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HomeMy WebLinkAbout10/22/1996, 7 - OPPOSITION TO PROPOSITION 218 council 9b j agenba PEpoat It.Numb� CITY O F SAN LUIS O B I S P O FROM: John Dunn City Administrative Offic r Bill Statler, Director of Finance SUBJECT: OPPOSITION TO PROPOSITION 218 CAO RECONEVIENDATION Adopt a resolution opposing Proposition 218 on the November 5, 1996 ballot. DISCUSSION As discussed in greater detail below, if Proposition 218 passes it will bring about major changes in the way that local governments finance their operations. After analyzing the impacts of Proposition 218 on local agencies throughout California in general, and on the City of San Luis Obispo specifically, we recommend that the Council adopt the attached resolution opposing the passage of Proposition 218. This agenda report briefly answers the following questions about the impacts of Proposition 218 if it is approved by the voters: ■ What changes will Proposition 218 bring about if it passes? ■ When will these changes happen? ■ How will this impact the State of California? ■ How will this impact local governments throughout California? ■ How will this impact the City of San Luis Obispo? It should be noted that Proposition 218 is very complex and sweeping in its scope. At the same time, there are a number of ambiguities and uncertainties in the measure that will undoubtedly require a number of years in the court system to resolve. Accordingly, it is not possible to fully evaluate all of the impacts of Proposition 218 in a definitive way. This factor on its own -- introducing even further unknowns to an already unstable and difficult fiscal environment at the local level — is a major reason in itself for opposing Proposition 218. What changes will Proposition 218 bring about if it passes? If it is passes, Proposition 218 will radically change the way all California local governments finance their operations. It will do this by significantly changing existing procedures for approving taxes, fees and assessments, which account for over 85% of most local government revenues. While it will affect all cities, counties, school districts and special districts -- the levels of government closest to the people and most subject to local control -- it will not affect the fiscal operations of the State at all. 7- / Cotmcil Agenda Report- Opposition to Proposition 218 Page 2 How will it change taxes? It many ways, it will have a minimal affect on existing voter approval requirements for taxes for many local agencies in California. It will require majority voter approval for general taxes, and two-thirds voter approval for special taxes. These requirements are already in place for general law cities and counties. However, it will bring about major changes in the ability of local communities to govern themselves: ■ Loss of local control. California has a long tradition of local home rule -- relying on local communities to make decisions regarding their future rather than on the State. This has been most pronounced in the case of charter cities and counties, where they are able to established their own community groundrules -- based on voter-approved charters -- for governing themselves. Proposition 218 removes these local control provisions from the State's constitution. ■ Loss of ability to make timely decisions. In the face of natural disasters (like floods, fire and earthquakes) and man-made disasters (like the State budget take-aways from local public safety agencies and schools that have occurred over the past several years), local government must have the ability to act in a timely fashion in funding its operations. This will be very difficult to do if Proposition 218 passes because tax elections (except in very limited circumstances) can only be held in conjunction with governing body elections. In essence, this means that important decisions by voters can only be made once every two years. ■ Loss of economic stability. Many communities have adopted new revenue measures after extensive consensus-building, followed by voter approval. Under the current State constitution, these types of decisions are not subject to initiative. Historically, the underlying reason for this is that adequate revenues are essential to the operation of government, and after tough revenue decisions have been made, ongoing stability and confidence in local government (by citizens, businesses and other stakeholders like those who have purchased local government bonds) is important. Proposition 218 removes this safequard, because revenues previously approved by the voters will become subject to initiative petitions. While the ultimate vote may not result in the repeal of the revenue measure, the agency will nonetheless have incurred the cost of a special election to simply re-affirm a decision it previously made. Also, this provision could have far-reaching impacts on public agencies in their ability to make bond payments based on new revenues previously approved by the voters. This factor has raised significant concerns on the part of the major credit rating agencies ■ No ability for schools or special districts to levy general traces. Even with majority voter approval, schools and other special districts would be prohibited from levying general taxes. r- � Council Agenda Report - Opposition to Proposition 218 Page 3 How will it change fees? This is uncertain,because Proposition 218 only applies to "property-related" fees, and specifically exempts from its provisions fees that are imposed as a condition of development, such as planning fees, building permits, and impact fees designed to ensure that new development pays it fair share of the cost of new facilities necessary to serve it. To increase "property related fees", Proposition 218 would require that a mailed ballot be sent to each property owner, and that the fee be approved by a majority of the property owners. In addition to this election, mailed notice and public hearings must also be held. In assessing the impact of Proposition 218, it is important to first ask: what are property-related fees? The proposition states that they are charges "imposed by an agency upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property related service." If Proposition 218 passes, there will undoubtedly be a lot of discussion about when a specific charge is "an incident of property ownership" and when a service is "property related". For this reason, it is unclear whether there will be far-reaching changes in current procedures -- which already require that fees be based solely on the cost of providing the service, and that they be considered at a noticed pubic hearing -- or simply a re-affirmation of what is already current practice. If Proposition 218 passes, this issue will probably only be resolved through the court system many years after its adoption. How will it change assessments? This is the area of greatest change in current revenue procedures for local government if Proposition 218 passes. Currently, assessment districts are used throughout the State to provide a wide range of community-based services, including the construction and maintenance of streets, sewers, sidewalks, street lights and parks. The existing procedural requirements for notice,public hearings (and in some cases elections) are already quite extensive. Proposition 218 will impose even more extensive approval requirements, which will make forming and continuing assessment districts much more difficult than it is today. The major changes are: ■ Afidled ballots. Maintenance assessments will require annual approval by mailed ballots. Votes wilt be weighted by the proportionate value of the overall assessment based on the ballots returned. For example, if there were 200 properties in an assessment district, all 200 property owners would receive ballots. If only five of the property owners return their ballots, and three are against the assessment, the services funded through the assessment district will not be provided to any of the 200 properties for the coming year. This example assumes that the assessments are equal; if the assessments are not equal, an even smaller number of no votes could prevent services from being provided to all properties. These elections will be in addition to extensive notification for a public hearing prior to this mailed ballot. r-3 Council Agenda Report - Opposition to Proposition 218 Page 4 ■ Specific benefits. Proposition 218 sets a much higher standard for determining proportionate "benefit" than current State law. While this will probably not affect assessments for services like sidewalks, sewers and sidewalks, it will have a major affect on assessment districts formed for lighting, landscape, library and public safety services. In these cases, it is common practice to assess all residents in a neighborhood the same amount for services like special landscaping features, on the assumption that all benefit equally from the amenity. However, Proposition 218 requires a more exacting standard for apportioning benefits, which may have the practical affect of precluding many types of assessments, regardless of the level of community support for them. As the Sacramento Bee noted in a recent editorial,Proposition 218 will require a detailed engineering report calculating how much benefit accrues to the apartment house with three street trees as opposed to the house with no trees but a view of the oleanders on the median of the parkway". Such distinctions will be very hard to make, and will be subject to court challenge once they are made. Many communities will simply decide to stop providing these neighborhood amenities rather than take on this task. These new provisions will affect existing, new or increased assessments. When will Proposition 218 be effective if it passes? While Proposition 218 contains a number of phase-in dates as well as some retroactive provisions, all local governments would have to comply with all of its requirements by July 1, 1997. How will this impact local governments if it passes? It will severely limit the ability of local governments