Loading...
HomeMy WebLinkAbout09/27/1995, Agenda Correspondence SEP 19 '95 03.54PM '-7T�NG _AGENDA ��-t�l"� ►..,.E - ITEM #� DRAFT (9-19-95) Getting to final form fast_-- PREAMBLE TO 9-27-95 meeting of all S.L.O. CO. CITIES COUNCILS The Mayors of San Luis Obispo County,s 7 cities have called our councils with staff together as representatives of our citizens within our city limits of each city; Furthermore we are representing our citizens as taxpayers within the borders of our county. We live in increasingly strained social tirdes evidenced by the daily dose of bad news, and many of our citizens live in economic distress . our cities have structural imbalances like inadequate housing and traffic circulation due to impacts that have originations outside our city limits , our cities are on the cutting edge in effectively managing our available .resources,trying to maintain at least respectful levels of service to everyone who wants to live, do business or recreate in San Luis Obispo County. Today we feel the need to meet and discuss an issue .that we hold as -common to •all .our 'ci'ty's citizens in gross. The question is; Can cities afford to provide municipal services to annexing areas, when the county refuses to cooperate in sharing tax revenues from the areas wishing to annex to a given city? Our 7 cities are well prepared to meet the goals of accountability and responsibility in the delivery of services to our citizens. However, the growth allowed in the unincorporated area wit h'Af it responsibility for services and traffic impacts cause our cities to express for our citizens a growing dissatisfaction in the trend. We recognize our county' s LAFCO has become a vital organ of an overall county plan to perpetuate the trend of unincorporated area growth in population. The county, because of its funding woes , SEP 19 '95 03:54PM P.2/2 encourages districts to be formed. Initially, areas form only road assessment districts. following are fire, water and sewer districts_ This encourages development that impacts on incorporated communities. Best examples are Shandon, Nipomo,Los Osos and Heritage Ranch. Incorporation is not feasible because our county does not pass thru sufficient funding to meet the obligations . So cities are here to make a best effort toy articulate problems educate one another, review some numbers and start a solution process that balances revenues with services provided. Rest assured we are aimed at fairness and what is in the best overall interests of not only the unincorporated area' s, but the incorporated areas as well . The goals of the preamble d at least two; 1 . Every city councilperson would know what this meeting is about. 2. Create a starting point to make the best use of limited time. Please contribute by calling Walt Macklin 238-0106 ASAP rti,EE,.I�AGENDA �. cOGr�v DATE REM # C I T Y ® F C 0 V I N A �'gtIFORfi�Q' 125 East College Street • Covina, California 91723-2199 UNCILaf�p�lA August 31, 1995 t q. , ��FIN OR ^ ❑ RRE CHIEF EyQ PK DIR CLERWORIC ❑.POUCE C;' . Mr. Walter Macklin _p MGW..TEk67 ❑ Mayor p REC DIR City of Paso Robles RLE ❑ Um DIR� E3 PERS DIR 1000 Spring Street :, Paso Robles,CA 93446 Dear Mr. Macklin: We are writing you to request the City of Paso Robles's support for the attached resolution which was adopted by the Los Angeles Division of the League of California Cities on August 3, 1995. As you are aware, Division-sponsored resolutions are being forwarded to the League's General Resolutions Committee on October 23, 1995, and then to the General Assembly on October 24, 1995. The subject resolution seeks to redistribute 1% sales tax from the State to cities. The State currently gets 5% and cities get 1% of the sales taxes paid on each dollar throughout California. The resolution directs the League to init ate legislative actions, either:.through the State legislature or through a ballot initiative, to change the percentage split to 4% for the State and 2% to cities. If the shift in sales taxes is accomplished, it would mean that the amount of sales taxes cities now receive would double. In essence, the resolution seeks to shift money from the State to cities using an existing tax mechanism and an existing allocation method. The resolution is relatively simple and in "terms of complexity" stands in sharp contrast to a number of efforts underway on government restructuring, constitutional revision, and modification of the taxation system. Consequently, the proposed resolution should not be compared to these activities. The issue for this resolution is not the structure of government, the constitution, or t e taxation system -- it is how much money different agencies receive. We believe cities and counties are getting a disproportionately small share of available revenues. For example, the City of Covina, located in eastern Los