IN THIS ISSUE: May 8, 2009
Issue #17-2009
Page 5: League First Vice President Ken Cooley Leaves Board
Page 6: State May be Liable for Municipal Bankruptcy Unless Cities Oppose Assembly Bill
Support Bill Promoting Sustainable and Livable Communities Through Grants
Page 7: Former San Leandro Mayor and League President Jack Maltester Passes Away
Economic Recovery Update: Broadband Grants Available
DOF’s PROPOSAL BORROWS LOCAL PROPERTY
TAXES TO CLOSE STATE DEFICIT
Department of Finance (DOF) staff on Tuesday, May 5 informed local officials that they have
prepared a May Budget Revision option for Gov. Arnold Schwarzenegger to consider that
borrows 8 percent of local governments’ property tax revenues, estimated at just over $2 billion.
The League will strongly oppose any proposal that puts the funding of state government ahead of
the public safety of city residents. For more, see Page 2.
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LEAGUE’S MAJOR BILL LIST
Each legislative session, the League tracks hundreds of bills with potential impacts to cities but
focuses its lobbying on a much smaller amount of legislation with the greatest potential impact.
For more, see Page 2.
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BUDGET ACTION DAY SCHEDULED FOR WEDNESDAY, JUNE 3
The League is holding a special event in Sacramento on June 3, following the release of the May
Budget Revise to bring city officials to lobby their legislators and administration officials on
possible implications of the May 19
special election results. The timing of this session is designed
to allow many city officials to come in just for the day. For more, see Page 5. 2
‘DOF’ Continued from Page 1…
In a statement the League released Tuesday, League President and Rolling Hills Estates Mayor
Judy Mitchell denounced the proposal. “This proposal is irresponsible and would have disastrous
and long-lasting impacts. Cities are already reducing services due to the recession and can’t
afford to cut public safety and other essential services to bail the state out,” said Mitchell.
Chris McKenzie, League executive director, added: “For most cities police and fire protection
make up 60-80 percent of their budgets.” Californians know how important it is to maintain public
safety. According to a Field Poll released April 30, 74 percent oppose cuts to law enforcement
and police. DOF’s proposal significantly increases the likelihood cities will have to cut the very
public safety services the voters want protected.
The League called on the Governor to reject the DOF proposal. McKenzie said: “The Governor
has said repeatedly that borrowing local property taxes and Proposition 42 transportation funds is
irresponsible. It only deepens the state’s structural deficit and creates an obligation to repay. In
the meantime, local services will be cut severely and citizens’ safety will be put at risk. This is
precisely the type of budgeting that California needs to avoid. The state needs to balance its
budget within its own resources.”
The DOF proposal is fiscally irresponsible. It acknowledges the deep cuts its proposal would
cause at the local level yet it fails to point out that diversion of local property tax funds to finance
the state budget will only deepen the state’s structural deficit; the state is obligated to repay the
property taxes with interest in three years. In the meantime, however, the state will have
decimated local public safety and other essential community services and dug itself a deeper hole
from which it is less likely to recover. This is a step backward to the days of binge borrowing that
brought California to the financial precipice in the first place.
DOF acknowledges that current credit conditions prevent cities from borrowing against the state’s
obligation to repay. What this means is that there is no effective way for local governments to
soften the financial blow of the proposal and cities will face drastic pressures to cut the muscle
out of their budgets and the community services they fund.
The League is prepared to fight vigorously to protect city services to the millions of Californians
who live in cities. The Governor should reject this proposal for the fiscally irresponsible idea it is.
Borrowing local government funds will put public safety at risk and cut community services for
families and children. It will never be acceptable to sacrifice essential local services to fund the
state budget.
Take Action
Contact your League regional public affairs manager and get involved with the League’s efforts to
fight any state borrowing of local government funds. Stay tuned to City Advocate Weekly for
updates on the state budget and local impacts. Also, watch for League Action Alerts on the
budget.
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‘Bills’ Continued from Page 1…
As of May 8, below is a list of major bills affecting cities with a brief description. The League’s
letters and sample letters are available for each of these bills at www.cacities.org/billsearch.
This list will be updated periodically through the legislative year. Below are the major bills
pending in the Legislature of interest to cities and the League:
Oppose
AB 10 (Hagman) Public funding: actions. Prohibits local officials from using public resources to
enjoin the operation of any law or a constitutional provision that was proposed by initiative petition
and approved by a vote of the people.
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AB 128 (Coto) Workers' compensation: cancer presumption. Extends the cancer
presumption limitation for all public safety personnel from the existing five-year limit from
termination of service, to one-year for each full year of service.
AB 155 (Mendoza) Local government: bankruptcy proceedings. Requires local agencies
contemplating bankruptcy to first obtain approval from the California Debt and Investment
Advisory Committee (CDIAC) before filing for bankruptcy.
AB 291 (Saldana) Coastal resources: coastal development permits. Prohibits any city that
has been issued a notice of intent, cease and desist order, notice of violation, or a restoration
order under the Coastal Act from being eligible to submit an application for a coastal development
permit until the violation has been resolved.
AB 396 (Fuentes) Works of improvement: liens. Prohibits retention proceeds from exceeding a
to be determined percentage of the payment, in all public works contracts entered into on or after
Jan. 1, 2010, between the original contractor and a subcontractor and between subcontractors.
AB 479 (Chesbro) Solid waste: diversion. Proposes to increase a jurisdiction’s diversion
requirements for solid waste and dramatically increases the state’s solid waste disposal fee.
Specifically, this bill requires the owner or operator of a business that contracts for solid waste
services and generates more than four cubic yards of total solid waste and recyclable materials
per week to arrange for recycling service, consistent with state and local laws and requirements,
to the extent that these services are offered and reasonably available from a local service
provider. Requires specified local agencies, by Jan. 1, 2011, to adopt commercial recycling
ordinances that include certain minimum requirements. Increases the fee a solid waste facility
operator collects (tip fee) to $3.90 per ton of solid waste.