to fund their operations. The State Legislative Analyst has projected that "statewide, local government revenue reductions probably would exceed $100 million annually." This potential loss would be especially severe in the many communities that use assessment districts extensively for neighborhood amenities like parks and landscaping. How will this impact the City of San Luis Obispo if it passes? There will be no immediate impacts on the City if Proposition 218 passes: we have no current tax revenues that would be subject to immediate review, and the City does not have any assessments districts currently in place. Further, in reviewing our current service charges and Proposition 218's definition of property related fees, we do not believe that we have these types of fees in place at this time. However, there are three areas where Proposition 218 will have significant impacts on the City in the future: r-y Council Agenda Report - Opposition to Proposition 218 Page 5 ■ Measure O. Forming an assessment district to fund open space protection is an advisory measure on the November 1996 ballot. If Proposition 218 passes, it will not be practical to implement Measure O if it is also approved. ■ Loss of local control, The City was incorporated in 1856, and became a charter city in 1876. If Proposition 218 passes, we will lose a fundamental "home rule"power provided to us in the State constitution for the past 120 years: the ability to locally control our own fiscal destiny. Based on the state and federal government's recent performance in managing their own fiscal affairs, it is difficult to believe that we will better served by placing even greater reliance on Sacramento and Washington in determining local service levels and funding priorities. ■ Addressing future service needs and fiscal problems. If it passes, Proposition 218 will make it much more difficult in the future for the City to fund services and respond to fiscal problems in a timely way. SUMMARY One of the most significant impacts if Proposition 218 passes will be the further loss of control by local communities over their future. While not an explicit feature of Proposition 218, experience has taught us that when local communities lose control over their own finances (and thus their ability to control their own service levels and set their own priorities), control flows from local agencies to the State. There are 470 cities and 58 counties in the State (and an even larger number of school and special districts), each of which has its own unique needs, and its own unique solutions to them. The "one size fits all solution" to local government finance that Proposition 218 would bring about is simply not a good model for effective, responsive government. This is the reason why many business groups such as the Los Angeles Chamber of Commerce (as well as our own local Chamber), good government groups like the League of Women Voters, and major California- based companies like Hewlett Packard are opposed to Proposition 218: it will simply not provide local governments with the flexibility needed to meet the current and future service and facility needs of residents and businesses throughout California. ATTACEMILENTS ■ Resolution opposing Proposition 218 ■ Information packet on Proposition 218 prepared by the League of California Cities ■ Full text of Proposition 218 CTROP218.CAR ��J RESOLUTION NO. (1996 Series) A RESOLUTION OF THE CITY COUNCIL OF SAN LUIS OBISPO OPPOSING PROPOSITION 218 WHEREAS, Proposition 218, the "Right to Vote on Taxes Act," is an initiative measure which will appear on the November 5, 1996 General Election ballot; and WHEREAS, Proposition 218 would require voter approval of all local taxes, and fundamentally change existing laws related to the use of special assessments and the imposition of other property-based fees and charges; and WIEREAS, such changes would dramatically reduce the flexibility of local governments to raise revenue necessary to provide, operate, and maintain adequate public facilities and services; and WHEREAS, the State Director of Finance has estimated that the fiscal impact to local governments may exceed a loss of$100 million annually if Proposition 218 passes; and WIIEREAS, Proposition 218 authorizes the use of the initiative process to repeal or reduce local taxes, assessments, fees and charges which could have far reaching negative impacts on local government's ability to plan budgets or pledge revenues to the repayment of bonds, and may adversely affect the overall credit rating and financial viability of local governments; and WHEREAS, the many unanswered questions raised about the effect of Proposition 218 would undoubtedly generate significant litigation in the future; and WHEREAS, Proposition 218 would grant disproportionate voting power to corporations, large landowners, and out-of-state interests, and deny renters the right to vote under the weighed voting system for assessments; and WHEREAS, Proposition 218 would result in a tax increase to local governments since it would require public agencies (such as schools) to pay assessments; and V41EREAS, Proposition 218 would impose on local governments significantly increased costs to hold elections, calculate fees and assessments (often on a block-by-block or parcel-by- parcel basis), mail notices and ballots, and defend any fees and assessments in court; and WHEREAS, the constraints imposed by Proposition 218 will substantially impair local government's ability to provide important new infrastructure necessary to meet the needs of the public, to promote economic development, and to compete in a competitive marketplace. 1-6 Resolution No. (1996 Series) Page Two NOW, THEREFORE, BE H RESOLVED, that the City Council of the City of San Luis Obispo hereby opposes Proposition 218 on the November 5, 1996, General election ballot. Upon motion of , seconded by , and on the following roll call vote: Ayes: Noes: Absent: The foregoing Resolution was adopted this day of 1996. Mayor Allen K. Settle ATTEST: City Clerk APPROVED: WIrney CTROP21MAR 7-T RICHARDS, WATSON & GERSHON ATTORNEY"AT LAW __ •�wo'e�soNAL eo�oAA*pN NCNARD RIO(#lOL OL{NN R M T!?m OAAY L OA/N nomew6 sx 6 y JOHN J.NYO.O (r/1�.1r1Y1 NA/.Y L 000-0. IRNN Q V w OOtp-*A W.AROY[ woLN 6 NAAwe YAYK L LAY4N YA71A492TrUOA 1P11IRTY490NTM PLOOR AAMOLO SWAON �V�R 0t!WACRE�T a. 01 333 90URN� L GAROLO n wm kock%AM a COL^kTuo+o LOS AAWEJ.B,CALPOqPAA OW"-Tr Aum+L Rawrsrr 0.mw.AO o. , srgVM L OOACRY ��R*+�' a„)428.4"" wauAY L wrpAu%z PArw R WS)6264M ANrmcw L OALM�Y a T_ _ O.w@10n TIYO'RM L NEJpCD 2^06.T.-"h"JWA OW COWOAR pweoc"W.CrpAN,004 lAVLw2 u VIV-LLW K POW AM AlOp+ai[W J0r0aO AY /. YCr^ AAK YAOO YOM6 CRYO A STCOA 1N�I.mm AU06L OYIMM Y.. Lvftcm T.ART01 §APF4 CAApL w.LwO� OQLIAYw MM�OYW IiSS+.mgc J0"A!Y A.AW AM Tzpapa=R 90*A OUR MIX NLMMSM OA�OORY Y.,WNlAT OOu01MA CAAMAN TNO,AAO Y.J,YGO pAYA1 L Amen YICMOZ YlAL WANE� UOA.WAIO AYANOA P.w3a ftO OWN6 AA cxca 99904-00191 woaeRr G Cz=om wMY� CL Y.Wt ww'""0=6=OWL N&J"am p V"a w4Y0� wnr.. .N K NAHIYANN (213)253-0207 11 REASONS SMALL GOVERNMENT CONSERVATIVES SHOULD OPPOSE PROP. 218 - THE "RIGHT TO VOTE ON TAXES ACT" Michael G. Colantuono, Esq. California Lincoln Club San Gabriel Valley Chapter September 20, 1996 Industry, California 1. Transfer of Power To Sacramento. The measure would make it very difficult for local communities to raise revenue to provide police, fire, and other essential services. Only the State Government would have power to impose a tax without a vote of the people. This will make local communities dependent on Sacramento's largesse and will transfer local decision-making to Sacramento and the interest groups with influence there. California's public schools are a good example of this: because the only local revenues available to schools require a two-thirds vote, schools are dependent on Sacramento and most school policy.is trade in Sacramento under the influence of statewide groups such as teachers' unions. 2. Shift of Power from Voters to Landowners. The proposed Article XIIID, § 4 grants the right to vote on local assessments only to property owners, and in proportion to the amount of the assessment each would pay. Instead of one voter, one vote, this system gives large landowners large votes; ordinary homeowners, small votes; and most renters, no votes. Votes will be granted to all landowners, whether or not they are citizens, and votes would be exercised by foreign corporations and state and federal government agencies. Should the Los Angeles Department of Water and Power have 60% of the voting power on Mono County assessments simply because it owns 60% of the assessed valuation of land in that county? While some assessment statutes operate this way now, Prop. 218 places �-8 RICHARDS. WATSON&GERSHON "Right To Vote On Taxes" September 20, 1996 Page 2 this system in the State Constitution and imposes it on all assessments. Under Prop. 218, votes are denied to millions of California renters but granted to foreign corporations. 3. Elimination of "Lifeline" and Conservation Rates. Article )IIID, § 6(b)(3) requires property-related fees to be calculated solely with respect to the cost of providing service to property. Fee systems that accomplish other important social goals, like subsidizing the elderly, poor, and infirm, and encouraging'conservadon in the use of water and in the generation of sewage and solid waste, would be forbidden. 4. Ban on User Fees for Police. Fire and Libraries. Article )IIID, § 6(b)(5) would impose a flat ban on user fees for police, fire and library services. Why eliminate a funding source for these core government functions? Weren't user fees what we had in mind when we adopted Prop. 13 to limit property taxes? 5. Elimination of Fundin; for Real Estate Development. The measure will have serious consequences for California's real estate industry, a key economic sector still struggling to escape the doldrums of the early 1990's. Although Article )IIID, § 5(b) was apparently intended to allow developers to consent to the establishment of assessment districts to finance improvements on their properties, a drafting error eliminates that funding source after November 1996. The loss of this tax-exempt financing will seriously affect real estate development and raise the cost of housing and commercial and industrial properties. 