sr-020910-1g~® City Council and
~~,y of Redevelopment Agency Report
Santa Monica"
City Council Meeting: February 9, 2010
Agenda Item: , `-~
To: Mayor and City Council
Chairperson and Redevelopment Agency
From: Rod Gould, City Manager
Subject: Adoption of Respective Resolution Endorsing the Local Taxpayer, Public
Safety and Transportation Protection Act of 2010, a Proposed
Constitutional Amendment for Potential Placement on California's
November 2010 Statewide Ballot.
Recommended Action
Staff recommends the City Council and Redevelopment Agency Board adopt respective
Resolution in support of the Local Taxpayers, Public Safety and Transportation
Protection Act proposed to be considered by the voters on the November 2010 ballot
(Attachment 1).
Executive Summary
A coalition of local government, transportation and transit advocates recently filed this
constitutional amendment with the California Attorney General's office for potential
placement on California's November 2010 statewide ballot. Approval of this ballot
initiative would close loopholes. and change the constitution to further prevent the State
from "raiding" tax revenues dedicated to funding local government, including local
essential services, redevelopment or funds dedicated to transportation improvement
projects and mass transit.
Background
Californians to Protect Local Taxpayers and Vital Services is a coalition of local
governments, transportation advocates, business, labor, public safety and others with
major funding from the League of California Cities (using non-public funds). This
coalition is working to place the Local Taxpayers, Public Safety and Transportation
Protection Act on the November 2010 ballot. The measure would amend various
sections of the California Constitution.
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The purpose of the measure, as found in the Initiative Text (Attachment 2), is to
"conclusively prohibit the State from seizing, diverting, shifting, borrowing, transferring,
suspending or otherwise taking or interfering with revenues that are dedicated to
funding services provided by local government or funds dedicated to transportation
improvement projects and services."
The ballot initiative would:
• Prohibit the state from taking, borrowing or redirecting local taxpayer funds
dedicated to public safety, emergency response and other vital local government
services (including redevelopment); and,
• Close loopholes to prevent the taking of local taxpayer funds currently dedicated to
cities, counties and special districts; and,
• Revoke the state's authority to borrow local government property tax funds or
divert local redevelopment funds; and,
• Prevent state borrowing, taking or redirecting of the state sales tax on gasoline
(Prop 42 funds) and Highway User Tax on gasoline (HUTA) funds that are
dedicated to transportation maintenance and improvements; and
• Prevent the state from redirecting or taking public transit funds; and
• Add additional constitutional protections to prevent the State from taking
redevelopment funds or shifting redevelopment funds to other state purposes.
Filing the measure with the Attorney General's office was the first step in a process of
qualifying a measure for the November 2010 ballot and securing voter approval.
Approximately 1 million signatures are needed to qualify for the November 2010 ballot.
The City Council is presented with an opportunity to support the attached Resolution.
Supporting the Resolution would be consistent with the Council-adopted policy to
protect local revenues. On September 14 2004, the City Council voted to support
Proposition 1A, a statewide measure that circumscribed the ability of the State to further
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borrow local government revenues. On September 26, 2006, the City Council adopted
a Resolution supporting Propositions 1A, 1 B, 1 C, 1 D, 1 E on the November 2006 Ballot.
The local government revenue protection measure in 2004 (Prop 1A) and the
transportation revenue protection measure in 2006 (Prop 1A) included provisions that
allow the State to borrow these funds during fiscal emergencies. However, after several
budget cycles, it has become apparent that these borrowing provisions are negatively
impacting local governments and transportation services and becoming a budgeting
mechanism for the State. Because the State has had the authority to borrow local
government and transportation funds, it has created uncertainty for local governments
to balance budgets.
