January 6, 2006
Issue #1-2006
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Gov. Schwarzenegger unveiled a bold agenda for 2006 and beyond in his
State of the State speech on January 5. Recalling the infrastructure invest-
ments made more than 50 years ago by Gov. Pat Brown and other state
leaders, Gov. Schwarzenegger said that it was time to replicate the kind of
investments that “made California the powerhouse it is today.”
For more, see Page 2.
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GOVERNOR UNVEILS 20-YEAR STRATEGIC GROWTH PLAN GOVERNOR UNVEILS 20-YEAR STRATEGIC GROWTH PLAN GOVERNOR UNVEILS 20-YEAR STRATEGIC GROWTH PLAN GOVERNOR UNVEILS 20-YEAR STRATEGIC GROWTH PLAN GOVERNOR UNVEILS 20-YEAR STRATEGIC GROWTH PLAN
MORE DETAILS OF THE PROPOSAL MORE DETAILS OF THE PROPOSAL MORE DETAILS OF THE PROPOSAL MORE DETAILS OF THE PROPOSAL MORE DETAILS OF THE PROPOSAL
TELECOM IN THE NEWS TELECOM IN THE NEWS TELECOM IN THE NEWS TELECOM IN THE NEWS TELECOM IN THE NEWS
Colorado Court Rules City’s Cable Franchise Fee is Legal
The Colorado Court of Appeals ruled in December that Colorado Springs’
cable franchise fee is legal, rejecting a claim by tax activist Doug Bruce that it
is a tax subject to a tax-limitation law that Bruce (an El Paso County Commis-
sioner) authored in 1992. For more, see Page 2.
League staff is currently analyzing the Strategic Growth Plan information
that was posted on the governor’s website immediately following his State of
the State speech on January 5. More details will likely be available when his
complete budget proposal is released Tuesday, January 10. (See also “Stra-
tegic Growth Plan Briefing Packet” at www.governor.ca.gov.)
For more, see Page 3.
EVENTS AND TRENDS OF INTEREST TO CITY OFFICIALS EVENTS AND TRENDS OF INTEREST TO CITY OFFICIALS EVENTS AND TRENDS OF INTEREST TO CITY OFFICIALS EVENTS AND TRENDS OF INTEREST TO CITY OFFICIALS EVENTS AND TRENDS OF INTEREST TO CITY OFFICIALSVisit the League’s Official Website--www.cacities.org PAGE 2 - PRIORITY FOCUS
January 6, 2006 - Issue #1
For the complete story, visit www.gazette.com
and search for the article entitled “State Appeals
Court: City Fees Aren’t Taxes.”
Telecom Legislation Threatens Public Access
TV
An article run by The New Standard on De-
cember 29 discusses the threat federal telecom
legislation could have on public access television
funding.
For the complete story, visit
www.newstandardnews.net and search for the
article titled “Telecom Laws Overhaul Threatens
Public-Access TV, Services.”
Court Upholds Dismissal of Lawsuit to Pre-
vent Municipal Broadband Project
The 8th U.S. Circuit Court of Appeals has
upheld the dismissal of a lawsuit filed by Time
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MEMBERS – SAN JOSE WINS MEMBERS – SAN JOSE WINS MEMBERS – SAN JOSE WINS MEMBERS – SAN JOSE WINS MEMBERS – SAN JOSE WINS
MUNICIPAL ENRICHMENT AWARD! MUNICIPAL ENRICHMENT AWARD! MUNICIPAL ENRICHMENT AWARD! MUNICIPAL ENRICHMENT AWARD! MUNICIPAL ENRICHMENT AWARD!
The governor outlined a “Strategic Growth
Plan,” calling for a $222 billion investment over 20
years in transportation and air quality, K-12 and
higher education, water supply and flood control,
and new or expanded prisons and courthouses.
Describing the pressing needs in each of these
areas, the governor stressed repeatedly, “Let’s
build it!” (An overview of the proposal is available
online at www.governor.ca.gov.)