6. The Measure Will Undermine the Bond Industry. The general effect of the measure will be to undermine the credit-worthiness of California's local governments. That credit risk will raise the cost of borrowing, make the delivery of local services more expensive, and increlse risk to the bond industry and the many senior citizens and other investors who rely on bonds to provide safe, secure returns on investment. Article XIIIC, 13 allows initiatives and referenda to repeal local taxes and fees. This creates great uncertainty for local officials, for a budget balanced when adopted can be thrown out of balance by an initiative. This creates substantial credit risk and may make general obligation bonds unsalable for many communities. 7. The Measure Imposes Very High Costs for Unnecessary Notices and Hearings. The proponents criticize the majority protest rule of some existing assessment statutes that requires an absolute majority of affected property owners to file written protests to stop an assessment. They claim, correctly, that majority participation on one side of an issue is very difficult to achieve and rarely accomplished. Yet they impose that empty procedure on property related fees, and require individually mailed notice (at substantial cost), a 45-day delay, a normally meaningless protest hearing, another 45-day delay, and a mailed ballot election (Article XIIID, § 6(a) & (c)). If an election is required, why impose the useless cost of a protest hearing? Article MD, § 4 will require annual elections to validate assessments even if those assessments remain at the same level or are reduced. 7 - 9 RICHARDS.WATSON&GERSHON "Right To Vote On Taxes" September 20, 1996 Page 3 Should we really be spending our tax money on expensive notices for meaningless hearings? Do we really need to pay for an annual election to determine whether to pay the electric bill for the street lamps? Article XIIID, § (b) provides that all assessments must be supported by the report of a licensed, professional engineer. Is the expense of an engineering consultant necessary to calculate the cost of fire trucks and firefighters? Couldn't the Fire Chief handle this? 8. The Measure is Poorly Drafted and Will Require Costly Litigation to Clarify its Meaning. The measure contains numerous drafting errors and ambiguities that make interpreting and applying it difficult. To give one example, the measure defines the term "special district" but elsewhere uses the undefined term "special purpose district" (Article XIIIC, §§ 1(c), 2(a)). Are these two the same? We don't know. Drafting errors like this will doubtless lead to litigation and waste tax dollars to decide issues that could have been answered by more careful drafting. 9. Requiring the Inclusion of Public Progeny in Assessment Districts is Unnecessary and Costly. Article XIIID, § 4(a) requires the inclusion of public property in assessment districts under most circumstances. Isn't this an expensive way to shift money from the taxman's left pocket to his right pocket? Should we divert dollars from schools to cities and counties? 10. The Practical Ban on Standby Fees Transfers Costs to Homeowners and Will Harm the Economy. Many water and sewer providers impose "standby fees" on vacant property to reflect the fact that excess capacity makes those properties developable and more valuable. Practically banning these fees, as Article XMD, § 6(b)(4) would do, will require utilities to recover the lost revenue from utility consumers. This transfers costs from developers and real estate investors to ordinary homeowners. In addition, it creates a disincentive to the development and maintenance of excess capacity. (Imagine the outraged citizen activist: "Why should we pay for a bigger sewage plant to benefit outsiders?") Without that excess capacity, there cannot be economic growth. A 1. Banning Special Tax Elections is a Triumph of Politics Over Policy. Article XIIIC, § 2(b), with very limited exceptions, forbids local officials to propose a general tax for voter approval except on a ballot which includes a race for a seat on the City Council, Board of Supervisors, or other local board. The Howard Jarvis Taxpayers Association admits that this provision was intended to generate "wedge" issues and to create favorable conditions for the election of anti-tax local officials. The price communities pay for this political victory is high: local budgets are greatly influenced by annual decisions in the State budget and by the business cycle, neither of which can be expected to generate the need for new revenues only at two-year intervals when offices are contested. Is this small political advantage worth imposing a fiscal strait jacket on our communities? 7-10 BEST BEST & KRIEGER LLP A p—•LM•Tm UAMN F4RYROIPW`WOJKMO IROPKBWOMAL COwPORwTNMY LAWYERS SUITE IZO ARTMIIR L LRTLCwORTNM TIMOTHY M.COMMOR MARK A.CASTER DAVID J.HANCOCK OLCM L.STEPHEN!. VICTOR L WOLF DIANE L FIMLCY "Wo M.IIAVAGC IV BOO NORTH HAVEN WILLIAM R.DKWOLFE• DANIEL L OLIVIER MKHCLLC OYCLLCTTE DAVID CABRAL P03T OFFICE BOX 4350 GALLA!MOLMCS• HOWARD D.COLD! DAVID P.PMIPPEN.COI. MARC T.RANCH CAL A S HOLM L CARPCNT(R' STEPHEN P.OEITlCH BERNIE L WILLIAMAGH ANA MARIA L FRCCORCN ONTARIO.CALIFORNIA 91764 RICHARD T.ANOERSON• MARC L.EMPTY KCVIM K.RANDOLPH MAROYLRITC S STRAND TELEPHONE I909I 089-8584 JOHN D.IYAHLDI' JOHN R.ROTTSCHAEFER JAMES B.GILPIN KAREN M.LCW13 MICHAEL 0.MARXISM MARTIN A.MUCLLER MARSHALL S RUDOLPH JEFFREY S FLASHMAN TCLECOPIER COOD1 944-1441 JOHN L DROWN• J.MICHAEL SUMMEROUR KIM A.RYRCM3 JEF/RCT T.MELCHING MICHAEL T.RmOCLL• SCOTT L WITH CYNTHIA M.GERMANO SCOTT D.HOw1C MCR[G1TH A. JURY- JACK O.CLARKS JR. MART L OILSTRAP ZACHARY R.WALTON MICHAEL GRANT' SRIAM M.LEWIS' GLENN P.SABINE MAYLET L PETERSON OF COUNSEL FRANCIS J.IIAUM' BRADLEY L NCUPCLD DOROTHY L AND[RlON MICHAEL J.BCHALFCR JOHN C.TOBIN ANN[T.THOMAS' PETER M.SARMACK CL HENRY WELLED MANOR^A.JACOBSON AMARTIN NETH(pTM MATT M.MORRIS DINA M HARRIS CLARK J.DUELLMAN DONALD F.ZWMCR D.GEORGE M.RITES JEFFREY V.OUNN BARBARA R.BARON ROGER L CRAW/ORD HENRY A.RRA/T WILLIAM W.FLCT JR. STEVEN C.OKBAUM RICHARD T.COCER JOHN R.PERRY OREOORY L.MARDE( ERIC L GARNER DEAN R.DERLCTH SHAWN HAGERTY KCNOALL M.MACVEY DENNIS M.COTA HELCNC P.DREYER KEITH L HIGGINS CLARK K ALSOP PJLW.F.PEARCE DOMIA RUBIO CARVALMO LEE ANN METER OFFICES IN DAVID J.CRWRP ROBERT W.MARORCAVES JOHN 0.PINSNEY MICHAEL J.ANOELSOM• C.MICHAEL COWETT THEODORE J.GRISWOLD XIV(RIIOC C8081 860.6450 DOUGLAS S.PMMUIP3M BRUCE W.6CACM JULIANN ANDERSON PALM 3PXMG![6121 325-7264 ANTONIA ORAPHOS ARLENE"ATER JEFFREY R.THORPC ORCGORT K.WILKINSON WILLIAM 0.CAMLIMO.JR. PATRICIA BYARS CISNCRC3 RANCHO MIRAGE[DID)5613-2611 WYNMC S FURTH KIRK W.SMITH JACOUELINC L BAILEY RAYMOND SCAT(2886.10391 SAN DIEGO(mi➢1 323.1300 GEN[TANSIES JASON C.DASARCINCII 0.ANYMONT RODRIGUEZ JAMCS M.KRIEGER(IR13.1873) BADE T.CHAPMAN RTL[A.SNOW SUSAN L DUMOUCNLL EYGLNC BESTI16➢3.186G VICTOR V ILL[4181 245.4127 •A PROFRPP•OKAL COMPOHwT10N LEAGUE OF CALIFORNIA CITIES Report on Fox Initiative / Proposition 218 Wynne S. Furth City Attorney, Claremont -7 -11 Proposition 218,the Fox Initiative, supported by the Howard Jarvis Taxpayers Association, is on the November 1996 ballot. As is often the case with new legislation, and ballot measures in particular, there is considerable uncertainty about the meaning, and even the constitutionality, of some sections. Therefore, this analysis is provisional — if Proposition 218 passes, litigation or supplemental legislation may clarify its effect. The City Attorneys' Division has worked cooperatively in studying the measure, but there are differing views, and you will want to discuss the Proposition with your own counsel. 1. Which Agencies are Subject to the New Rules? The Right to Vote on Taxes Act would apply to • Cities • Counties • Cities and Counties • Charter Cities • Charter Counties • Local or Regional Governmental Entities • Special Districts, including School Districts and • Redevelopment Agencies 2. When would it take effect? • November 6, 1996 for general taxes—they cannot be imposed, extended or increased after that date without prior approval of the majority of the electorate. Existing taxes adopted after January 1, 1995 can be collected if they are submitted to the voters within two years, at a regular election at which councilmembers are up for election. In cases of an emergency declared by a unanimous vote of the governing body,the election may be held at a different time. • November 6, 1996 for new and increased"assessments,"which include standby charges.. • July 1, 1997 for existing assessments. • July 1, 1997 for"property related fees and charges." 3. how do the new inhiative/referendum powers work? Voters would be able to use the initiative power to reduce or repeal "any local tax, assessment, or fee or charge." Courts might limit definition of fees and charges to those that are "property related." 01,MWS"7849 4. Does it narrow the definition of a general tax? Yes. At present, any tax that goes into the general fund without legal restrictions is a general tax. Under the initiative, a tax "imposed" for a special purpose is a special tax even if it is unrestricted. This may mean that if a council tells the public that new funds are needed to, for example, maintain public safety services, the tax may be a "special tax." This would reduce the power of a majority of voters to pass taxes. In addition,Proposition 218 may redefine general parcel taxes in such a way that a two-thirds vote will now be required. 