Angeles County with a population of 44,000, will receive about $19.8 million in general fund revenue during this next fiscal year from over a dozen sources, including an 8.25% utility users tax. Of this total, sales tax revenue is about $5.7 million. The State will get five times this amount or about $28.5 million — all from Covina transactions. The amount of sales tax revenue going to the State exceeds the City's total general fund revenue from over a dozen sources! And while Covina's budget has been reduced in recent years like a number of other cities and counties throughout California, the State's budget continues to increase, from $53.083 billion in fiscal year 1993-1994 to $57.508 billion in fiscal year 1995-1996, an increase of 8.3%. Page 2 of 2. As most city administrators throughout California know, part of the problem here is that property tax revenue and other funds have been lost due to State takeaways. A recent Los Angeles Times article put the amount of property tax revenue taken away by the State at $3.9 billion. Although many would agree that schools need more funding, it is unlikely that many would agree it should be taken out of the pockets of cities and counties since we have been heavily impacted by numerous State and Federal mandates as well as increased demands for Police, Fire, Public Works, Community Development, Parks and Recreation, and Library services amid continuing recession in many parts of the state. Adding to the plight and dismay of cities is the outcome of Proposition 172. Proposition 172 was approved by voters in November 1993 and increased statewide sales taxes a half percent to augment public safety funding, funding for police and fire services, for example. While it appeared that this measure would offset losses in property tax revenue, most cities only receive a small fraction of the money collected from this Proposition due to the formula used to apportion these funds. For example, Los Angeles County received $370 million so far for 1994- 1995 from Proposition 172, yet has allocated only about $35 million to cities in Los Angeles County, less than 10% of the revenues. Of thefunds--allocated to cities, receives $213,000, an amount far less than a half percent sales tax. If these funds were a ocat�Uiung to formula used- to allocate other sales tax revenues, ovina would have received over $2.5 million. We all know what is at stake regarding the financing of local government services. The true impacts of the recession and the need for increased government revenues have been pushed down to the local level by the State. To save many essential services that are now being threatened, we need to form a unified voice to effect the same changes at the State level that we have been forced to make as cities and counties. Through this resolution we are seeking a shift of an estimated $2.8 billion from the State to cities and counties. This amounts to less than a 576 cut in the State's a year 995-1996 budget. This is not an unreasonable reduction considering e kinds of drastic cuts being made this year by many cities and counties throughout California. We are not seeking a battle with the State over revenue. We simply feel that many local services that are now being jeopardized represent a higher taxpayer priority (e.g., Police and Fire) than other services provided by the State. This is the issue we wish to bring forward with this resolution. We ask that your City Council adopt the attached supporting resolution and either FAX it or mail it to the City of Covina b4 October 18, 1995. FAX to Covina's City Manager, Mr. Fran Delach at 818/858-5556, or mail it to him at 125 E. College Street, Covina, CA 91723. Following receipt of your supporting resolution, Covina will mail you a lapel pin that is now being produced to promote this effort. if you have any questions about this resolution feel IrFe — to call either of us at 818/858-7212. Thank you, A Qo ary Francis M. Z400L Mayor City Manager TMO'L/FMD:CAK RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SUPPORTING THE LEAGUE OF CALIFORNIA CITIES' RESOLUTION ON SALES TAX REDISTRIBUTION TO INCREASE THE AMOUNT RECEIVED BY CITIES TO 2%. WHEREAS, the State receives five times as much sales tax revenue as cities throughout California; and - WHEREAS, the sales talc revenue retained by the State from individual cities often exceeds the general fund budgets of those cities where the sales tax revenue originates; and WHEREAS, cities provide services that directly benefit the quality of life in hundreds of communities throughout California; and WHEREAS, the public benefits of cities' services include the maintenance of property values, reduced risk to health and safety caused by crime, fires, medical emergencies, poor sanitation, and poor building and road construction;.and WHEREAS, cities' services