IN THIS ISSUE: June 5, 2009
Issue #21-2009
Page 6: League of California Cities Major Bill List
Page 7: Cities Continue to Declare State of Severe Fiscal Hardship in Wake of Budget Proposals
Page 9: Appellate Court Says No to Taxpayer Class Actions
NLC Update on Federal Climate Change Legislation
Page 11: “Red Flags” Rule Delayed Until Aug. 1
Federal Collective Bargaining Bill May Have Little Impact on California Public Employers
Page 12: CalPERS Evaluates New Health Plan Design Options with Cost-Sharing In Mind
Find a Bill, Legislators, Leg Committee, or Ask League Leg Staff
Upcoming Events
CITY OFFICIALS DESCEND ON CAPITOL TO OPPOSE BUDGET PROPOSALS
AFFECTING CITIES
Close to 150 officials descended on Sacramento on Wednesday, June 3 to tell lawmakers about
the dire consequences that cities would experience if the state borrows local property taxes, or
attempts to seize or borrow transportation revenues to help close the state’s $24.3 billion deficit.
The city officials came to the Capitol as part of the League’s Budget Action Day. For more, see
Page 2.
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MUNICIPAL BANKRUPTCY BILL MOVES OFF ASSEMBLY FLOOR
AB 155 (Mendoza) moved off the Assembly floor on Wednesday, June 3 on a 47-25 vote and
now moves to the Senate. The bill would require local agencies contemplating bankruptcy to first
obtain approval from the California Debt and Investment Advisory Commission (CDIAC) prior to
filing for bankruptcy. Recent amendments would also authorize CDIAC to charge local
governments a fee to cover the costs associated with rendering a decision as to whether a
municipality would be granted the ability to file for bankruptcy. For more, see Page 5.
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INVITATION TO LOCAL GOVERNMENT SUMMIT ON GOVERNANCE AND FISCAL
REFORM: JULY 17-18, SACRAMENTO
City officials are invited to attend and participate in a historic summit meeting of city, county and
school officials in Sacramento, July 17-18 at the Hyatt Regency to discuss and debate the
emerging proposals to reform California’s governance and fiscal systems. For more, see Page 5. 2
‘Budget’ Continued from Page 1…
Budget Action Day began with a briefing at the Citizen Hotel that included presentations by
League President and Rolling Hills Estates Mayor Judy Mitchell, League Executive Director Chris
McKenzie, League Legislative Director Dan Carrigg and League Fiscal Consultant Michael
Coleman. Tom Vu, California Special Districts Association legislative director also made a brief
presentation. City officials were joined by representatives from the California Special Districts
Association as well as approximately 60 firefighters from Sacramento Metro Fire.
State Controller John Chiang addressed the group. The city officials assembled at the Citizen
were anxious to hear Controller Chiang discuss the state’s cash flow crisis. Previously the
Controller has said that he is opposed to borrowing local government revenues to help close the
state’s budget deficit.
Many of the city officials at Budget Action Day came from the more than 200 cities that have
declared a state of severe fiscal hardship.
During the event, the League’s regional public affairs managers were armed with video cameras
and recorded testimonials by city officials who had not had the opportunity to create a video for
www.SaveYourCity.net. A large group of firefighters recorded a joint video outside the Capitol to
tell lawmakers in unison not to take local funds. There are now more than 300 testimonials on the
Web site.
Budget Action Day ended with a briefing in the Capitol where the following legislators came to
address the League:
Sen. Alex Padilla (D-Los Angeles)
Senate Republican Leader Dennis Hollingsworth (R-Murrieta)
Assembly Member Alyson Huber (D-Lodi)
Assembly Member Cameron Smyth (R-Santa Clarita)
Assembly Member Anna Caballero (D-Salinas)
Assembly Member Jim Nielsen (R-Biggs)
Assembly Member Dan Logue (R-Chico)
Budget Proposal Summary
There have been a number of different budget proposals put forward in recent weeks that would
borrow or take local government revenues. Below is a summary of these proposals.
Proposition 1A
Borrowing local government property taxes under Proposition 1A (2004) remains on the table.