Discussion
The State has regularly diverted local government revenues to the detriment of
essential local services. In FY 2009-10, the State is "borrowing" $3.1 million from the
City's General Fund and taking nearly $21 million from the Redevelopment Agency,
which is being challenged in court by the California Redevelopment Association. The
City is participating in a securitization program so there will be no service impact
resulting from the $3.1 million Prop 1A loan to the State. However, pending the
outcome of current litigation, the Santa Monica Redevelopment Agency may lose $21
million, which will affect the Agency's ability to implement the Council's priorities
adopted on June 9, 2009 and November 17. 2009. The current State budget eliminated
funding for the State Transit Assistance program which over the past five years has
granted the Big Blue Bus between $1.2 million and $5.5 million annually. City officials
have repeatedly made hard decisions to balance their budgets during State take-backs,
recessions or other economic downturns by cutting expenditures and/or raising
revenues. Local services will most certainly be adversely impacted further if the State
continues to find it easy to balance its own budget on the backs of local governments.
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Financial Impacts & Budget Actions
There would be no fiscal impacts associated with adopting the resolution, however, over
the long term the protections in the Proposition will offer greater stability for Santa
Monica revenues and reduce the likelihood of raids by the State to balance its budget.
Prepared by: Kathryn Vernez, Assistant to the City Manager for Community &
Government Relations
Approved
Forwarded to Council:
~--
Kathryn rnez,
Assistant to the City Manager
Community & Government Relations
Attachments:
1. Proposed Resolution-:
2. Initiative Text
/°
J_- e®--a.J ~-_.J
Rod Gould
City Manager
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Date: December t6, 2004
lnitiative 09-0064
The Attorney General of California has prepared the fallowing title and summary of the chief
purpose and points of the proposed measure:
PROHIBITS THE STATE FROM TAKING FUNDS USER FOR TRANSPORTATION
OR LOCAL GO''•'ERPIiv1ENT PROJECTS AND SERVICES. L\'ITIATIVE
CONSTLTUTIONAL AMENDMENT. Prohibits the State from shifting, taking, borrowing, or
restricting the use of tax revenues dedicated by law to fund local govemment services,
comrnuniry redevelopment projects, or transportation projects and services. Prohibits fhe State
from delaying the distribution of tax revenues far [hest purposes even when the Governor deems
it necessary due to a severe state fiscal hardship. Summary of estimate by Legislative Analyst
and Director of Finance of fiseat impact on state and local government: Significant constraints
on state authority over city, county, special district, and redevelopment agency fiords. As a
result, higher and more stable local resources, potentially affecting billions of dollars in some
years. Commensurate reductions in state resources, resulting in major decreases instate
spending and/or increases in state revenues. (09-0064.)
O g- 0 0 6 4
SECTION 1. Title.
This act shall be known and may be cited as the "Local Taxpayer, Public Safety, and
Transportation Protection Act of 1020."
SECTION 2. Findings and Declarations.
The people of the State of California find and declare that:
(a) In order to maintain local control over local taxpayer funds and protect vital services
like local fire protection and 9-1-1 emergency response, law enforcement, emergency room
care, public transit, and transportation improvements, California voters have repeatedly and
overwhelmingly voted to restrict state politicians in Sacramento from taking revenues
dedicated to funding local government services and dedicated to funding transportation
improvement projects and services.
(b) 8y taking these actions, voters have acknowledged the critical importance of
preventing State raids of revenues dedicated to funding vital local government services and
transportation improvement projects and services.
{c) Despite the fart that voters have repeatedly passed measures to prevent the State
from taking these revenues dedicated to funding local government services and transportation
improvement projects and services, state politicians in Sacramento have seized and borrowed
billions of dollars in local government and transportation funds.
{d) In recent years, state politicians in Sacramento have specifically:
(1) Borrowed billions of dollars in local property tax revenues tha# would otherwise be
used to fund local police, fire and paramedic response and other vital local services;
(2) Sought to take and borrow billions of dollars in gas tax revenues that voters have
dedicated to on-going transportatian projects and tried to use them for non-transportation
purposes;
(3) Taken local community redevelopment funds on numerous occasions and used them
for unrelated purposes;
{4} Taken billions of dollars from local public transit like bus, shuttle, light-rail and
regional commuter rail, and used these funds far unrelated state purposes.