Funding for the infrastructure proposal would
come from bonds, new fees, federal funds and
existing general funds. The governor stressed that
the proposal includes no new taxes.
Out of $68 billion in proposed bonds, $38 billion
(about 55 percent) is intended for support for K-12
or higher education. In the area of transportation
and air quality, the proposal calls for $107 billion
total investment over the next decade. This
amount includes $47 billion from existing funds,
including Proposition 42 and federal funds. Other
sources are:
• $48 billion in new funding is proposed from
leveraging existing funds.
• $12 billion in new bond funds to attract
increased federal, local and private funding. These
bonds would be approved by California voters in
two $6 billion authorizations in 2006 and 2008.
The proposal also includes plans for a ballot
measure to enact a constitutional amendment to
permanently protect Prop. 42 funding from future
shifts to the state general fund.
(For further information, see “More Details of
the Proposal,” p.1.)
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The City of San Jose was honored for its Dr.
Martin Luther King, Jr. Library with the National
League of Cities’ 2005 James C. Howland Gold
Award.
The James C. Howland Awards for Municipal
Enrichment recognize and highlight communities
that, through effective policies and thoughtful
planning, have preserved and/or enriched a high
quality of life in cities, towns and villages. Subjec-
tive criteria applicants are judged on include the
degree to which the program is innovative; the
success of the local government in implementing
the program; and the extent of the measurable
benefit for the general community and local
government.
The League congratulates San Jose for its
achievement!
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Warner to prevent a municipal broadband project
in North Kansas City, Mo.
To read the court opinion, visit
www.baller.com, click on “Library” and then click
on “Comments, Briefs and Descriptions.” Scroll
down to “North Kansas City Litigation” and search
for the link titled “8th Circuit Rules in Favor of
North Kansas City.”
Continued on Page 3PRIORITY FOCUS - PAGE 3 Visit the League’s Official Website--www.cacities.org
January 6, 2006 - Issue #1
Continued Structural Budget Deficit. The
governor also stressed the importance of contin-
ued fiscal discipline. Reminding his audience of
legislators, state constitutional officers, Supreme
Court justices and others that the state still has a
structural budget deficit, Gov. Schwarzenegger
called for a state constitutional amendment to set
a 6 percent ceiling for the state’s debt service
ratio.
He also called for continued efforts at budget
reform. Acknowledging that the voters rejected
his ballot measure proposal for budget reform
(Proposition 76) last November, he asked legisla-
tors to “tell me how you would do it.”
“Work with me,” the governor said. “Autopilot
spending will send us into the ground, not into the
future. We have not other choice but to prepare
for our future.”
Infrastructure Funding is a Key League
Goal. The League’s first strategic goal for 2006
calls for greater state and local investment “in the
physical infrastructure of California, including, but
not limited to, its roadways, bridges, levees,
parks, libraries, and systems for delivering and
treating water, wastewater and storm water.”
“We applaud the governor’s vision, and his
willingness to tackle the silent deficit in infrastruc-
ture needs that state policy makers have largely
ignored for years,” said League Executive Direc-
tor Chris McKenzie. “We also heartened by the
infrastructure proposals put forward by Senate
Pro Tempore Don Perata’s and Assembly
Speaker Fabian Nunez, which show a similar
commitment to tackle our infrastructure deficit.”
“Cities will be carefully watching as details
emerge, to ensure that significant portions of
infrastructure funding are made available for
streets, roads, transit systems, libraries, levees
and other local infrastructure needs,” McKenzie
added.
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While the League strongly supports expanded
state investment in infrastructure, our initial analy-
sis identifies several areas where city officials will
want clarification. These include the following:
Transportation and Air Quality
The proposal assumes $107 billion in funding
for transportation and air quality over the next 10
years, of which $47 billion would come from
existing sources and $48 billion from new funding
sources. The existing funds include those from
Proposition 42, which voters passed in 2002 to
dedicate the sales tax on gasoline to transportation
projects, including funds set aside for cities and
counties to repair local streets and roads. The
proposal includes plans for a constitutional
amendment to “lock in” Prop. 42 funds for trans-
portation purposes – a proposal that the League
strongly supports. This change would end the
practice of transferring Prop. 42 funds to the state
general fund in times of fiscal crisis.