The Department of Finance (DOF) proposed an 8 percent across-the-board approach. The
Legislative Analyst Office (LAO) and others have suggested alternate formulas which could mean
that enterprise special districts should lose their remaining property tax shares because they can
raise fees. The LAO has also suggested that the Legislature is free to come up with other means
of distributing the hits
Transportation Funding
DOF and LAO have proposed both cutting and borrowing local transportation funding as part of
the solution to balance the state budget.
DOF proposes to take virtually all of the local share of Highway User Tax Account (gas tax) in FY
2009-10 and 72 percent going forward to pay for highway bond debt each year until the debt is
retired. The local share would be reduced in most years from $1.03 billion to approximately $300
million. However, in the coming fiscal year, through a formula adjustment involving weight fees,
the local share would be reduced from $1.03 billion to just $44 million. DOF claims that the
California Constitution (Section 5 of Article XIX) allows the state to take 25 percent of gas tax
revenues for bond debt repayment and can take all of this from the local share. This would relieve
pressure on the General Fund to pay debt service. 3
Local gas tax funds have been a reliable source of funding since the 1970’s, and losing these
funds would be devastating to local road maintenance and repair. Local transportation projects
also provide jobs, which in turn provide income tax and sales tax revenue to the state. Taking
these funds is an “anti-stimulus” proposal which will only hurt California communities and
businesses, and ultimately will reduce state revenues.
League attorneys have analyzed the legalities of this proposal and believe it is unconstitutional on
several fronts.
LAO proposes both a one-year suspension of the local gas tax revenues, and a partial
suspension of the Proposition 42 transfer, the sales tax on gas.
Borrowing Local Gas Tax Subventions: Rather than take local gas taxes as DOF proposes, LAO
proposes instead to borrow $1.03 billion in gas tax funds from local governments in FY 2009-10.
LAO says the state would repay it with interest within three years, as required pursuant of Article
XIX, Section 6 of the California Constitution.
Borrowing Prop 42 (Sales Tax on Gas): LAO proposes to suspend 80 percent of the Prop. 42
transfer for FY 2009-10, resulting in less funding for state highway projects and for local streets
and roads. The suspended amount would be approximately $1.2 billion (approximately $600
million from cities and counties). It would have to be repaid within three years according to the
same criteria that applies to borrowing local property taxes under Prop. 1A (2004). LAO has also
proposed a repeal of Prop. 42, but the voters would need to approve this proposal.
Transit: DOF has proposed redirecting $315 million in Public Transportation Account funds to
pay for debt service on transit bonds.
Corrections/Public Safety
The Governor’s budget includes nearly $1.2 billion in cuts to the California Department of
Corrections and Rehabilitation (CDCR), in addition to a $400 million unallocated cut made in the
budget passed in February. The new proposals include commutations of sentences for
undocumented immigrants (which would be turned over to the federal government for
deportation), early release of prisoners to be monitored by GPS, and changes in sentencing
options for specific crimes that can be treated as either felonies or misdemeanors (wobblers). The
largest part of the cuts would come from elimination of most rehabilitative services such as
substance abuse treatment and education programs.
COPS/Booking Fees: COPS, Booking Fee and other local public safety programs are currently
being funded by the new 0.15 percent increase (Approx $500 million per year) in the Vehicle
License Fee adopted as part of the February Budget. LAO has proposed taking one half of these
revenues for the General Fund.
Emergency Response Funding: Discussions continue over the details of DOF’s proposal to
allocate $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.
Mandates
DOF released a proposal to suspend all Non Prop 98 mandates (except those related to law
enforcement and property taxes), and defer payments for current mandate claims. LAO has
recommended suspension of mandates related to animal shelters. Under Proposition 1A, local
governments are not obligated to perform mandates that the legislature suspends.
Redevelopment
Cities with redevelopment agencies need to remain on guard against budget proposals affecting
redevelopment. Even though the California Redevelopment Association (CRA) prevailed against
the state in its recent lawsuit challenging a September 2008, legislative effort to take $350 million 4
from redevelopment agencies, rumors and discussions continue among legislative staff and
others about additional efforts to take redevelopment funds or “redevelopment reform.”
Clearly any proposal dealing with redevelopment would have fiscal impact to local governments.
The League has been working with CRA to prepare to respond to any proposals that emerge.
State-Local Government Fiscal Relationship Reform
Senate President Pro Tem Darrell Steinberg (D-Sacramento) has mentioned his interest in
instigating a larger discussion of reforming the state-local government fiscal relationship. While
no details are available, one aspect of this discussion involves shifting some health care
responsibilities to local governments.