5. What about assessments? • Assessments are redefined to include standby charges. • Assessments are limited to the cost of narrowly defined "special" benefits; general improvement of the neighborhood doesn't count. • The procedures for levying annual assessments are made much more complex_ • Some,but perhaps not all, existing assessments are"grandfathered" at their existing levels 6. Which existing assessments are arandfathered at their pre-November 6th levels? • An assessment to finance the acquisition, installation, construction, reconstruction, or replacement,maintenance and operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems, or vector control; • An assessment imposed pursuant to a petition which has been signed by all property owners affected by the assessment; • An assessment where proceeds are used exclusively to pay bonded indebtedness where a failure to pay such indebtedness would violate the Contract Impairment Clause of the United States Constitution; and • Any assessment previously approved by a majority vote of the voters at an election called for such purpose. However, "maintenance and operations expenses" are limited to maintenance and operations of a permanent capital improvement. If your vector control system involves operating inspection and spraying services,they probably do not meet that definition. If your fire district assessment pays for fire inspectors,that wouldn't seem to qualify either. ormwsrv7849 -2- 7-/3 7. %at about assessments that are levied annually like those in 1972 Landscape and Lighting Dimi=? The initiative seems to say that these are new levies, subject to the new requirements. However, the Howard Jarvis Taxpayers Association have indicated that at least for some kinds of assessment districts, this was not their intention. As long as the "assessment rates and methodology" remain the same, the assessment is grandfathered. This is interesting, but the courts will base their decision primarily on the ballot materials, not comments from the sponsors. S. What happens to the assessments that aren't"grandfathered"? If they are still for permitted purposes,they must be reauthorized by July 1, 1997. 9. What is the proceduTe for reauthorization? Cumbersome and expensive. There are two kinds of requirements: a re-engineering of the assessment and approval in a new kind of election: • Publicly owned property cannot be exempt from the assessment, unless there is clear and convincing evidence that such property does not receive the special benefit.' •Assessments must be supported by an engineer's report prepared by a registered professional engineer certified by the State of California. • Detailed mailed notice must be given to all property owners subject to the assessment • There must be a mailed ballot election • A property owner gets one vote for each dollar of the proposed assessment; a majority of the votes cast must be in favor of the assessment • Non-property owners would not have the right to vote on assessments. The Right to Vote on Taxes Act provides that if it is deemed unconstitutional to deny non-property owners the right to vote then the assessment shall be subject to two-thirds voter approval instead of the property owners pursuant to the procedures set forth above. 10. How could existing assessments become illegal? The definition of an assessment is narrowed, and the rules of evidence are changed, so that it will be harder to establish in court that an assessment which, for example, helps maintain parks, is There are legal problems with this provision. ormwsrW849 "3" a valid assessment. This may have a particular impact on school district assessments used to maintain and improve their recreational facilities and property, and special district assessments used for fire operations. Relatively broad assessment categories which, for example, impose the same rate on all single f only dwellings, may be harder to sustain. Again the Howard Jarvis Taxpayers Association has indicated that they intended a fairly broad grandfathering at existing rates. 11. What fees and charges are covered? Fee or charge"means arty levy D1 I than an ad valorem tax, a special tax or an assessment, . imposed by an agency upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property related service. So if a property owner, or a tenant, has to pay it, and it isn't a tax of an assessment, its a"fee or charge." 12. What are the new rules? They aren't all new; some are old. But, beginning July 1, 1997, no existing "fee or charge" may not be extended, imposed or increased unless: • The revenue from the fee/charge does not exceed the cost of providing the service; • The revenue from the fee or charge is used exclusively to provide the service; • The fee or charge does not exceed the proportional cost of providing the service; and • The service paid for is immediately available to or used by the property owner. Any standby charges for future use or service are treated as assessments. • No fee for general government service such as police, fire, or library may be imposed if the service is available to the public at large on substantially the same basis. 13. How do cities adopt new fees or increase old ones? • The agency must give detailed written mailed notice to the record owner of property. • There must be a public hearing, and if there is a majority protest, the fee must be abandoned. • There must be an election, and approval by two-thirds of the voters, except for fees or charges for sewer, water, or refuse collection services. • Even for charges for sewer, water, and refuse collection, the City must give notice and have a majority protest hearing. 01,mwsFW949 -4- 7 IS 14. what fees are specifically excluded? • Development Fees: this probably includes both review fees, like building permit fees, and zone change application fees, and capital improvement fees charged to new construction to pay for capital improvements, like park fees. • Timber Yield Taxes. • Charges for gas or electric services: these might be subject to an initiative to reduce them, but that does not seem to be the drafters' intent.. 15. What new costs do cities face? -There will be additional procedural expenses, for mailing, notices, engineers, and so forth if the city wishes to maintain its revenue stream. Staying in the same place but adjust for inflation would require detailed notice and protest hearings, or elections, or both. -Each local agency is now subject to the assessments of others; this means your city hall would be subject to the county fire district assessment, the local school district assessment, the mosquito abatement district, and so on. And,the schools and county facilities within your boundaries would also be subject to your own levies. The Proposition also seeks to apply these assessments to state and federal land. *If your city relies on special districts to provide public services, such as libraries, parks, vector control, and fire suppression, the levels of service may drop considerably, or be eliminated, creating a demand for more city financed services. ormws"7849 7-h lie ry pall ! kqt -RJR z 09 � z9140_ a� , Usoma! In m� Z �9 ho it y HIM I �em� C R7F M 15 ;A cc "CLAM 7-/ 7 The Sacramento Bee 10- OPINION Forum 4 Sunday,September 1S.19% The Sacramento Bee +r` Locwty owned and edited for 139 years JAMES MCCLATCHY,editor, 1957.1883 +V CX MCCLATCHY.edRor.president 1883-1938 ELEANOR MCCLATCHY,president 1936-1978 WALTER P.JONES,editor, 1936.1974 C.K.MCCLATCHY,editor,1974-1989 GREGORY FAYRE,exec ve edlor PETER SCHRAG,editonal page editor ^'�=•' FRANK R.J.WHfTTAKER,president and general manager Propos ition 218's tax poll ver the past 15 years, local govern- amount required to provide service to that meats in California have been de- property. Thus a city that wishes to fund Pjr` ed by Proposition 13 of much of their street landscaping and tree maintenance pFnperty tax revenue, denied the ability to through an assessment district must pro- increase property taxes and required to get duce a detailed engineering report calculat- • .r • majority or supermajority votes on most oth- ing how much benefit accrues to the apart- �,Y'tax increases.They have thus increasing- meat house with three street trees as op- ky•i`esorted to fees and special assessments posed to the house with no trees but a view f>�in some cases earmarked taxes)to help of the oleanders on the median is the park- � for a range of services, from mosquito way. The measure also prohibits property- coptrol to park and lighting improvements. based fees for fire, police, ambulance ser- f ometimes those assessments have been vices,libraries or any other service generally iRietched to pay for projects that provide lit- available to the public. ile benefit to the properties on which the as- he other provisions require majority sessments are levied. %' axpayers Tvoter approval for any general tax (in- iii response,the Howard Jarvis T49ociation and other tax-limitation groups, cluding retroactive votes on any tax imposed pharging that many of these measures are since Jan. 1, 1995, that did not get voter ap- gud=runs around the state's constitutional proval) and a weighted mail ballot of proper- t"-'limits, are sponsoring an initiative, ty owners for any property-based fee or as- Tro�osition 218 on the November ballot. It sessment. If, out of a hundred property own- wotild require weighted votes by affected ers, three objectors with large parcels are $pperty owners on all assessments, require subject to a greater collective assessment votes by the electorate on all other taxes and than the dozens of homeowners who support p sharply restrict the use of fees to pay for it, they can block the assessment. If one public services. property owner with a large parcel—gener- a ._ ally a business — wants an assessment for he impulse is understandable—assess- some improvement, he can impose it on a ments have distorted an already un- dozen residential neighbors who don't. 91ozkable fiscal system—and the title"Voter The legislative analyst estimates that Z*proval for Local Taxes" may be irresist- Proposition 218 would cost local govern- bl� But the measure, which would eviscer- meats, many of them already strapped, up ' fd the little discretion that cities and coup- ward of$100 million annually,with much of ries,have left, is excessive. It stacks the pro- that likely to come from discretionary funds vess by giving large property owners,includ- such as police and fire budgets. That's why ng-absentee corporations, disproportionate the state's police and fire chiefs'associations oppose it. But the measure's greatest cost Ating power over small homeowners. It im f doses impossibly costly and cumbersome wfrom further distortion of the gov ill come - rocedtues on routine government actions. ernmental process — the shift of power to ii1'd it denies the half of Californians who large property owners, the additional con- no property any voice over assessments straints on the ability of local government to that they help pay as renters and consum- respond to local needs, the legal uncertain- ers. ties it brings and the additional bureaucracy ; Proposition 218 has two major sets of pro- and costs that those engineering studies a and S�iisions.The first limits any property owner's mail ballots impose.Proposition 218 is car- ` ,benefit assessment to no more than the toon of tax reform.No on 218. 