AB 761 (Calderon, Charles) Mobilehomes: rent control. Provides that upon the sale,
assignment, transfer, or termination of an interest in a mobilehome or a mobilehome tenancy in a
mobilehome park, the management of the park may offer a new rental agreement containing an
initial rent in excess of the maximum rent established by a local measure. The bill provides that,
after execution of the new rental agreement, the local measure shall govern the agreement in all
applicable respects.
AB 853 (Arambula) Local government: organization. Requires Local Agency Formation
Commission boards to process annexation applications for economically disadvantaged areas
near city borders upon receiving support of 25 percent of the residents in that area.
AB 1004 (Portantino) Local government: emergency response. Prohibits public agencies
from taking into account a person’s residency when determining liability for the purpose of
imposing a fee or seeking reimbursement for any expense of an emergency response.
AB 1192 (Strickland, Audra) Cities: powers. Prohibits a city from selling or leasing a public
improvement to a public or private entity for the purpose of renting, leasing back, or repurchasing
through installment payments for existing public improvement.
SB 194 (Florez) Community Equity Investment Act of 2009. Creates new detailed planning
and spending requirements for cities and counties related to nearby economically disadvantaged
unincorporated areas, know as “colonias” to access and spend Community Development Block
Grants funds, strategic growth council planning funds, and other related funding.
SB 518 (Lowenthal) Vehicles: parking services and fees. Requires local agencies within a
metropolitan planning organization to adopt a combination of parking policies that meet a
prescribed point system.
SB 802 (Leno) Public contracts: retention proceeds. Removes the authority of public entities
to decide the appropriate amount of retention. This bill would require that contract retention
proceeds not exceed 5 percent of the payment of all contracts entered into after January 2010
between a public entity and an original contractor, between an original contractor and a
subcontractor, and between all subcontractors.
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Support
AB 18 (Knight) Local government: city councils. Extends the appointment period to fill a city
council vacancy from 30 days to 60 days.
AB 210 (Hayashi) Green building standards. Clarifies the ability of a local government to adopt
green building standards which are more stringent than those adopted by the State and published
in the State Building Standards code.
AB 262 (Bass) American Recovery and Reinvestment Plan: energy activities, programs, or
projects. Revises state law to ensure that federal funds may be allocated according to the
specifications of the American Recovery and Reinvestment Act of 2009 (ARRA).
AB 469 (Eng) Sales and use taxes: qualified use tax payment. Improves the collection of use
tax revenues owed to the state and local governments by consumers and businesses through
clarifications made to state income tax return forms.
AB 596 (Evans) Community planning grants. Creates a new competitive program to provide
funding for planning projects consistent for a number of state goals related to climate change,
public engagement, affordable housing, transit, downtown revitalization, water quality, protection
of farmland and open space, and other planning priorities. Local governments could then
leverage these funds with local money to kick-start needed planning projects across the state.
AB 715 (Caballero) City ordinances: publishing and posting requirements. Authorizes a city,
within 15 days after the passage of an ordinance, to post the ordinance on its official Web site
and to mail notice of passage of the ordinance to those who have filed a written request for
mailed notices in lieu of publishing the ordinance in a newspaper of general circulation.
AB 1284 (Huffman) Substance abuse: adult recovery maintenance facilities. Alters the
process by which the Department of Alcohol and Drug Programs may issue a license for an adult
recovery maintenance facility in three important ways: (1) provides a notice and commenting
procedure so that the local agency may have the opportunity to address specific circumstances
related to the license; (2) allows the department to impose requirement for the health and safety
of the residents of the proposed facility as a condition of licensure; and (3) deny the license if the
proposed facility would result in or exacerbate the over-concentration of facilities within a
particular area.
ACA 9 (Huffman) Local government bonds: special taxes: voter approval. Proposes a
constitutional amendment to be submitted before the state’s voters to allow them to decide if it
was appropriate to adjust voter thresholds for local infrastructure bonds or a special tax to a 55
percent super majority.
SB 268 (Harman) Alcoholism or drug abuse recovery or treatment facilities: licensing.
Assures that state licensed drug and alcohol facilities comply with local zoning codes. It asks
applicants to certify that they are consistent with local zoning codes and then asks the
Department of Drug and Alcohol Programs to verify that statement. In addition, it assures that
state licensed facilities conform to fire codes.
SB 415 (Oropeza) Alcoholic beverages: licenses: local government review. Provides local
agencies with more reasonable standards by which they may review alcoholic beverage license
applications. Specifically, this measure provides that any of the notified local authorities may
request the time extension, and that the review would be extended from 20 days to 30 days.
Watch
SB 93 (Kehoe) Redevelopment: funding construction of public facilities. Contains provisions
which expose local redevelopment projects across California to unnecessary costs, delays and
litigation. Sen. Christine Kehoe (D-San Diego) originally introduced the legislation in response to
what she viewed as an inappropriate use of funds to construct public facilities outside of a
designated redevelopment project area in San Diego, but the bill, as drafted, also affects existing 5
project areas. The League and the California Redevelopment Association are attempting to
resolve issues with the bill while the author has held the bill on the Senate floor.
_____________________________________________________________________________
‘Budget Action Day’ Continued from Page 1…
With California’s fiscal crisis, budget negotiations and testimonies are going to be extremely
important. The budget will likely include a combination of significant cuts and revenue-generating
solutions, and the May Revise will set the tone for the coming weeks of budget negotiations.
California cities need to join forces to respond to any relevant May Revise proposals to ensure
cities’ needs are heard and understood in the Capitol.
Schedule of Events
10 – 11:15 a.m., May Revise Budget Briefing
Citizen Hotel, Metropolitan Terrace, Sacramento, CA
11:15 a.m. – 3:30 p.m., Time for Scheduling Lunch and Lobbying Appointments with
Legislators
R.S.V.P.
Please R.S.V.P to League Staff Meghan McKelvey by May 18 at mmckelvey@cacities.org or
(916) 658-8253.
District Budget Meetings
City officials who are unable to make the trip to Sacramento on June 3 are encouraged to contact
their League public affairs manager to schedule a district meeting with their legislator.