According to an article in the Los Angeles Times June 3, funding for the programs would come
from the state, however, locals would have to keep the costs contained or find funding if the costs
rise. Another aspect of this discussion would involve lowering the voter threshold at the local level
for tax increases. It is unclear when such discussions would occur.
Bottle Bill Program Deficit
The Department of Conservation on Monday, June 1, announced that the state’s beverage
container program has a negative balance of $157 million. This bottle bill program funds city and
county grant payments for recycling (at $10 million annually) as well as the state’s bottle and can
CRV recycling program.
The administration’s plan to address this massive deficit, submitted to the legislative budget
committees this week, makes proportional cuts to the program. It also included a policy that
grants could only be given if the program had a surplus.
List of Officials Opposed to Borrowing Grows
Along with Controller Chiang, other constitutional officers and legislators have come out against
borrowing. A number of these state officials have made a video for www.SaveYourCity.net
including Republican Gubernatorial Candidate Tom Campbell, Sen. Dave Cogdill (R-Fresno),
Sen. Jeff Denham (R-Merced) and Assembly Member Tom Berryhill (R-Modesto).
Other state level officials who have publically said they oppose borrowing local government
revenues include Insurance Commissioner and Republican Gubernatorial Candidate Steve
Poizner, Senate Republican Leaders Dennis Hollingsworth (R-Murrieta), Sen. George Runner (R-
Antelope Valley), Sen. Bob Huff (R-Glendora), Assembly Member Steve Knight (R-Palmdale) and
Assembly Member Jim Nielsen (R-Biggs).
Key Budget Process Players
The Budget Conference Committee includes five legislators from the each the Assembly and
Senate: Assembly Member Noreen Evans (D-Santa Rosa) is chair. Other appointed members
include: Assembly Member Kevin de Leon (D-Los Angeles), Assembly Member Bob Blumenfield
(D-Woodland Hills), Assembly Member Roger Niello (R-Sacramento), Assembly Member Jim
Nielsen (R-Biggs), Sen. Denise Ducheny (D-San Diego), Sen. Bob Dutton (R-Rancho
Cucamonga), Sen. Mark Leno (D-San Francisco), Sen. Alan Lowenthal (D-Long Beach) and Sen.
Mimi Walters (R-Laguna Hills).
The “Big Five” is comprised of the Governor, Senate President Pro Tem Darrell Steinberg,
Assembly Speaker Karen Bass, Senate Republican Leader Dennis Hollingsworth and Assembly
Republican Leader Sam Blakeslee.
Call to Action:
1. Keep Up The Pressure! City officials need to continue to speak to their legislators about
the impacts of these pending budget proposals on their communities. The most recent
talking points used by city officials are on the League’s Web site. 5
http://www.cacities.org/resource_files/28084.BAD_budget_talking_points
_FINAL.doc
2. Spread The Word! Local officials are community leaders. Make sure you harness the
power of your community by educating your residents, business leaders, labor and other
groups about the importance of these proposals to your community.
3. Record a Video Testimonial: City officials who have not made a video testimonial for
www.SaveYourCity.net should contact their regional public affairs manager. Encourage
others in your community do so as well.
_____________________________________________________________________________
‘AB 155’ Continued from Page 1…
Assembly Republicans held strong in opposing the measure. Assembly Member Juan Arambula
(D-Fresno) also opposed the bill stating that a vote in favor of it was clearly a move toward
thwarting local authority. He continued that the decision to go into bankruptcy is not a decision
that is taken lightly among locally-elected officials.
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.
Cities that have not taken action should do so now. It’s a matter of preserving local authority and
it is vital that your city weigh in on this issue.
The League urges city officials to send opposition letters to their legislator and to the office of
Gov. Arnold Schwarzenegger. An updated 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.
_____________________________________________________________________________
‘Summit’ Continued from Page 1…
Co-sponsored by the League through the City County School Partnership, the event is a great
opportunity to help influence the future direction of the state. The summit was originally proposed
by the League’s board of directors.
Summit participants will:
• Hear from experts;
• Consider whether we need a constitutional convention; and
• Work with peers to create a plan for reform local governments need.