(e) The continued raiding and borrowing of revenues ded'+cated to funding local
government services and dedicated to funding transportation improvement projects and
services can cause severe consequences, such as layoffs of police, fire and paramedic first
responders, fire station closures, healthcare cutbacks, delays in road safety improvements,
public transit fare increases and cutbacks in public transit services.
{f) 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 dedicated funds.
{g) It is hereby resolved, that with approval of this ballot initiative, state politicians in
Sacramento shall be prohibited from seizing, diverting, shifting, borrowing, transferring,
suspending or otherwise taking or interfering with tax revenues dedicated to funding local
government services or dedicated to transportation improvement projects and services.
SECTION 3. Statement of Purpose.
The purpose of this measure is to conclusively and completely prohibit state politicians
in Sacramento from seizing, diverting, shifting, borrowing, transferring, suspending, or
otherwise taking or interfering with revenues that are dedicated to funding services provided
by local government or funds dedicated to transportation improvement projects and services.
SECTION 4. Article XVII is added to the California Constitution, to read:
SECTION 1. The Legislature may not reallocate, transfer, borrow, appropriate, restrict
the use of, or otherwise use the proceeds of any tax imposed or levied 8y a local government
solely for the local government's purposes.
SEC. 2. On and after the effective date of the measure adding Lhis article, and
notwithstanding subparagraphs (B) and (C) of paragraph {1) of subdivision (a) of Section 25.5 of
Article XIII of this Constitution or any other law, the legislature may not suspend subparagraph
{A} of paragraph {1} of subdivision {a) of Section 25.5 of Article XIII. The Legislature may not
change the pro rata shares in which ad valorem property taxes are allocated among focal
agencies to transfer property taxes to a Ioca1 government when the Legislature or any state
agency mandates a new program or higher level of service on that local government.
SEC. 3. On and after the effective date of the measure adding this article, and
notwithstanding Section 15 of Article XI of this Constitution or any other law, the Legislature
may not change the allocation of revenues described in Section 15 of Article XI to reimburse a
city, county, or city and county when the legislature or any state agency mandates a new
program or higher level of service on that city, county, or city and county.
SEC. 4. On and after the effective date of the measure adding this article, and
notwithstanding Article XIX of this Constitution or any other law:
{a) Revenues from taxes imposed by the State on motor vehicle #uels for use in motor
vehicles upon public streets and highways, over and above the costs of collection and any
refunds authorized bylaw, shall be deposited into the Highway Users Tax Account (Section
2100 of the Streets and Highways Code} or its successor, which is hereby declared to be a trust
.fund, and shat! be used solely for the purposes identified in subdivisions {a) and (bj of Section 1
of Article XIX.
(b) The Legislature may, by atwo-thirds vote of the membership in each house, modify
the statutory allocations'sn effect on June 30, 2009 only in accordance with the procedures
specified in Section 3 of Article XIX. Any bill modifyingthe statutory allocations in effect on
June 30, 2009 must remain in its final form for at least 12 days prior to passage in either house
of the Legislature.
(c) Revenues from taxes described in subdivision (a) allocated to cities, counties, and.
areas of the State maybe used solely by the entity to which they are allocated, and solely for
the purposes described in Sections 1 and 4 of Article XIX; and Section 5 of Article XIX subject to
the requirements of subdivision (e). The Legislature may not take any action that permanently
or temporarily borrows, diverts, appropriates for unrelated purposes, or delays, defers,
suspends, or otherwise interrupts the payment, allocation, distribution, disbursal, or transfer of
revenues from taxes described in subdivision {a} to cities, counties, and areas of the State
pursuant to the procedures in effect on June 3Q 2609.
(d) If the Legislature reduces or repeals the taxes described in subdivision {a) and
adopts an alternative source of revenue to replace the moneys derived from those taxes, the
replacement revenue shalt be deposited and allocated in the same manner, and dedicated to
the same purposes, as the revenues being replaced.