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League First Vice President Ken Cooley Leaves Board
With great regret, Rancho Cordova Vice-Mayor Ken Cooley, recently announced his resignation
from the League board of directors executive committee. Cooley has served as first vice
president since last year and was expected to seek the League’s presidency this summer for the
2009-2010 term.
On April 30, Cooley informed League President Judy Mitchell, mayor, Rolling Hills Estates that he
was resigning due to his recent employment transition in which he had accepted a key position as
staff to a standing committee of the California State Senate. He advised President Mitchell that
despite early indications to the contrary, it had become apparent to him that he could not serve
both the League and the Senate committee without potential or actual conflicts of interest. As a
result, he concluded it was his duty to resign as League first vice president.
In a letter to President Mitchell, Cooley expressed his great sorrow in having to resign from the
League’s board. “My years of involvement with you and our colleagues in our leadership body
have been far more gratifying than I could have ever anticipated,” Cooley wrote.
Rancho Cordova incorporated in 2003 and Cooley has served on its city council since that time,
including as mayor in 2005. He joined the League’s board of directors in 2006 and was elected an
officer in 2008, becoming first vice president later that year. Although leaving the League’s board,
Cooley will remain on Rancho Cordova’s city council.
“All California cities owe Ken Cooley a debt of gratitude for his distinguished service as an officer
and board member. The League is losing a leader of the highest caliber who worked tirelessly in
the best interests of cities. We wish Ken the best of luck in his new position with the Senate and
are pleased that he will still be representing Rancho Cordova on its council,” commented
President Judy Mitchell.
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In accordance with the League bylaws, the League board nominating committee, chaired by
Riverside Mayor and Past League President Ron Loveridge, is currently receiving applications
from interested board members to fill the First Vice President vacancy. The committee’s
recommendation will then be presented to the entire board of directors.
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State May be Liable for Municipal Bankruptcy Unless Cities Oppose Assembly Bill
Oppose AB 155 Now
The Assembly Appropriations Committee staff analysis of AB 155 (Mendoza) raises a number of
concerns and notably considers the state’s liability a major factor in its conclusions. Sponsored by
the California Professional Firefighters, the legislation would require local agencies contemplating
bankruptcy to first obtain approval from the California Debt and Investment Advisory Commission
(CDIAC) prior to filing for bankruptcy.
According to the committee’s analysis (http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0151-
0200/ab_155_cfa_20090505_172112_asm_comm.html) , the state may be fiscally and legally
liable because it gives CDIAC the broad authority to deny a municipality’s access to bankruptcy,
places conditions on bankruptcy filings, and recommends alternatives. The committee analysis
highlights the valid concern of a potentially new state obligation. This isn’t the first time the issue
of substantial state liability has been raised related to municipal bankruptcy.
The League opposes AB 155 because the bill is an unnecessary intrusion into what is
fundamentally a local government’s fiscal decision. Cities don’t take bankruptcy lightly; in fact it’s
often a decision of last resort.
The Legislature should be focused on finding ways to balance its own budget instead of thwarting
local authority to make fiscal decisions. Local governments would be better served with a
guarantee that their revenues are safe from seizure by the state. Not only does the state’s taking
of local revenues harm the fiscal health of cities, it also puts vital public services, such as police
and fire, at risk of being dramatically reduced.
This bill is currently on the Appropriations Suspense File, which means that it has a potential
fiscal impact of more than $150,000. Bills on the Suspense File will be heard in committee the
last week of May.
If your city has not taken action, the time is now. This is a matter of preserving local authority and
it is vital that your city weigh in on this issue.
Please send opposition letters to your legislator and to the office of Gov. Arnold Schwarzenegger.
A sample letter can be found on the League’s Web site at www.cacities.org/billsearch. Enter “AB
155” into the search field to locate the letter.
City officials with additional questions can contact Natasha Karl, League legislative analyst at
nkarl@cacities.org or Dwight Stenbakken, deputy executive director at
dstenbakken@cacities.org.
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Support Bill Promoting Sustainable and Livable Communities Through Grants
The League is encouraging cities to send a letter in support of AB 596 (Evans). This bill would
create a fund to implement provisions enacted through SB 385 (2008). Specifically it would
establish the Community Planning Grant and Loan Fund and authorize the Strategic Growth
Council, upon appropriation by the Legislature to provide competitive grants and loans for
planning projects that promote sustainable and livable communities.
Local planning plays an important role in addressing climate change, providing affordable
housing, and protecting important resources. However, there is not a continuous source of
funding to assure that local agencies have the resources to adopt, update, and implement their 7
plans. AB 596 takes an important step in this direction. Given this year’s fiscal realities, AB 596
does not appropriate funding for the program in the current budget. The program will create
funding that can be used when the state can once again afford to finance such programs.
While this bill is not intended to be a complete source of funding for planning, it creates a new
competitive grant and loan fund that local governments could then leverage to complete a
planning project or update an existing project.
This bill passed out of the Assembly Local Government Committee on April 29 and will be heard
within the next few weeks in the Assembly Appropriations Committee in the coming weeks.
Take action and send your letter of support today. A sample letter can be found online at
www.cacities.org/billsearch by entering “AB 596” in the search field.
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Former San Leandro Mayor and League President Jack Maltester Passes Away
Jack Maltester, former San Leandro mayor and League of California Cities president, passed
away on Friday, May 1. Maltester was 95 years old and died at the home in San Leandro where
he was born in 1913.
Maltester became a public official in 1948 when he was appointed to the San Leandro City
Council. He was subsequently elected to the city council in 1956 and was selected by the council
as mayor two years later. In 1962, he became the first mayor elected directly by the residents of
San Leandro instead of the city council. Re-elected in 1966, 1970 and 1974, Jack’s tenure ended
in 1978 due to a voter-approved two-term limit. He was the city’s longest serving mayor.
Maltester was very active in the League of California cities. He served as League president from
1966-67, as the annual moderator for the Labor Relations Institute sponsored by the League from
1966-1978. Maltester was also president of the San Leandro Chamber of Commerce and U.S.
Conference of Mayors. He was appointed five times to a federal commission by Presidents
Johnson, Nixon and Ford during his term as mayor.