7'/9 Analysis by the Legislative Analyst OVERVIEW Taken together, these fee restrictions would require Local governments provide many services to people local governments to reduce or eliminate some existing fees. Unless local governments increased taxes to replace and businesses in their communities. To pay for these these lost fee revenues, spending for local public service services, local governments raise revenues by imposing likely would be decreased. The measure's requirement, fees, assessments, and taxes. This constitutional would also expand local governments' administrative measure would make it more difficult for local workload. For example,local governments would have to governments to raise these revenues. As a result, this adjust many property-related fees, potentially (1) setting measure would: them on a block-by-block or parcel-by-parcel basis and • Reduce the amount of fees, assessments, and taxes (2)ending programs that allow low-income people to pay that individuals and businesses pay. reduced property-related fees. Local governments would • Decrease spending for local public services. also have to mail information to every property owner and hold elections. PROPOSAL Assessments This measure would constrain local governments' Current Practice. Local governments charge ability to impose fees, assessments, and taxes. The assessments to pay for projects and services that benefit measure would apply to all cities, counties, special specific properties. For example, home owners may pay districts, redevelopment agencies, and school districts in assessments for sidewalks,streets,lighting,or recreation California. programs in their neighborhood. Assessments are also called "benefit assessments, special assessments, Fees C `maintenance assessments," and similar terms. Local Current Practice. Local governments charge fees to governments typically place assessment charges on the pay for many services to their residents. Some of these property tax bill. fees pay for services to property, such as garbage To create an assessment, state laws require local collection and sewer service. Fees are also called governments to determine which properties would "charges." benefit from a project or service, notify the owners, and Local governments often establish several fee amounts set assessment amounts based on the approximate for a service, each based on the approximate cost of benefit property owners would receive. Often, the rest of providing the service to different types of properties the community or region also receives some general (such as commercial, industrial, or residential property). benefit from the project or service, but does not pay n Local governments usually -send monthly bills to share of cost. Typical assessments that provide gene property owners to collect these fees, although some fees benefits include fire, park, ambulance, and mosqu, are placed on the property tax bill. Local governments control assessments. State laws generally require local generally hold public hearings before creating or governments to reject a proposed assessment if more increasing such a fee,but do not hold elections on fees. than 50 percent of the property owners protest in Proposed Requirements for Property-Related writing. Fees. This measure would restrict local governments Some local governments also levy "standby charges," ability to charge "property-related"fees. (Fees for water, which are similar to assessments. Standby charges sewer, and refuse collection service probably meet the commonly finance water and sewer service expansions to measure's definition of a pioperty-related fee. Gas and new households and businesses. (The measure treats electric fees and fees charged to land developers are standby charges as assessments.) specifically exempted.) Proposed Requirements for Assessments. This Specifically, the measure states that all local measure would place extensive requirements on local property-related fees must comply by July 1, 1997, with governments charging assessments. Specifically, the the following restrictions: measure requires all new or increased assessments—and • No property owner's fee may be more than the cost some existing assessments—to meet four conditions. to provide service.to that property owner's land. First, local governments must estimate the amount • No fee may be charged for fire, police, ambulance, of"special benefit" landowners receive—or would library service, or any other service widely available receive—from a project or service. Special benefit is to the public. defined as a particular benefit to land and buildings, • No fee revenue may be used for any purpose other not a general benefit to the public at large or a than providing the property-related service. general increase in property values. If a project • Fees may only be charged for services immediately provides both special benefits and general benefits, available to property owners. a local government may charge landowners only for In addition, the measure specifies that before adopting the cost of providing the special benefit. Local a new property-related fee(or increasing an existing one), government must use general revenues (such a local governments must: mail information about the fee taxes) to pay the remaining portion of the project or to every property owner,reject the fee if a majority of the service's cost. In some cases, local government - property owners protest in writing, and hold an election not have sufficient revenues to pay this cost, or on the fee (unless it is for water, sewer, or refuse choose not to pay it. In these cases, a projecL �. collection service). service would not be provided. 7: G96 7,11 • Second, local governments must eiisure that no Proposed Requirements for Taxes. The measure property owner's assessment is greater than the cost states that all future local general taxes, including those to provide the improvement or service to the owner's in cities with charters, must be approved by a majority property. This provision would require local vote of the people. The measure also requires existing governments to examine assessment amounts in local general taxes established after December 31, 1994, detail, potentially setting them on a parcel-by-parcel without a vote of the people to be placed before the voters or block-by-block basis. within two years. • Third, local governments must charge schools and other public agencies their share of assessments. Other Provisions Currently, public agencies generally do not pay Burden of Proof. Currently, the courts allow local assessments. governments significant flexibility in determining fee • Finally, local governments must hold a mail-in and assessment amounts. In lawsuits challenging election for each assessment. Only property owners property fees and assessments, the taxpayer generally and any renters responsible for paying assessments has the"burden of proof"to show that they are not legal. would be eligible to vote. Ballots cast in these This measure shifts the burden of roof in these lawsuits the assessment the property owner or renter would elections would be weighted based on the amount of to local government. As a result,it would be easier for pay. For example, if a business owner would pay taxpayers to win lawsuits, resulting in reduced or twice as much assessment as a homeowner, the repealed fees and assessments. business owner's vote would"count"twice as much Initiative Powers. The measure states that as the homeowner's vote. Californians have the power to repeal or reduce any local Figure 1 summarizes the existing assessments that tax, assessment, or fee through the initiative process. would be exempt from the measure's requirements. We This provision broadens the existing initiative powers estimate that more than half of all existing assessments available under the State Constitution and local would qualify for an exemption. All other existing charters. assessments must meet the measure's requirements—including the voter approval FISCAL IMPACT requirement—by July 1, 1997. Revenue Reductions Existing Revenues. By July 1, 1997, local • governments would be required to reduce or repeal existing property-related fees and assessments that do not meet the measure's restrictions on (1) fee and Existing Assessments Exempt from assessment amounts or(2)the use of these revenues.The the Measure's Requirements most likely fees and assessments affected by these provisions would be those for: park and recreation programs, fire protection, lighting, ambulance, business improvement programs, library, and water service. • Assessments previously approved by voters—or by all Statewide,local government revenue reductions probably property owners at the time the assessment was created. would exceed $100 million annually. The actual level of • Assessments where all the funds are used to repay bond revenue reduction would depend in large part on how the obligations. courts interpret various provisions of the measure. In • Assessments where all the funds are used to pay for addition, because local governments vary significantly in sidewalks, streets, sewers, water, flood control, drainage their reliance upon fees and assessments, the measure's systems or, "vector control" (such as mosquito control). impact on individual communities would differ greatly. Within two years, local governments also would be required to hold elections on some recently imposed taxes Taxes and existing assessments. The total amount of these Current Practice. Local governments typically use taxes and assessments is unknown, but probably exceeds taxes to pay for general government programs, such as $100 million statewide. If voters do not approve these police and fire services.'Taxes are "general" if their existing taxes and assessments, local governments would revenues can be used to- pay for many government lose additional existing revenues. programs, rather than being reserved for specific New Revenues. The measure's restrictions and programs.Proposition 62—a statutory measure approved voter-approval requirements would constrain new and by the voters in 1986—requires new local general taxes increased fees, assessments, and taxes.As a result, local to be approved by a majority vote of the people. government revenues in the future would be lower than Currently, there are lawsuits pending as to whether this they would be otherwise. The extent of these revenue provision applies to cities that have adopted a local reductions would depend on court interpretation of the charter, such as Los Angeles, Long Beach, Sacramento, measure's provisions and local government actions to San Jose, and many others. replace lost revenues. 