{e}{1} Revenues allocated to any city or county pursuant to Section 3 of Article XIX for
the purposes specified in subdivision (a) of Section 1 of Article XIX shall not be used by the State
for any purpose, including, but not limited to, payment of principal and interest on voter-
approved bonds issued by the State. Up to 25 percent of the revenues allocated to any city or
county pursuant to Section 3 of Article XtX for the purposes specified in subdivision {a) of
Settion 1 of Article XIX maybe used by any city or county for the payment of principal and
interest onvoter-approved bonds issued by that city or county for such purposes.
(2) Up to 25 percent of the revenues allocated to the State pursuant to Settion 3 of
Article XIX for the purposes specified in subdivision (a} of Section 1 of Article XIX may be
pledged or used by the State, upon approval of the voters and appropriation bythe Legislature,
for the payment of principal and interest onvoter-approved bonds issued by the State for such
purposes on or after November 2, 2010.
SEC. S. On and after the effective date of the measure addingthis article, and
notwithstanding Section 1 of Article XIX A of this Constitution or any other law:
(a) All of the following shall be deposited no less than quarterly into the Public
Transportation Account {Section 99310 of the Public Utilities Code}, or its successor, which is
hereby declared to be a (rust fund:
(1}All revenues specified in paragraphs (1) through {3}, inclusive, of subdivision {a} of
Section 7102 of the Revenue and Taxation Code, as that section read on June I, 2001.
(2}All moneys in the Transportation Investment Fund that are allocated for public
transit and mass transportation pursuant to paragraph (A) of subdivision {c) of Section 1 of
Article XIX 8.
(b} Funds in the Public Transportation Account may only be used for transportation
planning and mass transportation purposes. The legislature may not take any action that
permanently or temporarily borrows, diverts, appropriates for unrelated purposes; or delays,
defers, suspends, or otherwise interrupts the quarterly deposit of the funds specified in
subdivision (a}into the Public Transportation Account. Funds in the Public Transportation
Account may not be loaned or otherwise transferred to the General Fund or any other fund or
account in the State Treasury.
(c) For the purposes of subparagraph (A) of paragraph (1} of subdivision.{ej,
"transportation planning" means only the purposes described in subdivisions (c}through {f),
inclusive, of Section 99315 of the Public Utilities Code, as that section read on July 30, 2009.
{d) For the purposes of this article and Article XIX B, "mass transportation," "public
transit," and "mass transit" have the same meaning as "public transportation." "Public
transportation" means:
(1)(A) Surface transportation service provided to the general public, complementary
parairansit service provided to persons with disabilities as required by 42 U.S.C. 12143, or
similar transportation provided to people with disabilities or the elderly; (B) operated by bus,
rail, ferry, or other conveyance on a fixed route, demand response, or otherwise regularly
available basis; (C) generally for which a fare is charged; and (D}provided by any transit district,
included transit district, municipal operator, included municipal operator, eligible municipal
operator, or transit development board, as those terms were defined in Article 1 of Chapter 4
of Part 11 of Division 10 of the Public Utilities Code on January 1, 2009, a joint powers authority
formed to provide mass transportation services, an agency described in subdivision {f) of
Section 15975 of the Government Code, as that section read on January 1, 2009, any recipient
of Funds under Sections 99260, 4926D.7, 99275, or subdivision (c) of Section 99400 of the Public
Utilities Code, as those sections read on January 1, 2009, or a consolidated agency as defined in
Section 132353.1 of the Public Utilities Code, as that section read on January 1, 2009.
{2) Surface transportation service provided by the Department of Transportation
pursuant to subdivision (a) of Section 99315 of the Public Utilities Code, as that section read on
July 30, 2009.
(3} Public transit capital improvement projects, including those identified in subdivision
(b) of Section 99315 of the Public Utilities Code, as that section read on July 30, 2009.
