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HomeMy WebLinkAbout04/06/1993, C-3 - COALITION FOR COOPERATIVE GOVERNMENT RESPONSE TO GOVERNOR'S BUDGET PROPOSAL MEETING DATE: city of san Luis OBISPO COUNCIL AGENDA REPORT ITEM NUMBER:/f FROM: Ken Hampian, Assistant City Administrativ Officer o� Prepared By: David Gray, Administrative Analyst J4 SUBJECT:Coalition for Cooperative Government Response to Governor's Budget Proposal CAO RECOMMENDATION: Endorse the position of the Coalition for Cooperative Government in response to the Governor's budget proposal to take away $2.6 billion in property tax revenues from cities, counties and special districts. DISCUSSION: Back rg_ound The Coalition for Cooperative.Government was organized in 1991 under the leadership of the City of San Luis Obispo to support changes to SB 2557 and to encourage the County of San Luis Obispo not to implement fees charging cities for jail booking and property tax administration. Changes to SB 2557 were. subsequently adopted by the California Legislature as a result of lobbying by cities to soften the financial burden of this cost shift from counties to cities. Although the financial impact was still very significant, cooperative action by the cities, schools and special districts presented a more powerful front to the State and the County. Recently the Coalition for Cooperative Government was reorganized, this time with the participation of the County of San Luis Obispo, to oppose the State takeaway of$2.6 billion in property tax revenues from cities, counties and special districts as proposed in the Governor's 1993-94 State Budget. Local school leaders have again been willing to join with other local governments in opposing this tax shift proposal. All local agencies recognize the importance of once again presenting a unified front to oppose the Governor's budget proposal. Coalition Request The City received a letter signed by Harry Ovitt, Chairman of the San Luis Obispo County Board of Supervisors, .and Julian Crocker, Superintendent of the Paso Robles Public Schools, on behalf of the Coalition for Cooperative Government(Attachment 1). The letter describes the budget proposal and the Coalition's recommendation for a collective response (Attachment 2). Attached to the Coalition letter is the text of a suggested response drafted by several Coalition members (including our CAO) and approved by the Coalition staff. The Coalition is requesting endorsement of their response by this Council and all other local governments in San Luis Obispo County. Coalition Response The position of the Coalition in response to the Governor's budget proposal points out that the shift in property tax funds from local government to public education in effect uses city �,n�i�►;i�►II(IVIIU° lldlll city of San LAS OBISPO COUNCIL AGENDA REPORT dollars to meet the State's obligations to schools,while reducing educational funding overall. The response also cites the historic funding sources of local-.government, the role of those - funds in providing public services, and the need for city services to support the local economy. The response recognizes four key principles: (1) the State must continue and increase its direct support of public education; (2) local funding sources must be protected to preserve the tradition of "home rule"; (3) the State must support local economies and job creation; and, (4) local governments must reduce expenses through cooperation with each other and the State. Ten constructive and specific alternatives to the loss of local property tax revenues are proposed: (1) continue the present 1/2 cent additional sales tax until the economy recovers; (2) give greater local revenue authority to schools and other local agencies; (3) consider removing restrictions on State tax revenues, such as gasoline tax; (4) further reduce the cost of State government; (5) raise additional State revenues by closing tax loopholes, such as mortgage interest deductions on second homes; (6) further reduce the public cost of State Boards and Commissions; (7) provide relief from State mandates; (8) adopt asimple majority, rather than two-thirds,voter approval of general obligation bonds; (9) adopt long- term structural reform of the State Budget; and, (10) provide State incentives for intergovernmental collaboration. Finally,the Coalition emphasizes that local governments are willing to"share the pain"while providing those services which are closest to the people. However, the well-being, health and welfare of our mutual constituents must be preserved. Legislative Action Plan Staff believes that the principles in the Coalition response are consistent with the Legislative Action Plan recently adopted by this Council,i.e. 'balancing the State budget without further loss of City revenues; protecting the City from loss of revenues due to State mandates; and, strengthening opportunities for local fiscal independence." The Coalition intends to implement its own legislative action plan by gaining the endorsement of local governments and jointly communicating the consensus concepts to the Governor, our legislators, and our various statewide organizations, for both breadth and depth of commitment. ATTACHMENTS 1. Letter of Request from Supervisor Ovitt and Superintendent Crocker 2. Coalition for Cooperative Government Position Response Letter g\carcoall du-02- County of San. Luis Obispo COUNTY GOVERNMENT CENTER,RM.370■SAN LUIS OBISPO,CALIFORNIA 93408■(805)781-5011 March 4, 1993 OFFICE OF THE 199 COUNTY ADMINISTRATOR L) John Dunn, City Administrator _ City of San Luis Obispo P.O. Box 8100 San Luis Obispo, CA 93403-8100 Dear Mr. Dunn: The Governor is proposing that the state help balance its budget by severely impacting local government. More specifically,the Governor in his proposed budget for fiscal year 1993-94 has recommended that the state take an additional $2.6 billion from the local property tax revenues of cities, counties and specials districts. While this would partially relieve the state of its responsibility to fund the schools, in actuality it provides no additional financial support. We believe we must as a county "say no," but in a way which offers viable alternatives for the state to pursue. In this vein,the Coalition for Cooperative Government,which is made up of representatives of the county, cities, schools, and special districts has reconvened to put together a list of constructive ideas which can be offered to the state as alternatives to the further taking of local property tax revenue. This group, which was initially formed two years ago to cooperatively address the issue of SB 2557,met on February 19th and produced the attached letter. We propose to send this letter to the Governor, our legislators, and our various statewide organizations. We believe a coalition of local agencies will have a collective "power" which none of us acting separately could achieve. We also believe that the concepts expressed in the attached letter will have considerably more impact if it has the endorsement of every local governmental unit in San Luis Obispo County. As such, the Coalition is asking that this letter be presented to your governing body with a recommendation for its endorsement. In this respect, if your governing body feels it appropriate to suggest modifications in