Details
Registration for the summit is $80 for elected and senior appointed city and county officials and
school board members, $120 for others.
Register online at www.cacities.org/events. County officials should register through CSAC and
school board members through CSBA.
Hotel reservations can be made through Hyatt. Call (800) 233-1234 and ask for the special Local
Government Summit room block rate of $124 plus taxes for the night of July 17.
6
The memo League Executive Director Chris McKenzie sent this week is available on the
League’s Web site.
http://www.cacities.org/resource_files/28073.CityofficialmemoJune1.pdf
_____________________________________________________________________________
League of California Cities 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.
As of June 2, below is a list of major bills affecting cities with a brief description. The League’s
letters and sample letters are available 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 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 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 815 (Ma) Public contracts: bidding procedures: Has place-holder language, clarifying
existing law shall not be construed to prohibit a local public entity from requiring a bidder to
review all relevant bid documents provided by the local public entity, including but not limited to
architectural or engineering plans and specifications, prior to submission of a bid, and report any
errors and omissions noted by the contractor to the architect or owner. The legislation intends to
address the decision on a public contracting case before the California Supreme Court that could
potentially hold local agencies responsible for costly change orders if the local agencies fail to
provide complete, full, and accurate plans and specifications, including cost efforts. This
premature effort should be put on hold entirely until the courts render their decision.
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.
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.
SB 786 (Yee) Civil procedure: attorney's fees and costs. This measure prohibits a prevailing
defendant from being awarded attorney’s fees in any anti-SLAAP claim (Code of Civil Procedure
Section 425.16) in which the underlying litigation arose from an action under the Brown Act,
Public Records Act, or Bagley Keene Act. 7
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 83 (Feuer) Torts: personal liability immunity. Expands Good Samaritan protections for
volunteer law enforcement, fire, and medical personnel for medical and non-medical acts of
emergency care.
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 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 726 (Nielsen) Transportation capital improvement projects. Includes “local road
rehabilitation” among the list of eligible types of projects that may receive STIP funding, subject to
regional discretion pursuant to current law.
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 93 (Kehoe) Redevelopment: funding construction of public facilities. Restricts the
funding of public facilities outside a redevelopment project area. In order to fund public facilities
outside of, or not contiguous to, a project area the legislative body would have to make specified
findings and these findings would be subject to legal challenges. The revised amendments,
however, make no substantive changes in redevelopment agency authority to fund public facilities
inside or contiguous to a redevelopment project area.
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.
SCA 18 (Liu) Local government: property-related fees. This measure would include fees for
storm water management programs to those exemptions already included in Proposition 218. In
doing so, it would make it easier for cities to fund and comply with new and increasingly stringent
storm water quality permit requirements adopted by the regional water quality control boards.
_____________________________________________________________________________
8
Cities Continue to Declare State of Severe Fiscal Hardship in Wake of Budget Proposals
Since May 11, 211 cities across California have declared a state of severe fiscal hardship and
opposed a proposal to take local property tax revenues to finance the state budget. Cities are
already struggling to balance their own budgets: enacting drastic cuts including public safety
reductions, employee layoffs, hiring freezes, project delays, program reductions and more.