Maltester also received several awards including the League of California Cities’ Past Presidents’
Distinguished Service Award and San Leandro’s Citizen of the Century award in 1999. That
same year, former Gov. Gray Davis also proclaimed Oct. 10 Jack Maltester Day in California.
Residents of San Leandro who knew Maltester observed that he worked hard to bring resources
and development to the city and described his passing as a great loss to the community.
After learning of his passing on Friday afternoon, San Leandro Mayor Tony Santos said “In his
time, Jack was one of the most respected and effective local politicians in the nation, bringing
national prominence to San Leandro during his leadership. He played a huge role in shaping the
wonderful town of San Leandro that we know and love today. Jack is nothing less than a legend
and we will miss him deeply.”
Maltester is survived by his wife of 68 years, Ruth Maltester; a daughter, Jackie Wong; a son,
John Maltester; six grandchildren; and seven great-grandchildren. A memorial service is planned
for May 16 from 11 a.m. – 2 p.m. at the Civic Center Plaza in San Leandro.
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Economic Recovery Update: Broadband Grants Available
The United State Department of Agriculture (USDA) has released grant guidance for $13.4 million
to expand broadband service to rural areas. Local governments are eligible to apply for grants
from $50,000 to $1 million. Grant applicants must match 15 percent of the grant, either in cash or
in kind. Applications will be accepted through June 19.
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Grants will be awarded on a competitive basis and can be used to: construct, acquire or lease
broadband transmission services; improve, expand or lease community centers that provide free
access to broadband for at least two years before, during and after normal work hours and on
Saturdays and Sundays; purchase computer equipment; and provide broadband to all critical
community facilities – first responders, police, etc. – within the proposed Service Area.
The application guide for this grant program can be found on the USDA Web site.
http://www.usda.gov/rus/telecom/commconnect/2009/2009CommConnectAppGuideb.pdf.
City officials are urged to review the April 20 Federal Register announcement (page 17941).
http://edocket.access.gpo.gov/2009/pdf/E9-9006.pdf.
The USDA news release announcing the grants has additional information and is also available
on the USDA Web site.
http://www.usda.gov/wps/portal/%21ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2009
/04/0135.xml.
For questions please contact Megan Taylor, League staff consultant at mtaylor@cacities.org.
_____________________________________________________________________________
IN THIS ISSUE: May 15, 2009
Issue #18-2009
Page 6: California Cities Begin Declaring State of Severe Fiscal Hardship
Page 7: Local Government Associations Plan State Governance Reform Summit
Page 8: CalPERS Board Debates Methods to Ease Economic Pressures on Employer Contribution Rates
Bill Could Double Local Government Costs for Public Safety Personnel with Cancer
Page 9: Apply for Funding from the Neighborhood Stabilization Program
Register Now for Energy Efficiency and Conservation Block Grant Webcast
LEAGUE OF CALIFORNIA CITIES OPPOSES PROPOSED SHOTGUN “LOAN” OF
CITY FUNDS TO BAIL OUT THE STATE BUDGET
Proposal is Reckless and Threatens Californians’ Public Safety
Just as mayors and city councils statewide slash city budgets and reduce services to deal with
the worst economic crisis in decades, they learned Thursday that state leaders may try to coerce
local governments into providing a forced $2 billion bailout of the state budget if the May 19 ballot
measures fail. The May Revise option released by Gov. Arnold Schwarzenegger on Thursday,
May 14, containing that bailout, or “loan,” essentially forces cities to rescue the state from its
financial quagmire and would cripple city services. To take money from cash-strapped cities now
amounts to a profound “anti-stimulus” action by the state. For more, see Page 2.
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SUMMARY OF MAY BUDGET REVISE PROPOSALS
The League has examined both of the May Budget Revise proposals released by Gov. Arnold
Schwarzenegger on Thursday, May 14. The proposals are contingent on the outcome of the May
19 special election. Originally scheduled for release May 28, the Governor moved up the May
Revise to May 14 because he wanted voters to understand the dire choices facing the state
budget. For more, see Page 3.
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GOVERNOR CALLED URGENT MEETINGS WITH CITY OFFICIALS
TO DISCUSS IMPACT OF BORROWING
Earlier this week, Gov. Arnold Schwarzenegger held roundtable meetings with approximately 50
city officials to discuss Propositions 1A-F and the impact of their failure on state and local
services. League President and Rolling Hills Estates Mayor Judy Mitchell joined the Governor at
the meeting he held on Monday in Culver City. Tuesday, the Governor held a meeting in San
Jose which included Campbell Council Member Dan Furtado and Brisbane Mayor Sepi
Richardson. (See the full list of who attended below.) Chris McKenzie, League executive director,
also participated in both meetings. The League endorsed the May 19 special election ballot
propositions on April 6 to help prevent a deeper state fiscal crisis and to enact some long-term
state budget reforms. For more, see Page 4. 2
‘Budget’ Continued from Page 1…
Yesterday, the Governor said he absolutely “despised the proposal.” He also said earlier this
week in a meeting with mayors and council members that he understands this proposal would be
devastating to public safety services and that he did not know how the state would pay back the
loan. Statewide opinion polls consistently show a vast majority of Californians themselves don’t
believe borrowing should be used to balance the state’s budget and oppose public safety cuts.
California cities cannot afford to bail out the state when they are already adopting extremely
painful cuts to balance their own budgets. This shotgun “loan” of city property tax revenues would
force additional service cuts including police and firefighter layoffs and result in longer emergency
response times and fire station closures.
Here is a small snapshot of what some of California’s cities are facing:
• Los Angeles is facing a $529 million budget deficit and Mayor Villaraigosa has
urged the city council to declare a fiscal emergency to give him authority to layoff and
furlough thousands of city employees;
• Rohnert Park may have to lay off 31 employees, including 17 sworn police officers
and nine public safety technicians — and would still not be able to balance its
budget;
• Stockton, to address a $31 million budget deficit, sent layoff notices to 55 police
officers, 35 civilian employees and demoted seven officers; and
• Vallejo, facing bankruptcy, may be forced to decimate city services by 20 percent
and staff are recommending that the city council cut 30 sworn officer positions as
well as close two fire stations;
“It’s absolutely unthinkable that the state would consider sacrificing local public safety at a time
like this. City officials are already making painful cuts locally, laying off employees, cutting
services and much more, to make our budgets balance. Taking local funds used for public safety
to bail out the state budget is the last thing the public wants to see,” said League President and
Rolling Hills Estates Mayor Judy Mitchell.