the language of the letter, please insert the modifications and then adopt it. In order to give the parties in Sacramento sufficient time to work with our suggestions, we would lice to send them up as soon as possible. Hence, it would be greatly appreciated if you could inform us of your governing body's action on this letter by March 26, 1993. ATTACHMENT 1 d-j-3 To the best of our knowledge this kind of united approach is not being taken in other counties throughout the state. With quick action, we believe we have the opportunity to be in the forefront of developing solutions to this situation. Your help, and the help of your agency, in presenting this united front will be greatly appreciated. HARRY VITT, Chairman LIAN D. CROCKER, Superintendent San Luis Obispo County o Robles Public Schools Board of Supervisors attachment adm\coopgv[ �3-h� February 26, 1993 DRAFT (BY ED DENTON, LEE WILLIAMS, JULIAN CROCKER AND JOHN DUNN, AND AS AMENDED BY OTHERS) POSITION OF THE COALITION FOR COOPERATIVE GOVERNMENT OF SAN LUIS OBISPO COUNTY (SCHOOL DISTRICTS, SPECIAL DISTRICTS, CITIES AND COUNTY) IN RESPONSE TO THE GOVERNOR'S BUDGET PROPOSAL The Governor's budget proposes to shift to school districts and community colleges $2.6 billion of local property tax that currently is received by cities, counties and special districts. This would relieve the State of$2.6 billion of its funding obligations to education. In essence, the State is paying its obligation with local property taxes taken from one entity and given to another. The Governor's budget proposal, on the surface, takes property tax from local governments and gives it to the schools. In reality it reduces the State's constitutional obligation to fund education, thereby increasing the State's income at the expense of cities and counties.- It is a blatant property tax grab from local government in California, and a reduction of State funding to education. Historically, in California, State government has been supported by personal and corporate income tax, and local government has been financed by property taxes. The Governor's budget proposal amounts to a historic and fundamental tax shift of property taxes away from local government, and using that money to address the budget deficit of the State of California. While the Governor's budget emphasis is on job creation, the State's reduction in property tax support for local government will cost local government many jobs, jobs which provide critical services to California citizens. Our collective position is that California local government should not be weakened by the State's taking of critically-needed property tax revenue, nor should California.education be weakened by a reduction of State support for it. ATTACHMENT 2 J We urge the Governor and the State Legislature to recognize the following principles: 1. The State must continue, and increase, its historic support of education, for it is only through the education of our future citizens that the State can remain strong and competitive in a world economy. 2. The State must preserve or create a protected, predictable source of financing for the local agencies of California. In the past there has been a strong local home rule tradition, and this must be preserved in order to give local agencies a sense of protection, independence and stability and reduce the volatility and unpredictability of local government finance which leads to the perpetration of a continual crisis situation. 3. The State must encourage and support local agency's efforts to maintain a viable local economy and to create and maintain jobs for its citizens. 4. Local government must recognize the need to look for opportunities for cost savings by identifying commonly-provided services, exploring possible consolidation and/or contracting arrangements to cut overhead and to save money. This can best be accomplished by all units of local government working together in a cooperative fashion, with State assistance in the form of incentives to encourage such cooperation. Therefore, in recognition of our goals and the reality of the State's financial position, we believe it is our collective obligation to come up with constructive alternatives for consideration by the Governor and State Legislators. We believe; for the short term: 1. The State should continue the present 1/2 cent sales tax until the State's fiscal emergency eases through economic recovery. 2. All local agencies, including school districts, should be given greater authority and flexibility for independent revenue raising and service delivery. 3. The State should consider removing the restrictions on use of certain State tax revenues, with gas tax being one example. 4. The State should share a portion of the current fiscal burden by incorporating the Governor's earlier mandated departmental budget reductions,to further reduce the cost of State government. 5. The State should consider raising additional revenue by closing tax loopholes. Cj 4 6. The State should totally re-evaluate the purpose, function, productivity and benefit Gof all State Commissions and Boards, and delete those not meeting bonafide and explicit State objectives. 7. All local government and local school districts should identify onerous State mandates, and the State should relieve local governments from those mandates providing marginal benefit to State objectives. We believe, for the longer term: 8. The Governor and the Legislature should sanction majority voter approval for general obligation bonds for capital facilities, and special taxes for operating purposes. 9. The State should study and implement the difficult structural reforms necessary to ensure the long-term fiscal health and viability of the State. There needs to be a long-term plan developed for meeting people's needs and for financing the State programs necessary to do this. 10. The State should establish incentives to encourage intergovernmental collaboration among cities, counties and school districts. To do our part, members of the Coalition for Cooperative Government will look at opportunities for cost savings by listing commonly-provided services, and exploring possible consolidation and/or contracting arrangements to cut overhead and to save money. In conclusion, we realize that the State of California is in an extremely difficult financial situation. Because of this we realize that local government agencies will have to be part of a "shared pain" process. However, we genuinely believe that the Governor's budget proposal, in its initial form, represents an unwarranted and unwise assault on our established and historical system of local government financing in California. We realize our obligation to prepare constructive alternatives to the proposal and, in the text above, we have done that. Counties and cities and special districts are an integral part of the system of government in California. We, in combination with local school systems, are those levels of government closest to the people we serve. Our services to our citizens and our integrity must be respected by the State legislature as they go through the difficult process of dealing with the fiscal crisis and, at the same time, preserving what should be preserved for the well-being, health and welfare of our common citizens. JD:mc h:proposal d-3-7