Below is a list of the cities that have declared a state of severe fiscal hardship to date:
Adelanto
Albany
Antioch
Apple Valley
Arcata
Arroyo Grande
Artesia
Arvin
Atascadero
Atherton
Bakersfield
Baldwin Park
Banning
Beaumont
Bellflower
Benicia
Biggs
Blythe
Buena Park
Calimesa
Calipatria
Canyon Lake
Carlsbad
Carmel
Carson
Cathedral City
Ceres
Chowchilla
Chula Vista
Citrus Heights
Claremont
Clayton
Cloverdale
Clovis
Coachella
Coalinga
Colfax
Colusa
Commerce
Concord
Corning
Corona
Coronado
Covina
Crescent City
Culver City
Del Mar
Delano
Desert Hot Springs
Dinuba
Dorris
Duarte
Dunsmuir
El Cajon
El Cerito
El Monte
Elk Grove
Encinitas
Escondido
Eureka
Fairfield
Folsom
Fort Bragg
Fortuna
Fowler
Fremont
Gardena
Grass Valley
Grover Beach
Hanford
Hawthorne
Hemet
Hermosa Beach
Hesperia
Highland
Hollister
Imperial
Imperial Beach
Indian Wells
Indio
Ione
Irwindale
Jackson
La Canada Flintride
La Mesa
La Puente
La Quinta
La Verne
Lake Elsinore
Lakewood
Larkspur
Lathrop
Lemon Grove
Lindsay
Lodi
Lomita
Long Beach
Los Angeles
Los Banos
Los Gatos
Loyalton
Lynwood
Mammoth Lakes
Marina
Marysville
McFarland
Menifee
Merced
Millbrae
Modesto
Monrovia
Montebello
Monterey Park
Moreno Valley
Morro Bay
Mount Shasta
Mountain View
Murrieta
National City
Nevada City
Norco
Norwalk
Novato
Oakdale
Oceanside
Ontario
Orinda
Orland
Oroville
Pacific Grove
Palmdale
Palm Springs
Palmdale
Palo Alto
Paradise
Perris
Petaluma
Pittsburg
Placentia
Plymouth
Pomona
Portola
Poway
Rancho Cordova
Rancho Cucamonga
Rancho Mirage
Red Bluff
Redding
Redlands 9
Redondo Beach
Rio Vista
Riverside
Riverbank
Rocklin
Rohnert Park
Rosemead
Sacramento
Salinas
San Anselmo
San Bernardino
San Carlos
San Clemente
San Francisco
San Gabriel
San Jacinto
San Leandro
San Luis Obispo
San Marcos
San Rafael
Sand City
Sanger
Santa Clara
Santa Clarita
Santa Cruz
Santa Fe Springs
Santa Maria
Santee
Seaside
Sebastopol
Selma
Solana Beach
Sonoma
Sonora
South Gate
South Lake Tahoe
South San Francisco
Stockton
Susanville
Taft
Tehachapi
Temecula
Torrance
Tulare
Vacaville
Vallejo
Victorville
Visalia
Vista
Walnut
Walnut Creek
Wasco
Watsonville
Weed
West Covina
Wheatland
Whittier
Wildomar
Williams
Willows
Windsor
Woodland
Yountville
Yucaipa
_____________________________________________________________________________
Appellate Court Says No to Taxpayer Class Actions
Local governments secured an important win last week when the Second District Court of Appeal
issued its decision in Ardon v. City of Los Angeles. In this case, the court confirmed that a single
taxpayer cannot bring a class action lawsuit “on behalf of himself and all others similarly situated”
for a tax refund. Rather each individual must bring a separate claim.
A contrary ruling would have imposed substantial but unknown potential liabilities on local
governments. When presented with a class claim, local governments would not know who or how
many were claiming a tax refund and for what amounts. This potential for uncertain liability would
have placed local governments between a rock and a hard place when budgeting.
“Such class claims for tax refunds [would] force local governments either to impound tax revenue
and thus make revenue unavailable to meet basic needs—or to spend the revenue to meet basic
needs now, and risk major budget cuts or the issuance of bonds later. Class claims thus defeat
the chief purpose of the pre-lawsuit claim presentation requirement, which is to allow
governments to accurately plan for potential liabilities,” explained Peter Keith, Deputy City
Attorney for the City and County of San Francisco and drafter of the League’s amicus brief in this
case.
The taxpayer is likely to seek review by the California Supreme Court. The League will continue
to monitor this case, and if review is granted, the League will file an amicus brief in support of the
City.
The court’s full opinion is available online at http://www.courtinfo.ca.gov/opinions/.
____________________________________________________________________________
NLC Update on Federal Climate Change Legislation
Several weeks ago, the federal House Energy and Commerce Committee passed comprehensive
energy reform and climate change legislation. While this legislation is nowhere near its final form,
National League of Cities (NLC) staff has provided a short summary of key provisions as they
relate to local government.
Eight other House committees are expected to consider portions of the bill that fall under their
jurisdiction: Agriculture, Education and Labor, Financial Services, Foreign Affairs, Natural 10
Resources, Science and Technology, Transportation and Infrastructure, and Ways and Means.
As the bill continues to move through the House, NLC will continue to advocate for funding for the
Energy Efficiency and Conservation Block Grant, local adaptation projects and energy efficient
transportation solutions. The U.S. Senate has not yet drafted companion legislation.
