize the services Californians need most,including police,fire and emergency 911 services;local
economic development and redevelopment;mass transit like buses and commuter rail;and transportation improvements
like road repairs and congestion relief.We need to pass this measure to protect these vital local services from State raids
and borrowing.
ISN'T FUNDING FOR LOCAL GOVERNMENT AND TRANSPORTATION ALREADY PROTECTED
FROM STATE RAIDS?
California voters have overwhelmingly passed separate measures to prevent the State from raiding local government and
transportation funds.Even so,each and every year the State attempts to take or borrow local government,transportation
and transit funding using loopholes,or illegal funding diversions that have only been stopped after expensive and lengthy
court battles.In the 2009/10 fiscal year alone,the Legislature:
•Borrowed approximately $2 billion in property taxes from local governments,despite no clear path to repay these
funds;took $2.05 billion in local redevelopment funds;and shifted nearly $1 billion in transit funding away from
local transit agencies.The courts have since ruled the transit shift unconstitutional.Finally,the so-called "gas tax swap"
in the 2010/2011 budget could result in transit losing more than $600 million annually.
Prop.22 would close loopholes in current law that the legislature has exploited to take or divert local funds.And it would
tighten sections of the law to prevent illegal State funding raids of local government and transportation funds before they
happen.
Paid for by Yes on 22/Californians to Protect Local Taxpayers and Vital Services,a coalition of taxpayers,public safety,local government,
transportation,business and labor,with major funding from the League of California Cities (non-public funds and CitiPAC)and the California Alliance
for Jobs Rebuild California Committee,1121 L Street,#803 -Sacramento,CA 95814
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ATTACHMENT A
WHY DOES PROP.22 PREVENT THE STATE FROM BORROWING LOCAL GOVERNMENT AND
TRANSPORTATION FUNDS?
The local government revenue protection measure approved by voters in 2004 (Prop 1A)and the transportation revenue
protection measure approved by voters in 2006 (Prop 1A)included provisions that allow the State to borrow these funds
during fiscal emergencies.However,after several bUdget cycles it is clear that these borrowing provisions are not only bad
for local governments and transportation services,but fiscally irresponsible for the State.Borrowing these dedicated funds
only plunges our state deeper into debt because the funds must to be repaid,with interest,within three years.
The borrowing provisions were meant to provide an outlet in short-term budget emergencies,but instead are being used to
paper over structural budget problems.For example,the State has no clear way to pay back the $2 billion plus interest in
local property taxes that the State borrowed as part of the 2009/10 State budget,yet lawmakers borrowed these funds
anyway.
What's more,because the State has the authority to borrow local government and transportation funds,it creates mass
uncertainty for cities and counties who need to plan and pass their local budgets,and for transportation and transit planners
who aren't sure if they can rely on these revenues in any given year.
HOW DOES PROP.22 IMPACT THE RECENT GAS TAX "SWAP"?
Prop.22 will strengthen constitutional protections for the new amount of gasoline tax.At a minimum,the measure will:
•Prohibit the Legislature from diverting,borrowing or using the new increase in gasoline tax for non-transportation
purposes.It also includes a prohibition on using the county/city share of HUTA to payoff state bond indebtedness.
•Strengthen protections for Public Transportation Account (PTA)funds which are dedicated to public transit,inclUding
funds from the existing sales tax on diesel fuel (which was not eliminated),and funds from the slight increase to the
sales and use tax on diesel.Together,these diesel tax funds amount to $430 million annually for local transit and
intercity rail.The measure protects these and other PTA revenues by:
o Prohibiting the Legislature from diverting,borrowing,appropriating or otherwise using these and other PTA
revenues for anything other than bona fide transportation planning and mass transportation purposes.
o Prop.22 also prohibits the Legislature from diverting Public Transportation Account revenues to pay for
expenses of the State's General Fund.
DOES PROP.22 INCREASE OR DECREASE REVENUES FOR LOCAL GOVERNMENTS OR FOR
TRANSPORTATION AND TRANSIT?
Prop.22 does not increase or decrease the existing revenues that are dedicated to local government,transportation and
transit funds.It simply prevents the State from borrowing or raiding existing local government,transportation and transit
revenues that voters have dedicated to these services.
WON'T PROP.22 MAKE OUR STATE'S BUDGET SYSTEM EVEN WORSE?
First,these are revenues that have historically been dedicated to cities,counties and special districts to fund local
government services,or to transportation and transit.It's fiscally irresponsible for State Government to raid funds from local
governments.
Second,it's important to remember that these are funds that voters have ALREADY dedicated to local govemment,
transportation and transit services.Prop.22 does not dedicate any NEW funding for these services,but instead ensures
that the will of voters is upheld by protecting local government and transportation funds from further State raids and
borrowing.
This reform is fiscally responsible and a key step in long-term reform for California.The State has gotten itself into this deep
fiscal mess in large part because lawmakers have relied on bUdget gimmicks like tapping into voter-protected funds and
borrowing which only pushes our problems into the future.
Paid for by Yes on 22/Californians to Protect Local Taxpayers and Vital Services,a coalition of taxpayers,public safety,local government,
transportation,business and labor,with major funding from the League of California Cities (non-public funds and CitiPAC)and the California Alliance
for Jobs Rebuild California Committee,1121 L Street,#803 -Sacramento,CA 95814
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ATTACHMENT A
HOW DOES PROP.22 FIT INTO THE NEED FOR BROAD REFORM OF STATE GOVERNMENT IN
CALIFORNIA?