74 G96 7-d2D Summary of Revenue Reductions. In the short notify the public, and defend their fees and assessments term, local government revenues probably would be in court. These local increased costs are unknown, but reduced by more than $100 million annually. Over time, could exceed $10 million initially, and lesser amounts local government revenues would be significantly lower annually after that. than they would otherwise be,potentially by hundreds of School and community college districts,state agencies, millions of dollars annually. Individual and business cities, counties, and other public agencies would have payments to local government would decline by the same increased costs to pay their share of assessments. The amount. In general, these local government revenue amount of this cost is not known, but could total over losses would result in comparable reductions in spending for local public services. $10 million initially, and increasing amounts in the future. Cost Increases Local governments would have significantly increased - costs to hold elections, calculate fees and assessments, For text of Proposition 218 see page 108 G96 70 7-J. Voter Approval for Local Government Taxes. 218 Limitations on Fees, Assessments, and Charges. Initiative Constitutional Amendment. Argument in Favor of Proposition 218 VOTE YES ON PROPOSITION 218. IT WILL GIVE YOU TAXPAYERS HAVE NO RIGHT TO VOTE ON THESE THE RIGHT TO VOTE ON TAX INCREASES! TAX INCREASES AND OTHERS LIKE THEM Proposition 218 guarantees your right to vote on local tax UNLESS PROPOSITION 218 PASSES! increases—even when they are called something else, like Proposition 218 will significantly tighten the kind of benefit "assessments"or"fees"and imposed on homeowners. assessments that can be levied. Proposition 218 guarantees your right to vote on taxes Here are examples of why fees and assessments and other imposed on your water,gas,electric,and telephone bills. nonvoted taxes are so unfair. Proposition 218 does NOT prevent government from raising The poor pay the same assessments as the rich.An elderly widow pays exactly the same on her modest home as a and spending money for vital services like police, fire and tycoon with a mansion. education. If politicians want to raise taxes they need only " There are now over 5,000 local districts which can impose convince local voters that new taxes are really needed. fees and assessments without the consent of local voters. Proposition 218 simply extends the long standing Special districts have increased assessments by over constitutional protection against politicians imposing tax 2400% over 15 years. Likewise, cities have increased increases without voter approval- utility taxes 415%and raised benefit assessments 976%,a After voters passed Proposition 13, politicians created a ten-fold increase. loophole in the law that allows them to raise taxes without Non-voted taxes on electricity, gas, water, and telephone voter approval by c"llin�v taxes"assessments"and"fees." services hit renters and homeowners hard. Once this loophole was created, one lawyer working with And,retired homeowners get hit doubly hard! politicians wrote, assessments "are now limited only by the To confirm the impact of fees and assessments an you,look at your property tax bill.You will see a growing list of assessments limits of human imagination." How imaginative can the politicians be with assessments? Pr position 2 8 approval. The list will grow even longer unless Here are a few examples among thousands: Proposition 218 will allow you and your neighbors—not • A view tax in Southern California—the better the view of politicians—to decide how high your taxes will be.It will allow the ocean you have the more you pay. those who pay assessments to deride if what they are being • In Los Angeles,a proposal for assessments for a$2-million asked to pay for is worth the cost. scoreboard and a $6-million equestrian center to be paid PROPOSITIONRTHERIGHT TO VOTE ON TAXES, VOTE YES ON for by property owners. • In Northern California, taxpayers 27 miles away from a JOEL FOS park are assessed because their property supposedly President,Howard Jarvis Taxpayers Association benefits from that park. JIM CONRAN • In the Central Valley, homeowners are assessed to President,Consumers First refurbish a college football field. RICHARD GANN President,Paul Gann's Citizens Committee Rebuttal to Argument in Favor of Proposition 218 PROPOSITION 218 IS NO FALSE ALARM . . . IT HURTS CONSTITUTIONAL POWER SHIFT. Propositions can deceive,so carefully judge who you believe. Proposition 218 etches this into the state Constitution: Beware of wild claims for new "constitutional rights" and • Blocks 3 million Californians from voting on tax people who pretend concern about widows and orphans. assessments.The struggling young couple renting a small Read Proposition 218 yourself and see how large home,WILL HAVE NO VOTE on the assessments imposed corporations,big landowners and foreign interests gain more on the house they rent. voting power than YOU. • Grants special land interests more voting power than Promoters say you get-"tax reform" . . . you may actually average homeowners. The"elderly widow"promoters cite get serious cutbacks in local service and FEWER VOTING will be banned from voting if she is a renter,or her voting RIGHTS for millions of California citizens. power dwarfed by large property owners. Sometimes we hear hysterical warnings about bad things Gives non-citizens voting nghts on your community taxes. that never occur . . . Proposition 218 is a REAL threat. On Proposition 218 is a great deal for wealthy special interests. But its a bad deal for the average taxpayer,homeowner and Proposition 218 consider the harm to EXISTING local services, renter. not vague future threats: HOWARD OWENS • May reduce CURRENT funding for police, fire and Congress of California Seniors emergency medical programs across California. LOIS TINSON • Worsens SCHOOL CROWDING by making public schools president,California Teachers Association pay NEW TAXES,cutting classroom teaching. RON SNIDER • Could eliminate LifeLine utility support for SENIORS and President,California Association of disabled citizens. Highway Patrolmen 76 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. G96 Vo,er Approval for Local Government Taxes. Limitations on Fees, Assessments, and Charges. 21 S Initiative Constitutional Amendment. Argument Against Proposition 218 PROPOSITION 218 DILUTES VOTING RIGHTS, HURTS Don't handcuff police and firefighters. The California Police LOCAL SERVICES Chiefs Association, Fire Chiefs Association and California In the disguise of tax reform,Proposition 218's Constitutional Professional Firefighters ask you to vote NO. Amendment REDUCES YOUR VOTING POWER and gives The impartial Legislative Analyst's report shows how huge voting power to corporations, foreign interests and Proposition 218 could impede Lifeline support for the elderly wealthy lead owners. and disabled. It prohibits seniors and disabled from receiving It cuts police,fire,library,park,senior, and disabled services needed utility services unless they pay all costs themselves. and diverts funds ae 18 care classroom-size reductions. Proposition 218 cuts more than $100 million from local Read Proposition 218 carefully—it's a wolf,not a lamb! services,yet wastes tens of millions each year by changing the YOU LOSE RIGHTS; CORPORATIONS, DEVELOPERS, Constitution to require 5,000 local elections even if local NON-CITIZENS GAIN VOTING POWER citizens don't want an election . . . even if the election cost is Section 4(e) of.Proposition 218 changes the Constitution to more than the potential revenue. give corporations,wealthy landowners and developers MORE VOTING POWER THAN HOMEOWNERS.It lets large outside MAKES SCHOOL CROWDING WORSE interests control community taxes—against the will of local California teachers oppose Proposition 218 because Section citizens. 