provide important cultural and economic benefits through parks and recreation programs, library and senior programs, removal of blight from inner cities and older neighborhoods, and through business attraction efforts that provide jobs; and WHEREAS, the State has acted to reduce the amount of revenue received by cities in recent years forcing many cities throughout California to augment their revenues by imposing local assessments, fees, or taxes — or to make cuts in essential services; and WHEREAS, because cities receive only a small fraction of the money coL'ected through voter-approved Proposition 172 (Public Safety Augmentation Fund), public safety services like police and fire services face drastic financial reductions in many cities throughout California in light of State takeaways and State-imposed mandates; and WHEREAS, many taxpayers object to paying additional taxes for what they view as diminishing local services caused by these factors, especially while the demand for police services, for example, continues to increase due to rising crime; and WHEREAS, on August 3, 1995, the Los Angeles County Division of the League of California Cities adopted a resolution which seeks legislative action that would result in a more equitable distribution of sales tax revenue by shifting 1% sales tax revenue from the State to cities; and WHEREAS, the League's resolution will help cities provide essential local services without adding more burden to taxpayers; and WHEREAS, on October 24, 1995, the General Assembly of the League of California Cities will vote on this important resolution; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF that the City of does hereby support the League of California Cities' resolution to Redistribute Sales Taxes so that the total received by cities is 2% of the amount paid per dollar on taxable sales. PASSED, APPROVED AND ADOPTED this day of 1995. Mayor ATTEST: ADOPTED RESOLUTION OF THE LOS ANGELES COUNTY DIVISION OF THE LEAGUE OF CALIFORNIA CITIES --ADOPTED AUGUST 3, 1995-- RESOLUTION TO REDISTRIBUTE SALES TAXES WHEREAS, cities throughout California receive 1% of the sales taxes paid on each dollar within their jurisdictions; and .WHEREAS, the State receives 5% of the sales taxes paid on each dollar in each city throughout California; and WHEREAS, the State has reduced the amount of funding to cities in recent years; and WHEREAS, costs of operating cities have increased in recent years due to a variety of factors, including increases in crime and increases in the number of mandates cities must comply with; and WHEREAS, voters throughout the State are weary of paying additional taxes, fees, and assessments for what they view as diminishing local services; and WHEREAS, the above circumstances have led to drastic cuts in the areas of Police, Fire, Library, Parks and Recreation, and Street Maintenance services by many cities throughout California; and WHEREAS, the effects of such cuts, and continued erosion of services in these areas will result in increased crime, reduced property values, reduced sales tax revenues, and increased costs to manage cities; and WHEREAS, the voters throughout California seem to consider such local government services a higher priority than many services provided by the State that are funded with sales tax revenue; now, therefore, be it RESOLVED, that the General Assembly of the League of California Cities assembled in Annual Conference in San Francisco, October 24, 1995, that the League will sponsor legislation or sponsor a ballot initiative effort that will redistribute sales taxes received by the State such that the State's share is 4% and the cities' share is 2% of the sales taxes paid per dollar; and, be it further RESOLVED, that the amount of sales tax revenue to be redistributed shall be allocated to cities using the same method as is currently being used to distribute the existing 1% share per dollar cities receive. INFORMATION & SOURCES Statewide Tax Rat The statewide sales tax breaks down as follows according to the State Board of Equalization. [Legal references were obtained from Mr. John Waid, Senior Legal Counsel, State Board of Equalization (telephone 916/324-3828). Taxable sales information is available from the Statistics Section, Planning and Research Division, State Board of Equalization (telephone 916/445-0840)]. STATEWIDE SALES TAX BREAKDOWN Percents received by Agencies . State Government 5.00% 4 & T Cede 60511 & 60541.3 County - Health & Welfare .50% R & T Code 6051.2 & 6201.2• W & 1 17600 Count - Public Safety* .50% Prop 172 added to State Constitution Cities and Counties# 1.00% R & T Code 7202(a) Counties - Transportation .25% R & T Code 7202 d e Total 7.25% Notes: 'About 10% of the amount apportioned to counties is allocated to cities, except in Alameda County. #Apportioned by place of sale. Do