(e)(1) Revenues deposited into the Public Transportation Account pursuant to paragraph
(1} of subdivision (a) are hereby continuously appropriated to the Controller without regard to
fiscal years for allocation as follows:
(A} Fifty percent pursuant to subdivisions {aJ through {fJ, inclusive, of Section 99315 of
the Public Utilities Code, as that section read on July 34, 2009.
(B) Twenty-five percent pursuant to subdivision (b) of Section 99312 of the Public
Utilities Code, as that section read on July 30, 2009.
(C) Twenty-five percent pursuant to subdivision (c) of Section 99312 of the Public
Utilities Code, as that section read on July 30, 2009.
(2}Revenues deposited into the Public Transportation Account pursuant to paragraph
(2) of subdivision (a) are hereby continuously appropriated to the Controller without regard to
fiscal years for allocation as follows:
(A) Twenty-five percent pursuant to subdivision {b) of Section 99312 of the Public
Utilities Code, as that section read on July 30, 2009.
(B) Twenty-five percent pursuant to subdivision (cJ of Section 99312 of the Public
Utilities Code, as that section read on July 30, 2009.
{CJ Fifty percent for the purposes of subdivisions (a}and (b} of Section 99315 of the
Public Utilities Code, as that section read on July 30, 2009.
SEC. 6: On and aker the effective date of the measure adding this article, and
notwithstanding any other provision of this Constitution or any other law, the percentage of
the tax imposed pursuant to Section 7202 of the Revenue and Taxation Code allocated to Iota!
transportation funds shall not be reduced below the percentage that was transmitted to such
funds during the 2008 calendar year. Revenues allocated to local transportation funds shall be
transmitted in accordance with Section 7204 of the Revenue and Taxation Code and deposited
into local transportation funds in accordance with Section 29530 of the Government Code, as
Yhose sections read on June 30, 2009.
SEC. 7. (a) On and aker the effective date of the measure adding this article; and
notwithstanding subdivision (d) of Section 1 of Article XIX B of this Constitution or any other
law, all revenues that are collected during the fiscal year from taxes under the Sales and Use
Tax Law, or any successor to that law, upon the sale, storage, use, or other consumption in this
State of motor vehicle fuel, as defined in Section 7326 of the Revenue and Taxation Code on
June 30, 2009, shall be deposited quarterly into the Transportation Investment Fund
(subdivision (a) of Section 7104 of the Revenue and Taxation Code) or its successor, which is
hereby declared to be a trust fund. The Legislature may not take any action that permanently
or temporarily borrows, diverts, appropriates for unrelated purposes, or decays, defers,
suspends, or otherwise'snterrupts the quarterly deposit of these funds into the Transportation
Investment Fund. Funds in the Transportation Investment Fund may not be loaned or
otherwise transferred to the General Fund or any other fund or account in the State Treasury.
(bj (1} If the Legislature reduces or repeals the loxes described in subdivision (a} and
adopts an alternative source of revenue to replace the moneys derived from those taxes, the
replacement revenue shall be deposited and allocated in the same manner, and dedicated to
the same purposes, as the revenues being replaced.
(2} in addition to the requirements contained in subdivision {e) of Section 1 of Article XIX
8, any bill modifying the percentage shares set forth in subdivision (c} of Section 1 of Article XIX
B must remain in its final form for at least 12 days prior to passage in either house of the
legislature.
SEC. 8. (a}The Legislature may not require a community redevelopment agency (1} to
pay, remit, loan or othernise transfer, directly or indirectly, taxes on ad valorem real property
and tangible personal property allocated to the agency pursuant to Section 16 of Article XVI to
or for the benefit of the State, any agency of the State, or any jurisdiction; or (2} to use, restrict,
or assign a particular purpose for such taxes for the benefit of the State, any agency of the
State, or anyjurisdiction, other than (A} for making payments to affected taxing agencies
pursuant to Sections 33607.5 and 33607.7 of Health and Safety Code or similar statutes
requiring such payments, as those statutes read on January 1, 2008; or (Bj for the purpose of
increasing, improving, and preserving the supply of low and moderate income housing available
at affordable housing cost.