“It’s painful. We’re going well below our ability to provide essential services. We have nothing left
to cut,” said Vallejo city Council Member Stephanie Gomes.
Reflecting the impact that the stagnating economy has had on city budgets, cities across the state
are passing resolutions declaring a state of severe fiscal hardship. To date, close to 100 cities
have either passed or are scheduled to pass a resolution.
California’s news leaders understand why it’s fundamentally wrong for the state to raid local
revenues. Writing in an op-ed in the Los Angeles Times on May 14, D.J. Waldie, a contributing
editor, expressed it poignantly stating: “The quality of life in California's neighborhoods will be part
of the wreckage. Closed libraries mean kids won't have a place to go after school. Unsupervised
parks means they won't have a safe place to play. Furloughed workers won't be available to
process your business license, check your building plans or deal with your complaint. Everyday
life — the level at which local government works —- will be harder and coarser.”
During the meeting the Governor held with city officials earlier this week, he told the assembled
city officials that he will be under extraordinary pressure to “borrow” local government funds if the
ballot measures fail and the budget deficit reaches $21.3 billion. The League and the city officials
present told the Governor that they strongly opposed any borrowing on top of the $900 million
cities already provide the state each year in city property taxes. The League endorsed the
propositions on April 6.
“The League is supporting Props. 1A - F because they provide a framework for beginning to
responsibly balance the state budget without gimmicks. The state should follow the lead of the
cities of California in dealing with its budget deficit — cut spending, sell assets, enhance
revenues and don’t borrow,” said League Executive Director Chris McKenzie.
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City officials will fight any budget proposal that attempts to raid local property tax revenues to bail
out the state budget.
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‘May Revise’ Continued from Page 1…
The Governor stated that if the voters approve the six measures—placed on the ballot by the
legislature and Governor as part of the February budget agreement—the state will have a $15.4
billion deficit to resolve; however, if those measures are rejected the deficit swells to $21.3 billion.
If the propositions fail, the Governor proposes to borrow $2 billion in local property taxes to help
close the deficit.
Below is a summary of the major provisions of the May Revise:
Proposal #1 (if ballot measures are approved by voters): A projected $15.4 billion state
budget deficit would be resolved through a variety of cuts, program consolidation and borrowing.
Programs with city impacts:
• $34.7 in state savings by deleting reimbursement for Williamson Act subventions;
• $40.1 million in state savings gained by charging fees to employers for Department of
Industrial Relations programs; and
• $336 million in “spillover” gas tax revenues are dedicated to transit bond debt service. An
explanation of the “spillover” is posted online at
www.californiacityfinance.com/SpilloverFAQ.pdf.
Other major budget components include:
• $6 billion in borrowing from state-issued revenue anticipation warrants (RAW);
• $3 billion reduction to K-14 schools, during FY 2008-09 and FY 2009-10;
• $1 billion reduction to CSU and UC funding in FY2008-09;
• $1 billion derived from the partial sale of the State Compensation Insurance Fund;
• $750 million in proposed Medi-Cal changes which require federal waivers;
• $610 million in revenue accelerations from income tax estimated payments;
• $245 million in cuts to social service and health programs to immigrants;
• $248.5 million in savings by reducing state grant funding for aged and disabled;
• $192 million in cuts and anti-fraud efforts to in home supportive service programs (IHSS);
• $179.7 million in reductions and anti-fraud efforts to various Medi-Cal programs;
• $156.7 million in savings from changes to CalWorks (welfare);
• $132 million in savings by shifting to lower cost health care programs. Additional savings
are gained by requiring 25 years of service for new state employees before eligibility
commences for lifetime health benefits;
• $100 million in revenue from an oil and gas lease off the Santa Barbara coast;
• $50 million in savings from consolidating state departments and programs, including tax
collection, energy and waste management; and
• Additional savings from laying-off 5,000 state workers from positions funded through the
General Fund.
Proposal #2 (if ballot measures are rejected by voters): A projected $21.3 billion state budget
deficit would be resolved through these additional measures:
Programs with city impacts:
• $1.982 billion in borrowing property taxes from local government under
Proposition 1A of 2004. A joint powers agency is also proposed to allow local agencies
to borrow as a group against the state’s repayment. Under this proposal the proposed $6
billion RAW (above) would be reduced by $500 million; and
• $76 million from a new 4.8 percent surcharge on insurance policies to partially fund CAL
Fire and local response agencies. Local agencies can receive reimbursement for costs
incurred for responding to emergencies as part of the state’s mutual aid system.
Other major budget components include:
• $2.3 billion in additional cuts to K-14 school programs; 4
• $1.7 billion in revenue acceleration achieved by increasing income tax withholding in the
FY 2009-10 by 10 percent;
• $301.5 million in additional IHSS cost containment;
• $182 million would be saved by deporting undocumented immigrants housed in California
prisons;
• $150 million in additional cuts to CSU and UC;
• $138.9 in cuts to HIV awareness, domestic violence, child welfare and health programs;
• $108 million in savings by eliminating Prop. 36, substance abuse treatment funding;
• $99 million is savings by changing sentencing options so that lower-level offenders serve
time in local jails rather than state prison; and
• $82.9 million achieved in cuts to Healthy Families, Medi-Cal and other programs.
• $0.5 million gained from increasing state park fees.
Please visit the Department of Finance’s Web site at www.dof.ca.gov to access a copy of the May
Budget Revise.
May 19 Special Election
On May 19, six measures are before the voters:
• Prop. 1A: Strengthens state reserve funds, limits excessive state spending.
• Prop. 1B: Repays schools $9.3 billion over time.
• Prop. 1C: Modernizes the state lottery, allows state to securitize $5 billion for budget.