Prop.22 is a necessary and responsible first step toward fiscal reform in California.Virtually everyone agrees that State
reforms must include the restoration of more local control over local tax dollars,and moving services closer to the people at
the local level.This measure ensures local control,predictability,and accountability for local tax dollars that are used to
provide the most essential local services.
WILL PROP.22 IMPACT FUNDING FOR PUBLIC SCHOOLS,HEAL THCARE OR OTHER SERVICES?
No.Prop.22 does not take away funding from schools or any other service funded by the State because it only protects
EXISTING funds that are already dedicated to local services like pUblic safety and transportation.And this measure in no-
way alters Proposition 98,which guarantees funding levels for K-14 schools.
HOW WILL PROP.22 IMPACT TAXPAYERS?
Prop.22 provides further protections for eXisting revenues that voters have already dedicated to local government,
transportation and transit services.It does not increase taxes.In fact,Prop.22 protects taxpayers by keeping more of our
tax dollars local where they're more accountable.And Prop.22 decreases pressure for local tax and fee increases at the
local government level that become needed when the state takes local revenues and local governments are forced to look
for new revenues to protect vital services.
Paid for by Yes on 22/Californians to Protect Local Taxpayers and Vital Services,a coalition of taxpayers,public safety,local government,
transportation,business and labor,with major funding from the League of California Cities (non-public funds and CitiPAC)and the California Alliance
for Jobs Rebuild California Committee,1121 L Street,#803 -Sacramento,CA 95814
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ATTACHMENT B
PROPOSITION 22
PROHIBITS THE STATE FROM BORROWING OR
TAKING FUNDS USED FOR TRANSPORTATION,
REDEVELOPMENT,OR LOCAL GOVERNMENT
PROJECTS AND SERVICES.INITIATIVE
CONSTITUTIONAL AMENDMENT.
Official Title and Summary
Prepared by the Attorney General
PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS
USED FOR TRANSPORTATION,REDEVELOPMENT,OR LOCAL
GOVERNMENT PROJECTS AND SERVICES.INITIATIVE
CONSTITUTIONAL AMENDMENT.
•Prohibits the State,even during a period of severe fiscal hardship,from delaying
the distribution of tax revenues for transportation,redevelopment,or local
government projects and services.
Summary of Legislative Analyst's Estimate of Net State and Local Government
Fiscal Impact:
Due to restrictions on state 'authority over fuel and property taxes,the state would have to
take alternative actions-probably in the range of $1 billion to several billion dollars
annually.This would result in both:
•Reductions in General Fund program spending and/or increases in state revenues
of those amounts.
•Comparable increases in funding for state and local transportation programs and
local redevelopment.
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ATTACHMENT C
RESOLUTION NO.2010-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO
PALOS VERDES IN SUPPORT OF PROPOSITION 22 THE LOCAL
TAXPAYER,PUBLIC SAFETY AND TRANSPORTATION PROTECTION
ACT OF 2010.
WHEREAS,California voters have repeatedly and overwhelmingly passed separate
ballot measures to stop State raids of local government funds,and to dedicate the taxes on
gasoline to fund local and state transportation improvement projects;and
WHEREAS,these local government funds are critical to provide the police and fire,
emergency response,parks,libraries,and other vital local services that residents rely upon
every day,and gas tax funds are vital to maintain and improve local streets and roads,to
make road safety improvements,relieve traffic congestion,and provide mass transit;and
WHEREAS,despite the fact that voters have repeatedly passed measures to
prevent the State from taking these revenues dedicated to funding local government
services and transportation improvement projects,the State Legislature has seized and
borrowed billions of dollars in local government and transportation funds in the past few
years;and
WHEREAS,this year's borrowing and raids of local government,redevelopment and
transit funds,as well as previous,ongoing raids of local government and transportation
funds have lead to severe consequences,such as layoffs of police,fire and paramedic first
responders,fire station closures,stalled economic development,healthcare cutbacks,
delays in road safety improvements,pUblic transit fare increases and cutbacks in public
transit services;and
WHEREAS,State politicians in Sacramento have continued to ignore the will of the
voters,and current law provides no penalties when state politicians take or borrow these
locally-dedicated funds;and
WHEREAS,a coalition of local government,transportation and transit advocates
filed a constitutional amendment with the California Attorney General,called the Local
Taxpayer,Public Safety,and Transportation Protection Act of 2010,which will be on the
November 2010 statewide ballot as Proposition 22;and
WHEREAS,approval of this ballot initiative would close loopholes and change the
constitution to further prevent State politicians in Sacramento from seizing,diverting,
shifting,borrowing,transferring,suspending or otherwise taking or interfering with tax
revenues dedicated to funding local government services,including redevelopment,or
dedicated to transportation improvement projects and mass transit.
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ATTACHMENT C
THEREFORE,BE IT RESOLVED that the City of Rancho Palos Verdes formally endorses
Proposition 22,the Local Taxpayer,Public Safety and Transportation Protection Act of
2010,a proposed constitutional amendment.
BE IT FURTHER RESOLVED that we hereby authorize the listing of the City of Rancho
Palos Verdes in support of Proposition 22,the Local Taxpayer,Public Safety and
Transportation Protection Act of 2010,and instruct staff to fax a copy of this resolution to
campaign offices at 916.442.3510.
PASSED,APPROVED,AND ADOPTED this 19th day of October 2010.
Mayor
ATTEST:
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )ss
CITY OF RANCHO PALOS VERDES )
I,Carla Morreale,City Clerk of the City of Rancho Palos Verdes,hereby certify that the
above Resolution No.201 O-XX was duly and regularly passed and adopted by the said City
Council following a roll call vote:
Ayes
Noes
Absent
at a regular meeting held on October 19,2010.
City Clerk
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