4(a) imposes a new tax on public school property, diverting EXAMPLE:An oil company owns 1000 acres, you own one millions from classroom programs to pay for non-school acre; the oil corporation gets 1000 times more voting power expenses. than you. California already has the most crowded classrooms in While Prop. 218 gives voting power to outside interests, America(dead last of 50 states). Proposition 218 makes school Section 4(g) denies voting rights to more than 3,000,000 crowding worse. California renters. SHELL GAME Reducing American citizens'Constitutional rights,it grants This measure takes a few good ideas,but twists and perverts voting rights to corporations and absentee landowners--even them. It cripples the best local services and puts more power foreign citizens. into the hands of special interests and non-citizens. EXAMPLE:A shopping center owned by a foreign citizen is Proposition 218 goes too far. Assessment laws DO need worth 100 times as much as your home; that person gets 100 improvement,but Proposition 218 is the wrong way to do it. It es times more voting power than you! domore harm than good, restricting our voting rights, Every citizen should have the right to vote if a community is hurting schools,seniors and public safety programs. voting on local assessments for police, fire, emergency medical Please vote NO on Proposition 218. and library programs. It's unfair to give votingower to FRAN PACHARD non-citizens, big landowners and developers, yet deny it to President millions of Californians. ,League of Women Voters of California MAY CUT LOCAL POLICE,FIRE PROTECTION CB1EF RON LOWENBERG Section 6(b)(5) eliminates vital funding sources for local President,California Police Chiefs'Assocfation police,fire, emergency medical and library services. CHIEF JEFF BOWMAN Proposition 218 goes too far—may forbid emergency President,California Fire Chiefs'Association assessments for earthquakes,floods and fires. Rebuttal to Argument Against Proposition 218 Arguments against Proposition 218 are misleading and Under Proposition 218,officials must convince taxpayers that designed to confuse voters.In truth: tax increases are justified. Politicians and special interest 1. Proposition 218 expands your voting rights. It groups don't like this idea. But they can't win by saying CONSTITUTIONALLY GUARANTEES your right to vote taxpayers should not vote on taxes,"so they use misleading on Y9Tes statements to confuse a simple question. That question: DO YOU BELIEVE TAXPAYERS SHOULD 2. Under Proposition 218, only California registered voters, HAVE THE RIGHT TO VOTE ON TAXES? If you answered including renters, can vote in tax elections. Corporations 'Yes",VOTE YES ON PROPOSITION 218. and foreigners get no new rights. Read the nonpartisan, independent SUMMARY by the 3. Current law already allows property owners, including Attorney General, which�bebegins "VOTER APPROVAL FOR nonresidents, to act on property assessments based on the LOCAL GOVERNMENT TAXES. And,by all means read your assessment amount they pay. This is NOT created by property tax bill,due out now.Then you'll know the truth. Proposition 218. FOR THE RIGHT TO VOTE ON TAXES, VOTE YES ON 4. "Lifeline"rates for elderly and disabled for telephone, gas, PROPOSITION 218! and electric services are NOT affected. CAROL ROSS EVANS 5. Proposition 218 allows voter approved taxes for police, fire, Vice-President,California Taxpayers Association education. FELICIA ELEINSON Proposition 218 simply Fives taxpayers the right to vote on Past President,Council of Sacramento taxes and sto s politicians end-runs around Proposition 13. Senior Organizations That's why ordinary taxpayers, seniors, parents, LEE PHELPS homeowners, renters, consumer advocates, support Founder,Alliance of California Taxpayers Proposition 218. and Involved Voters(ACTH G96 Arguments printed on this page are the opinions of the authors and have not been checked for accuracy by any official agency. 77 7_o-2-- RIGHT TO VOTE ON TAXES ACT SECTION 1. ' TITLE. This Act shall be known and may be cited as the Right to Vote on Taxes Act. SECTION 2. FINDINGS AND DECLARATIONS. The People of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases. However, local governments have subjected taxpayers to excessive tax, assessment,-fee and charge increases that not only frustrate the purposes of voter approval for tax increases, but also threaten the economic security of all Californians and the California economy itself. This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent. SECTION 3. VOTER APPROVAL FOR LOCAL TAX LEVIES. Article XIIIC of'the California Constitution is hereby added: SEC. 1. Definitions. As used in this Article: (a) "General tax" means any tax imposed for general governmental purposes. (b) "Local government" means any county, city, city and county, including a charter city or county, any special district, or any other local or regional governmental entity. (c) "Special District" means an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions with limited geographic boundaries including, but not limited to, school districts and redevelopment agencies. (d) "Special tax" means any. tax imposed for specific purposes including taxes imposed for specific purposes which are placed into a general fund. SEC. 2. Local Government Tax Limitation. Notwithstanding any other provision of this Constitution: (a) All taxes imposed by any local government shall be deemed to be either general taxes or special taxes. Special purpose districts or agencies, including school districts, shall have no power to levy general taxes. , Right to Vote on Taxes Act Page 2 (b) No local government may impose, extend or increase any general tax unless and until such tax is submitted to the electorate and approved. by a majority vote. A general tax shall not be deemed to have been increased if it is imposed at a. rate not higher than the maximum rate so approved. The election required by this subdivision shall be consolidated with a regularly scheduled general election for members of the governing body of the local government except in cases of emergency declared by a unanimous vote of the governing body. (c) Any general tax imposed, extended or increased, without voter approval, by any local government on or after January 1, 1995, and prior to the effective date of this Article, shall continue to be imposed only if approved by a majority vote of the voters voting in an election on the - issue of the imposition, which election shall be held within two years of the effective date of this Article and in compliance with subdivision (b) of this section. (d) No local government may impose, extend or increase any special tax unless and until such tax is submitted to the electorate and approved by a two-thirds vote. A special tax shall not be deemed to have been increased if it is imposed at a rate not higher than the maximum rate so approved. SEC. 3. Initiative Power For Local Taxes, Assessments, Fees and Charges. Notwithstanding any other provision of this Constitution, including, but not limited to, Article II, Sections 8 and 9, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments and neither the legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives. SECTION 4. ASSESSMENT AND PROPERTY RELATED FEE REFORM. Article XIIID of the California Constitution is hereby added: SEC. 1 . Application. Notwithstanding any other provision of law, the provisions of this Article shall apply to all assessments, fees and charges whether imposed pursuant to state 7-� Right to Vote on Taxes Act Page 3 statute or local government charter authority. Nothing in this Article or Article XIIIC shall be construed to: (a) provide any new authority to any agency to impose a tax, assessment, fee or charge; (b) affect existing laws relating to the imposition of fees or charges as a condition of property development;'or (c) affect existing laws relating to the imposition of timber yield taxes. SEC. 2. Definitions. As used in this article: (a) "Agency" means any local government as defined in Article XIIIC, Section 1 (b). (b) "Assessment" means any levy or charge upon real property by an agency for a special benefit conferred upon the real property. "Assessment" includes, but is not limited to, "special assessment," "benefit assessment," "maintenance assessment" and "special assessment tax." (c) "Capital cost" means the cost of acquisition, installation, construction, reconstruction or replacement of a permanent public improvement by an agency. (d) "District" means an area determined by an agency to contain all parcels which will receive a special benefit from a proposed public _. improvement or property-related service. (e) "Fee" or "charge" means any levy other than an ad valorem tax, a special tax or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property related service. (f) "Maintenance and operation expenses" means the cost of rent, repair, replacement, rehabilitation, fuel, power, electrical current, care, and supervision necessary to properly operate and maintain a permanent public improvement. 7"a k Right to Vote on Taxes Act Page 4 (g) "Property ownership" shall be deemed to include tenancies of real property where tenants are directly liable to pay the assessment, fee, or charge in question. (h) "Property-related service" means a public service having a direct relationship to property ownership. (i) "Special benefit" means a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement of property value does not constitute "special benefit." SEC. 3. Property Taxes, Assessments, Fees and Charges Limited. (a) No tax, assessment, fee or charge shall be assessed by any agency upon any parcel of property or upon any person as an incident of property ownership except: (1) The ad valorem property tax imposed pursuant to Article XIII and Article XIIIA of this Constitution. (2) Any special tax receiving a two-thirds vote pursuant to Article XIIIA, Section 4 of this Constitution. (3) Assessments as provided by this Article. (4) Fees or charges for property related services as provided by this Article. (b) For purposes of this Article, fees for the provision of electrical or gas service shall not be deemed charges or fees imposed as .an incident of property ownership. SEC. 4. Procedures and Requirements for All Assessments. (a) An agency which proposes to levy an assessment shall identify all parcels which will have a special benefit conferred upon them and upon which an assessment will be imposed. The proportionate special benefit derived by each identified parcel shall be determined in relationship to the entirety of the capital cost of a public improvement or the maintenance and operation expenses of a public improvement or for the cost of the property