cities receive 1% or 1,25%? The Bradley-Burns Uniform Local Sales and Use Law (Taxation and Revenue 7200 et seq.), does establish the rate for cities and counties at 1.25 percent. But, according to Mr. John Waid, Senior Legal Counsel, State Board of Equalization, .25 percent is reserved for county transportation programs and goes to counties. This is pursuant to sections 7202(d)(e). Hence, cities do not receive 1.25 percent, but 1% in non- restricted general funds. Health and Welfare Realignment Program The amount designated for county health and social service programs of $1.6 billion (according to Western City, August 1995, p. 4), mostly goes only to counties, according to the Sandy Rogerson, Supervisor of Health and Welfare Program, Apportionment Unit of the State Controller's Office (916/322-5089). This is for the Health and Welfare Realignment Program which was approved and went into effect in 1991. This program is codified in Welfare & Institutions Code, Sections 17600 - 17609.15. Only seven cities statewide receive any funds for this program.(San Francisco, Berkeley, Pasadena, Long Beach, and a Tri-City group). -- OVER -- Public Safety Funds These funds were voter approved through Prop 172 in November of 1993 and amount to a .5% sales tax. They are designated for counties and cities that were subject to the property tax shift and are apportioned to counties based on their percentage of statewide taxable sales. Counties allocate funds to cities based on a formula established in Government Code Sections 30052-30054. According to Mr. Lyman Jeung, Principal Accountant of the LA County Auditor's Office (telephone 213/974-8362), and as stated in the Code, there is a limit on how much cities can receive from Prop 172 revenue -- 50% of the amount shifted in property taxes after deducting vehicle registration fee revenue. For example, if a city lost $1 million in property tax revenue but received $200,000 in vehicle registration fee revenue, then the city could receive no more than $400,000 in Prop 172 revenue (1,000,000 - 200,000 = 800,000 ' .50 = 400,000). LA County received $370 million in fiscal year 94-95 (less 1 month) and retained $335 million; cities in LA County were apportioned about $35 million -- less than 10% of the total apportioned to LA County by the State. Mr. Lyman says that counties lost a greater share of property tax revenue during the shift and this is why counties receive a larger share of sales tax revenue from this source. According to Ms. Kwong- McGee at the State Controller's Office (916/324-8365), a number of cities are now complaining how little funding they actually receive -- in some cases counties are retaining up to 95% of these revenues. As an example of what this has meant to cities consider the following example. Prop 172 ushered in a 1/2 cent or .5% sales tax. A 1% sales tax results in $5.7 million to the City of Covina (population 44,000) when it is apportioned based on place of sale. Yet, the 1/2 cent sales tax imposed by Prop 172 resulted in only $213,000 to Covina last year. This has to do with the formula set forth in Government Code Section 30054. If this allocation formula was changed to return the funds based on place of sale, Covina's revenue designated for public safety services would increase by over $2.5 million per year. `,� ��� �� �- �� . .�� ��� �- C �� � . �� �� 1 � / �, �,,� yrl yf Rs of S;41V Lz%s Ora/S�c� C'oc/.v�ys 7 G.9 LLQ) O vR Go v.c/ c L 5 Gt//f. 7`f} 7L-1 ✓E - &7,c A//mi 7't5 jCA(5!zq Or 7y. ���.��s �.✓1`i�v ov�e c��i z s ,g s C1)i 7` 141 Li ✓dL ,,v /.�Gi2 S,i(1G' Ly S fefi iN� D .SDG/AL �/'✓l�.S El�/��NC�D .T�y 7''6�E �,/�i�lLy .D ash �,�- .� .�,� !✓�uss� .�►-.�.� rn.�,v y �� o v'� DvR C� �s f�i9v� s -ell T C�I f/A" o N. 7-iy`L4—' G v7�.va jo4gg v,5,11 adR '-;�'I?y/Ne; 7p rrn,,V.A/ 7fi',y ,V74-- 7OLF EVER y on1A!E: a//lo CdAA f 7O Z / vir-� Z�o L�si�v mss o FZ l��Go��A 7`� V S�v Lv/� o�, sP6 CodPS yol. me I!I C I?QSS . .rte 4 -tl-o -,N/ !s , LC, �1�BLF 7'o Co AI�1-1vgr- Do/ NG GI] ✓a o v2 Ove 7 c17`71 4F-s /996 u1A� LL 1,01?49�.9 101A�-b T mg4.7' 7"AC 6;M LS aF lqCCO(/iv 7',f.6 IZI fy ANS Ri�spoNS1 < Li? e IN y'f�ep. Z?iP1/vy ©vr-� 51xf9t/i cFS ©!JR C/7Li Z J!F_/vS . A&j ;r ✓,r?) ?�ftE ae7 tcl 74W f1 L Lvr,c-)A-r� IN 7`fE U�rri/vcvApolPh 7`iF- ,,b �4 Rte,¢ W/ 7`f/v r/7` eaGL 1?4a73/ Z f' f �D /2 $�/Q ✓/G��' /¢ir/..1� �/�A`�"/� /n'J�A-G 7`s G�lJS� OU,e C/ �S �Xp��SSJ f'O/? dviP Gi74 ��/VS A �Rt�u/�n/G �/sf�! s,�.q c 7i o ry /N r�{�' *6N -2 Alk /P�co��vi z� ov2 cv v�v s Lf} Fc o f/�9S .3EC0/r/� ,9 Y�7�.9'L OiP{,isi i✓ D/r �4it/ D rs�/P�L� Gava/7'y pZo4lV ro �� c0 n/ f"Ro LC Ej 7'hl2✓ A )/0 )`i ivy 13 Loc% ✓1 S o R S i- •,vim 7�Ef�ise R��L Gil/L�ae�-/v, Tf1E Celr7mvw/ 7'-y 1-5 e/ a •J/ �'4 s �1/v�'I13E�S AAI P S7`AR •9 �'�LUlL�a�J /�vR.o G� s� �ES 50Z- a7`70 &1 i9 N� 7"h<� /��l= �R Jay JiSTg113J1;0N OF -e, 0A1