• Prop. 1D: Redirects over $1 billion in tobacco tax proceeds for state budget.
• Prop. 1E: Redirects $460 million from Prop. 63 mental health tax for budget.
• Prop. 1F: Prohibits salary increases for elected state officials during budget deficit.
Other legislation approved by the Legislature contains provisions that provide authority for the
Governor to enact mid-year budget cuts and extend the duration of various tax increases
contingent upon the approval of Prop. 1A.
Additional Context
City officials reviewing this proposal should consider the following:
1. Borrowing local property taxes must be strongly opposed;
2. The direct impact on cities of the remainder of these proposals is minimal. There are no
proposed takeaways of Props. 42 (sales tax on gas) revenues or redevelopment funds,
nor deferrals of local Highway Users Taxes;
3. These are the Governor’s proposals and the legislature may not agree with many of
them. The legislature will advance other proposals which could be beneficial or harmful to
local government;
4. Much can change with the outcome of the May 19 special election if some of the
measures pass;
5. The state faces a major cash flow crisis this summer and the May Revise is silent on
infrastructure bond allocation, economic stimulus and other matters. It is likely, therefore,
that additional proposals will emerge following the election; and
6. As part of the February budget agreement, the legislature approved the FY 2009-10
budget, so technically, the state already has an adopted budget that meets the July 1,
Constitutional deadline. However, the adopted budget is not balanced. How this will affect
the timing of legislative action is unknown.
Take Action: The League is launching Save Your City, an extremely aggressive campaign to
protect local revenue in this chaotic budget environment. Cities are passing resolutions, sending
letters, forming coalitions and making phone calls. It is imperative that city officials work with their
League regional public affairs managers and take action to protect their revenues. Make plans to
attend the League’s Budget Action Day scheduled for June 3 in Sacramento.
_____________________________________________________________________________
‘Meeting’ Continued from Page 1…
City officials asked the Governor about the Department of Finance budget option put forth last
week which would have the state borrow $2 billion (8 percent) of local property tax revenues to 5
help close the state’s budget, telling him of the damaging effects on city services if a state “loan”
of local funds occurs.
“A number of city officials told the Governor they understood the state’s fiscal plight because they
are already making deep budget cuts to core services and any loss of property tax funds to
finance the state budget would be crippling,” said Chris McKenzie, League executive director.
In his initial statements and response to questions, the Governor made it clear that he adamantly
opposes “borrowing” local property taxes even though it was constitutionally permissible under
the passage of Prop. 1A in 2004. The Governor also made it clear that he will be under
extraordinary pressure to consider it to fill the state budget deficit which is estimated at $15 billion
if Props. 1A-F pass and $21.3 billion if the measures fail. He told city officials that he would resist
borrowing local government revenues to the end as it would be the last option as far as he is
concerned.
The May Budget Revise, which the Governor released Thursday, contained two options. For
more on the May Revise please see “Summary of May Budget Revise Proposals.”
Visit the Governor’s Web site to view the transcript from the roundtable meetings.
(http://gov.ca.gov/speech/12296/)
Governor’s Roundtable - Culver City
Andrew Weissman, mayor, Culver City
Barry Waite, council member, Lomita
Bill Bogaard, mayor, Pasadena
Bill DeWitt, mayor, South Gate
Bruce Barrows, mayor, Cerritos
Cliff Numark, council member, Torrance
Frank Ferry, mayor, Santa Clarita
Frank Zerunyan, CCCA president and council member, Rolling Hills Estates
Greg Nordbak, council member, Whittier
Jerry Fulwood, city manager, Culver City
Joe Aguilar, mayor, Commerce
Jorge Rifa, city manager, Commerce
Judy Mitchell, League president and mayor, Rolling Hills Estates
Larry Forester, council member, Signal Hill
Larry Nelson, council member, Artesia
Lois Gaston, council member, Duarte
Mario Guerra, mayor, Downey
Micheal O’Leary, council member, Culver City
Owen Newcomer, council member, Whittier
Peter Yao, council member, Claremont
Portia Cohen, mayor, Manhattan Beach
Richard Montgomery, council member, Manhattan Beach
Ron Beilke, council member, Pico Rivera
Stan Carroll, council member, La Habra Heights
Steve Diels, council member, Redondo Beach
Todd Rogers, mayor, Lakewood
Veronica Guardado, mayor, Maywood
Governor’s Roundtable – San Jose
Breene Kerr, Town council member, Los Altos Hills
Charles Marsala, council member, Atherton
Chuck Page, mayor, Saratoga
Chuck Reed, mayor, San Jose
Dan Furtado, council member, Campbell
Don Perry, vice mayor, Monte Sereno
Ian Bain, council member, Redwood City
Jamie Matthews, vice mayor, Santa Clara 6
Jerry Deal, council member, Burlingame
Kathleen King, vice mayor, Saratoga
Lou Becker, council member, Los Altos
Melinda Hamilton, council member, Sunnyvale
Nancy Pyle, council member, San Jose
Omar Ahmed, council member, San Carlos
Orrin Mahoney, mayor, Cupertino
Perry Woodward, council member, Gilroy
Sue Digre, mayor pro tem, Pacifica
Rose Herrera, council member, San Jose
Sepi Richardson, mayor, Brisbane
_____________________________________________________________________________
California Cities Begin Declaring State of Severe Fiscal Hardship
Dozens Expected to Follow Suit in Coming Days
On Monday, May 11, the first of many cities across California declared a state of severe fiscal
hardship and opposed a proposal to take local property tax funds to finance the state budget.
These actions reflect the impacts that the stagnating economy has had on California’s cities due
to serious declines in local tax revenues. Across the state, many cities are enacting drastic cuts to
their budgets including public safety reductions, employee layoffs, hiring freezes, project delays,
program reductions and more.