Will Prop. 42 Funds for Local Street and
Road Repairs Be Reduced? The current Prop.
42 funding formulas call for the city/county annual
share of funds for local street and road repairs to
increase, beginning in FY 2008-09, from the
current level of $127 million for cities and $127
million for counties, to $280 million for cities and
$280 million for counties. These amounts would
then grow over time as revenues in increased.
The Strategic Growth Plan suggests that cities
and counties would be capped at their current
allocation levels, with the additional funds allocated
instead to state projects. The plan notes that
reducing the local allocation would require a two-
thirds vote.
The League is attempting to clarify this issue
with the Department of Finance and with the
governor’s office.
No Proposal to Change Vote Requirements
for Local Transportation Sales Tax Measures.
In the area of “new funding sources,” the Strategic
Growth Plan assumes $9 billion from “extended/
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Continued on Page 4Visit the League’s Official Website--www.cacities.org PAGE 4 - PRIORITY FOCUS
January 6, 2006 - Issue #1
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new local transportation sales tax measures,” but
states that there is no proposal to change two-
thirds vote requirements that apply to these local
funding measures. Existing League policy sup-
ports changes in state law that would make it
possible for cities to pass local revenue mea-
sures with a simple majority vote.
It is worth noting the Strategic Growth Plan
allocates about 55 percent of new bond funds to
K-12 and higher education needs – measures that
can now be passed at the local level with 55
percent voter support, rather than the two-thirds
threshold required for local government revenue
measures.
No Funding for Housing, or Housing-
Related Transportation Projects. The proposal
would fund environmental improvements at ports,
highway improvements, expanded rail and transit
and other projects. None of projects identified
appear to specifically address transit and trans-
portation issues relating to the state’s smart
growth goals, involving infill housing or the means
to address the jobs-housing balance.
Additionally, the Strategic Growth Plan does
not include funding that would address the state’s
urgent need for more housing, and particularly
more affordable housing.
Water and Flood Control
Cities are heartened by the governor’s pro-
posal to upgrade the state’s flood control infra-
structure – an issue of statewide importance.
After the recent storms in California, it is clear that
much needs to be done both at the state and local
levels. While current focus has been on levee
systems, flood control is a statewide concern that
includes not only levees but also flood control
infrastructure for urban streams, creeks and
rivers and alluvial fans.
The plan proposes to invest $35 billion to
“maintain and improve our levee and flood control
system” and for water supply: $21 billion from
existing federal and local funding sources, $9
billion from general obligation bonds, and a new
revenue source, the Water Resources Investment
Fund, which will generate approximately $5 billion
over 10 years. Of the $35 billion total, $6 billion
would be allocated to levees and flood protection
($2.5 billion from bonds), and $29 billion ($6.5
billion from bonds) to integrated regional water
management projects.
The proposal also states that the Administra-
tion will pursue a package of reforms, including
ACA 13 (Harman), which is supported by the
League. This Administration-sponsored measure
is critically needed for local governments to raise
revenue to pay for flood and storm water infra-
structure improvements and operating and main-
tenance expenses.
This will be especially important to any federal-
state-local funding structure that contemplates a
local match component. The League stands ready
to work with the Administration and Legislature on
this critically important issue.
The California Resources Investment
Fund: How Will It Work? As noted above, the
Plan proposes a new fund with revenues derived
from a new fee collected from each retail water
purveyor. Two-thirds of the funds would be re-
turned to locals to fund integrated regional water
projects; the state would retain one-third of the
revenues for statewide water resource manage-
ment programs, including surface storage.
League staff will be carefully analyzing the
budget details after January 10 to determine more
about this new funding proposal: more about how
the fee would be collected and dispersed, and the
specific types of projects it would fund.
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