related Right to Vote on Taxes Act. Page 5 service being provided. No assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and an agency must separate the general benefits from the special benefits conferred on a parcel. Parcels within a district that are owned or used by any agency, the State of California or the United States shall not. be exempt from assessment unless .the agency can demonstrate by clear and convincing evidence that such publicly owned parcels in fact receive no special benefit. (b) All assessments must be supported by a detailed engineer's report prepared by a registered professional engineer certified by the:-- State of California. (c) The amount of the proposed assessment for each identified parcel shall be calculated and the record owner of each parcel shall be given written notice by mail of the proposed assessment, the total amount thereof chargeable to the entire district, the amount chargeable to the owner's particular parcel, the duration of such payments, the reason for such assessment and the basis upon which the amount of the proposed assessment was calculated, together with the date, time, and location of a public hearing on the proposed assessment. Each notice shall also include, in a conspicuous place thereon, a summary of the procedures applicable to the completion, return and tabulation of the ballots required pursuant to subdivision (d), including a disclosure statement that the existence of a majority protest, as defined in subdivision (e), will result in the assessment not being imposed. (d) Each such notice mailed to owners of identified parcels within the i district shall contain a ballot which includes the agency's address for receipt of any such ballot once completed by any owner receiving such notice whereby each such owner may indicate his or her name, reasonable identification of the parcel and support or opposition to the proposed assessment. (e) The agency shall conduct a public hearing upon the proposed assessment not less than 45 days after mailing the notice of the proposed assessment to record owners of each identified parcel. At the public hearing, the agency shall consider all protests against the proposed assessment and tabulate the ballots. The agency shall not impose an assessment if there is a majority 7�� Right to Vote on Taxes Act Page 6 protest. A majority protest exists if, upon the conclusion of the hearing, ballots submitted in opposition to the assessment exceed the ballots submitted in favor of the assessment. In tabulating the ballots, the ballots shall be weighted according to the' proportional financial obligation of the affected property. (f) In any legal action contesting the validity of any assessment, the burden shall be on the agency to demonstrate that the property or properties in question receive a special benefit over and above the benefits conferred on the public at large and that the amount of any contested assessment. is proportional to, and no greater than, the benefits conferred on the property or properties in question. (g) Because only special benefits are assessable, electors residing within the district who do not own property within the district shall not be deemed under this Constitution to-have been deprived of the right to vote for any assessment. If a court determines that the Constitution of the United States or other federal law requires otherwise, the assessment shall not be imposed unless approved by a two-thirds vote of the electorate -in the district in addition to being approved by the property owners as required by Section 4(e). SEC. 5. Effective Date Pursuant to Article Il, Section 10(a), the provisions of this Article shall become effective the day after the election unless otherwise provided. Beginning July 1 , 1997, all existing, new or increased assessments shall comply with this Article. Notwithstanding the foregoing, the following assessments existing on the effective date of this Article shall be exempt from the procedures and approval process set forth in Section 4: (a) f. any assessment imposed exclusively to finance the capital costs or maintenance and operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems or vector control. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4; (b) any assessment imposed pursuant to a petition signed by the persons owning all of the parcels subject to the assessment at the time the assessment is initially imposed. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4; 4- c Right to Vote on Taxes Act Page 7 (c) any assessment the proceeds of which are exclusively used to repay bonded indebtedness of which the failure to pay would violate the Contract Impairment Clause of the Constitution of the United States of America; or, (d) any assessment which previously received majority voter approval from the. voters voting in an election on the issue of the assessment. Subsequent increases in such assessments shall be subject to the procedures and approval process set forth in Section 4. SEC. 6. Property Related Fees and Charges. (a) Procedures for New or Increased Fees and Charges. An agency shall follow the procedures pursuant to this section in imposing or increasing any fee or charge as defined pursuant. to this Article including, but not limited.to, the following: (1) The parcels upon which a fee or charge is proposed for imposition shall be identified. The amount of the fee or charge proposed to be imposed upon each parcel shall be calculated. The agency shall provide written notice by mail of the proposed fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed for imposition, the amount of the fee or charge proposed to be imposed upon each, the basis upon which the amount of the proposed fee .or charge was calculated, the reason for the fee or charge, together with the date, time, and location of a public hearing on the proposed fee or charge. (2) The agency shall conduct a public hearing upon the proposed fee or charge not less than 45 days after mailing the notice of the proposed fee or charge to the record owners of each identified parcel upon which the fee or charge is proposed for imposition. At the public hearing, the agency shall consider all protests against the proposed fee or charge. If written protests against the proposed fee or charge are presented by a majority of owners of the identified parcels, the agency shall not impose the fee or charge. (b) Requirements for Existing, New or Increased Fees and Charges. A fee or charge shall not be extended, imposed or increased by any agency unless it meets all of the following requirements: 7 -3 , Right to Vote on Taxes Act Page 8 (1) Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service. (2) -Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed. (3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel. (4) No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4 of this Article. (5) No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services where the service is available to the public at large in substantially the same manner as it is to property owners. Reliance by an agency on any parcel map including, but not limited to, an assessor's parcel map, may be considered a significant factor in determining whether a fee or charge is imposed as incident of property ownership for purposes of this Article. In any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance with this Article. (c) Voter Approval for New or Increased Fees and Charges. Except for fees or charges for sewer, water, and refuse collection services, no property related fee or charge shall be imposed or increased unless and until such fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area. The election shall be conducted not less than 45 days after the public hearing. An agency may adopt procedures similar to those for increases in assessments in the conduct of elections under this subdivision. (d) Beginning July 1 , 1997, all fees or charges shall comply with this Section. 7.3 / Right to Vote on Taxes Act Page 9 SECTION 5. LIBERAL CONSTRUCTION. The provisions of this Act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent. SECTION 6. SEVERABILITY. If any provision of this Act, or part thereof, is for any reason held to be invalid or unconstitutional, the remainingsections shall not be affected, but shall remain in full force and effect, and to this end the provisions of this Act are severable. i. 7-307 06 ,W-r G� fl /0:tt-9ENOA =A 20440 Highway 18 P.O. Box 429 Apple Valley, California 92307 October 8, 1996 C� p Mr. Don Benninghoven �CR� Executive Director C/T Y /qT7Y' League of California Cities PZ6 1400 K Street Sacramento, California 95184 RE: PROPOSITION 218 Dear Mr. Benninghoven: The Town Council of the Town of Apple Valley is compelled to express our strong disappointment in the action taken to reportedly authorize the expenditure of League funds to lobby against Proposition 218. It is the Town Council's view that the League of California Cities' purpose is to educate its member cities on the impact of legislation which in the League's view may be beneficial or injurious to municipalities of the state. The Council recognizes and acknowledges the legitimate role of the League to take positions of support or Opposition and to even sponsor legislation that supports the adopted League Position. What this Council finds objectionable is the League's action to step out of the role of legislative advocate and fund an organized effort to oppose Proposition 218. We are a public agency and the League is funded by public funds. This is the stuff that .results in initiative resolutions being placed on the ballot to limit campaign .I funding practices and to constrain local government's action to impose fees and assessments. The simple fact is that as public agencies we have anobligation to the voters of our communities to earn their trust and respect if we are to do our jobs effe ely. Sinc rely, STEVEN D. WILLISON MAYOR cc: Mayors,' League of California Cities C:\WINWORD\LETTERS\PROP218A.DOC RECEIVED I�Jb CITY CO::NCIL 'nn• ..�iqp� rn (619)240-7000 ® Recyaed Paper Fax(619)247-3RR5