More than 100 cities have passed or are scheduled to pass a resolution declaring a state of
severe fiscal hardship by Tuesday, June 2. Many additional cities will be following suit in the
coming weeks as they prepare their FY 2009-10 budget. Cities that have declared or are
scheduled to declare a state of severe fiscal hardship include:
Monday, May 11: Bellflower, Concord, Fort Bragg, Morro Bay, Palo Alto
Tuesday, May 12: Arroyo Grande, Atascadero, Chula Vista, Claremont, Dinuba, El
Cajon, Folsom, Hermosa Beach, Highland, La Mesa, Novato, Salinas,
San Marcos, Santa Clarita, Vallejo, Vista
Wednesday, May 13: Corning, Encinitas, Palm Springs, Santee, Solana Beach, Williams
Thursday, May 14: Citrus Heights, Tehachapi
Monday, May 18: Albany, Biggs, Calimesa, Del Mar, Fortuna, Grover Beach, Hollister,
Lomita, Los Gatos, Merced, Oakdale, Orland, Petaluma, San
Bernardino, Santa Maria, Sonora
Tuesday, May 19: Coronado, Desert Hot Springs, El Monte, Eureka, Fremont, Lemon
Grove, Ione, Loyalton, Mountain View, Poway, Red Bluff, Redding,
Redlands, Riverside, Sacramento, San Luis Obispo, Taft, Tulare,
Yountville
Wednesday, May 20: Atherton, Bakersfield, Imperial Beach, Lodi, Los Banos, Sebastopol
Thursday, May 21: Indian Wells, Rancho Mirage, San Jacinto, Seaside
Tuesday, May 26: Apple Valley, Banning, Blythe, Hemet, Jackson, Millbrae, Moreno
Valley, San Carlos, Temecula, Wheatland, Willows
Wednesday, May 27: Adelato, Cathedral City, Cloverdale, Covina, Grass Valley, San
Anselmo, South San Francisco
Thursday, May 28: Plymouth
Monday, June 1: Selma
Tuesday, June 2: Campbell, Murrieta, Ontario, South Gate, West Covina, Woodland
Wednesday, June 3: Canyon Lake, Indio, Norco
“These resolutions are a sign of the serious financial strain many cities face as a result of the
economic downturn. We can’t allow the state to compound the existing crisis facing many cities
by taking local property taxes or other revenues,” said League President and Rolling Hills Estates
Mayor Judy Mitchell.
Gov. Arnold Schwarzenegger met with city officials Monday in Culver City and Tuesday in San
Jose to discuss Propositions 1A-F on the May 19 special election ballot. The Governor outlined 7
the potential dire consequences facing California if the measures are defeated. The League of
California Cities endorsed the propositions on April 6 to help prevent a deeper state fiscal crisis
and to enact some long-term state budget reforms.
“A number of city officials told the Governor they understood the state’s fiscal plight because they
are already making deep budget cuts to core services and any loss of property tax funds to
finance the state budget would be crippling,” said Chris McKenzie, League executive director who
attended both meetings.
One of the two budget options put forth by the Governor on Thursday, May 14, would borrow
local property taxes. With this official announcement, more and more cities are engaged and
looking to pass resolutions declaring a state of severe fiscal hardship. City officials should contact
their regional public affairs manager to take action.
A sample resolution can be found on the League’s Web site
http://www.cacities.org/resource_files/28002.SAMPLERESOLUTIONFINDINGASEVEREFISCAL
HARDSHIPMay8.pdf.
_____________________________________________________________________________
Local Associations Plan State Governance Reform Summit
Restoring Local Control Will Be Focus of Summit July 17-18
Whatever the outcome of the May 19 statewide special election, there is a growing belief among
Californians and local government leaders that the state government has become hopelessly
dysfunctional. The League board of directors supports the May 19 ballot measures, however it is
keenly aware that late budgets, partisan gridlock, a lack of a long-range fiscal plan and a failure to
address water resources, education and the other major pressing issues of the day are evidence
of the need for fundamental reforms in how the business of California state government is
conducted.
The League supported the establishment of a Fiscal Reform Task Force earlier this year by the
City-County-School (CCS) partnership to study and recommend reforms to the state budget
process and the state and local fiscal systems to address the dysfunction and gridlock that seems
to have infected state government. The CCS Task Force has been meeting for the last few
months and is prepared to submit a list of governance and fiscal reforms to address many of the
problems plaguing state government. The major focus of the preliminary report is on the
importance of restoring local control in our state-local system.
Meeting in Sacramento last month and reviewing the preliminary recommendations of the CCS
Task Force, the League board of directors concluded that it was essential that the League and
our sister local government associations provide leadership on state governance reform. The
board unanimously adopted a resolution
(http://www.cacities.org/resource_files/28001.RESOLUTIONENDORSINGSUMMITONSTATEGO
VERNANCEREFORM-Final.pdf) inviting our county and school board partners to co-sponsor a
Summit on State Governance Reform.
The invitation was recently accepted by the executive committees of both the California State
Association of Counties (CSAC) and California School Boards Association (CSB) and is being
considered this weekend by the delegate assembly of CSBA. Tentatively scheduled for Friday,
July 17 and Saturday, July 18 at the Grand Hyatt Regency in Sacramento, the Summit will
consider recommendations from the task force and feature debates on other ideas on state
governance reform.
In the near future, the League will be inviting cities to designate a representative to attend the
two-day Summit, which will also be attended by League board members who will be ending their
July board meeting early to participate.
_____________________________________________________________________________
8
CalPERS Board Debates Methods to Ease Economic Pressures on Employer
Contribution Rates
The economic downturn has caused the California Public Employees Retirement System
(CalPERS) to lose a $100 billion in its investment portfolio. The CalPERS board and staff have
begun serious talks about what the losses will mean for public agency employer contribution
rates. These losses will have a significant impact on what city employers will be required to pay
into the CalPERS pension fund beginning in FY 2011-12. The PERS Board is exploring methods
to ease the blow to contribution rates because many cities are straining to meet financial
obligations.
Chief Ron Seeling on May 13 presented an alternative method for determining employer
contribution rates to the CalPERS board that could soften the impact of the market losses on
employers. Seeling, referring to the market losses, commented that, “we believe this is a unique
and catastrophic event.” He painted a bleak future for employers by stipulating that using the
current method of determining employer contribution rates, with the losses the fund has
experienced so far, will inevitably have a tremendous impact to local governments.