(b} "Jurisdiction" has the meaning specified in Section 95 of the Revenue and Taxation
Code, as that section read on July 1, 2009.
SEC. 9. {a} If any challenge to invalidate an action that violates Sections 4 through 8,
inclusive, of this article is successful either by way ofa final judgment, settlement, or resolution
by administrative or legislative action, there is hereby continuously appropriated from the
General Fund to the Controller, without regard to fiscal years, that amount of revenue
necessary to restore the fund or account from which the revenues were unlawfully taken or
diverted to its financial status had the unlawful action not been taken.
{b} If any challenge to invalidate an action that violates Sections 1 through 3, inclusive,
of this article is successful either by way of a final judgment, settlement, or resolution by
administrative or legislative action, there is hereby continuously appropriated from the General
Fund to the local government an amount of revenue equal to the amount of revenue unlawfully
taken or diverted.
(c}Interest calculated at the Pooled Money tnvestment Fund rate from the date or dates
the revenues were unlawfully taken or diverted shall accrue to the amounts required to be
restored pursuant to this section, Within thirty days from the date a challenge is successful, the
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Controller shat! make the transfer required by the continuous appropriation and issue a notice
to the parties that the transfer has been completed.
(d) It in any challenge brought pursuant to this section a restraining order or preliminary
injunction is issued, the plaintiffs or petitioners shall not be required to post a bond obligating
the plaintiffs or petitioners to indemnify the government defendants or the State of California
for any damage the restraining order or preliminary injunction may cause.
SECTION 5.
Section 16 of Article XVI of the Constitution requires that a specified portion of the taxes
levied upon the taxable property in a redevelopment project each year be allocated to the
redevelopment agency to repay indebtedness incurred for the purpose of eliminating blight
within the redevelopment project area. Section 16 of Article XVI prohibits the Legislature from
reallocating some or alE of that specified portion of the taxes to the State, an agency of the
State, or any other taxing jurisdiction, instead of to the redevelopment agency. The Legislature
has been illegally circumventing Section 16 of Article XVI in recent years by requiring
redevelopment agencies to transfer a portion of those taxes for purposes other than the
financing of redevelopment projects. A purpose of the amendments made by this measure is to
prohibit the Legislature from requiring, after the taxes have been allocated to a redevelopment
agency, that the redevelopment agency transfer some or all of those taxes to the State, an
agency of the State, or a jurisdiction; or use some or all of those taxes for the benefit of the
State, an agency of the State, or a jurisdiction.
SECTION 6. Continuous Appropriations.
The continuous appropriations provided for in this Act are intended to be
"appropriations made by law" within the meaning of Section 7 of Article XVI of the California
Constitution.
SECTION 7. Liberal Construction.
The provisions of this Act shall be liberally construed in order to effectuate its purposes.
SECTION 8. Conflicting Statutes.
Any statute enacted between October 21, 2009 and the effective date of this measure,
that would have been prohibited if this measure were in effect on the date the statute was
enacted, is hereby repealed.
SECTION 9. Conflicting Ballot Measures.
In the event that this measure and another measure or measures relating to the
direction or redirection of revenues dedicated to funding services provided by local
governments and/or transportation projects or services appear on the same statewide election
ballot, the provisions of the other measure or measures shal I be deemed to be in conflict with
this measure. In the event that this measure shall receive a greater number of affirmative
votes, the provisions of this measure shall prevail in their entirety, and the provisions of the
other measure or measures shall be null and void.
SECTION li). Severability.
It is the intentof the People that the provisions of this Act are severable and that if any
provision of this Act, or the application thereof to any person or circumstance, is held invalid
such invalidity shall not affect any other provision or application of this Act which can be given
effect without the invalid provision or application.
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Reference Resolution Nos.
10457 (CCS) and
518 (RAS).