Seeling’s recommendation involves:
1. Isolating the July 1, 2008 through June 30, 2009 losses;
2. Breaking them into three separate years; and
3. Paying for the losses separately.
According to Seeling, by isolating the losses, CalPERS can generate a higher probability of
improving its funded status. The CalPERS board voted six-to-four to have this issue revisited at
its next board meeting in June. While most board members were relatively supportive of Seeling’s
recommendation, the Controller and the Treasurer raised a number of issues.
Steve Cooney, the Treasurer’s board representative, declared that he was not ready to support
Seeling’s recommendation on the basis that “the economy hasn’t really had a chance to play out.”
He continued that CalPERS is in a unique position to address the larger issue of retirement
security and to inspect what part of defined benefits should be re-examined. Cooney also
remarked that, while certain benefits should be retained, re-examining other policies such as
retirement age makes sense.
Tony Oliveira, local government board representative and Kings County supervisor, attempted to
persuade the members to vote in favor of Seeling’s recommendation by conveying that this is a
local government sustainability issue. He said that if the CalPERS board didn’t take action, the
mounting pressure against defined benefit plans will only get greater and when that’s
compounded with the current fiscal crises, this can become a huge problem for the state and
local governments.
Anne Stausboll, CalPERS chief executive officer, announced that CalPERS will be holding a
constituent meeting on this issue before the next scheduled CalPERS Board of Administration
meeting in June. League staff will send information on the constituent meeting for interested city
officials as it is received.
To see a more detailed look at Ron Seeling’s recommendation please visit:
http://www.calpers.ca.gov/eip-docs/about/board-cal-agenda/agendas/full/200905/item14.pdf.
For questions please contact Natasha Karl, League legislative analyst at nkarl@cacities.org.
_____________________________________________________________________________
Bill Could Double Local Government Costs for Public Safety Personnel with Cancer
The League opposes AB 128 (Coto), a bill which would change the current cancer presumption
law for public safety personnel. Police and fire are covered under the current workers’
compensation law, which provides a presumption for a cancer related injury for up to five years
post-employment. A presumptive injury, illness, or disease under workers’ compensation
presumes that the injury, illness, or disease occurred out of or in the course of employment. The
burden of proof for a non-presumptive injury lies with the employee, but with presumptive injuries 9
the employer must prove that the injury was caused by circumstances other than employment.
Additionally, case law has made it impossible for employers to rebut a cancer presumption.
Current law also affords public safety personnel the ability make a cancer related claim after the
five-year limitation, but the burden of proof shifts back to the injured worker away from the
employer. AB 128 would eliminate the five-year post employment limitation and replace it with
one-year of post employment to file a claim for every year of employment with the agency. For
example, a fire fighter with a 30-year career would have up to 30 years post-employment to make
a claim with the benefit of presumption that the cancer is a result of employment.
Estimates show that 50 percent of people will have some form of cancer at some point in their
lives. AB 128 would give very expensive long-term health care benefits to firefighters for any
cancer at the taxpayers’ expense.
The California State Association of Counties Excess Insurance Authority conservatively estimates
that the current $90 million in cancer claims will double to $180 million under AB 128. They
further testified before the Assembly Insurance Committee that AB 128 could easily triple or
quadruple the costs. The exposure under this new benefit for public agencies and the taxpayers
is tremendous.
The bill passed the Assembly Insurance Committee and will be heard next in the Assembly
Appropriations Committee.
Take Action
Cities are urged to contact members of the Assembly Appropriations Committee to oppose AB
128. A sample opposition can be found on the League’s Web site at www.cacities.org/billsearch.
Enter “AB 128” into the search field to access the sample letter.
_____________________________________________________________________________
Apply for Funding from the Neighborhood Stabilization Program
The Department of Housing and Community Development (HCD) recently issued a notice of
funding availability for the Neighborhood Stabilization Program (NSP). The program was
established by the Federal Housing Economic and Recovery Act of 2008 and provides $3.9 billion
to various entities (including local governments) to purchase abandoned or foreclosed homes.
Cities can use this money to rehabilitate communities affected by the housing crisis. The enacting
law also requires any homes purchased with NSP funds to be sold or rented to low or moderate
income families.
The first round of applications are due by June 15. HCD dedicated the following staff to assist
with the application process and answer any questions:
• Leticia Martinez, lmartinez@hcd.ca.gov, (916) 552-9357
• Charles Ewers, cewers@hcd.ca.gov, (916) 319-8444
• Sharon Hoshiyama, shoshiyama@hcd.ca.gov, (916) 319-8100
• Rita Levy, rlevy@hcd.ca.gov, (916) 327-3822
The application can be found on the HCD Web site: http://www.hcd.ca.gov/fa/nsp/Final_App_5-8-
09.doc.
Take action and apply for funds available through the NSP. Program funds will assist your city in
mitigating the effects of the foreclosure problem.
____________________________________________________________________________
Register Now for Energy Efficiency and Conservation Block Grant Webcast
The U.S. Department of Energy (DOE) has announced a series of webcasts and online resources
on the Energy Efficiency and Conservation Block Grant (EECBG). The next webcast will focus on
the EECBG application process and is scheduled for Wednesday, May 20, from 12-1:30 p.m.
Pacific Time. DOE plans to repeat this webcast weekly, as needed. 10
Agenda for webcast:
• EECBG Program overview and DOE's objectives for successful implementation;
• Solutions Center online tour featuring its resources;
• Discussion of sample strategies;
• Brief presentation by one-to-two local governments to share their preliminary plans and
strategies; and
• Q&A;
To register for the webcast, visit:
http://www.eecbg.energy.gov/solutioncenter/webcasts/default.html
Additionally, DOE has revised and expanded their EECBG Web site, www.eecbg.energy.gov.
The updated Web site features a new online Solution Center
(http://www.eecbg.energy.gov/solutioncenter/eligibleactivities/default.html) that houses best
practices and information resources for each eligible activity under the program.
The application deadline for EECBG formula grants from DOE is June 25.