State Energy and Environmental Development Account
The bill establishes a State Energy and Environmental Development (SEED) account, which
would serve as the state repository for managing and accounting for emission allowances for
renewable energy and energy efficiency purposes. Not less than 12.5 percent shall be distributed
to local governments for energy efficiency and renewable energy purposes.
Buildings
There are several sections of the bill pertaining to residential and commercial buildings, including
establishing a building retrofit program and a building energy performance labeling program.
While municipal buildings are not specifically mentioned in these programs, they are not
specifically excluded either. The provision that would affect local governments most directly is the
proposal for a National Building Code Energy Efficiency Target and a National Energy Efficiency
Building Code for residential and commercial buildings.
States and local governments with code authority would be required to adopt the national code or
other code that meets or exceeds the target. From 2012 through 2050, states would receive
emissions allowances for their SEED account for building code compliance. In any state that is
out of compliance and a local government is in compliance, emission allowances would be
provided to the local government. Local governments would be able to use their SEED allocations
for this purpose as well.
Adaptation
The bill would establish a National Climate Service within the National Oceanic and Atmospheric
Administration to develop climate information, data, forecasts, and warnings at the national and
regional scales, and to distribute information related to climate impacts to state, local, and tribal
governments and the public to facilitate the development and implementation of strategies to
reduce society’s vulnerability to climate variability and change. States will be required to develop
a climate change adaptation plan.
Renewable Electricity Standard
The bill would establish a renewable portfolio standard, which would apply to utilities that sell
more than 4 million megawatt hours (MWh) of electricity to consumers, requiring 20 percent of
electricity to come from renewable resources by 2020, and allowing up to one quarter of the
requirement to come from energy efficiency measures. States could petition to reduce their
renewable requirement to 12 percent and 8 percent efficiency. Based on 2007 data from the
Energy Information Administration, 21 public utilities produced more than 4 million MWh.
It is important to note that in California, investor owned utilities are already required to comply
with a 20 percent RPS by 2010. The California legislature and state agencies are additionally
contemplating a 33 percent renewable portfolio standard for investor owned and publicly owned
utilities by 2020.
Transportation
Under this provision, each state would be required to submit to EPA goals for transportation-
related greenhouse gas emissions (GHG) reductions. Each MPO with a population greater than
200,000 must submit a transportation plan to EPA/DOT outlining the strategies to be used to
achieve the goals. EPA/DOT may award grants to states or MPOs to support related activities.
For California regions, the likely result of this provision would require the regional MPOs to submit
their plan to achieve a regional transportation related target as required by SB 375 to the federal
government 11
Energy Efficiency and Conservation Block Grant
The bill amends the Energy Independence and Security Act of 2007 pertaining to the Energy
Efficiency and Conservation Block Grant (EECBG):
1) removes limits on funds received by communities through the EECBG program that can
be used to fund revolving loan accounts;
2) allows small communities to join with other neighboring small communities in a joint
program of sufficient size to be defined as an eligible local government recipient under
the EECBG program.
_____________________________________________________________________________
“Red Flags” Rule Delayed Until Aug. 1
The Federal Trade Commission (FTC) announced on April 30 that it would once again delay
enforcement of the “Red Flags” rule requirement until Aug. 1.
The League raised Fair and Accurate Credit Transaction (FACT) Act compliance last August and
many cities have experienced pressure to comply with the new “Red Flags” rule, which requires
some cities to implement written identity theft prevention programs. The Federal Trade
Commission has moved the deadline for compliance from to May 1 to Aug. 1.
The FACT Act added new provisions to the Federal Credit Reporting Act to protect consumers
against identity theft. New regulations require financial institutions and creditors to develop and
implement written identity theft prevention programs.
The FTC has developed a Web site (http://www.ftc.gov/redflagsrule) to help entities covered by
these rules design and implement identity theft prevention programs.
Please contact Natasha Karl, legislative analyst, with questions regarding these new rules at
nkarl@caciteis.org.
____________________________________________________________________________
Federal Collective Bargaining Bill May Have Little Impact on California Public
Employers
For the third consecutive year, the U.S. House of Representatives has introduced the Public
Safety Employer-Employee Cooperation Act. H.R. 413. Sponsored by Dale E. Kildee (D-MI), this
legislation has been hailed by federal Democrats as a necessary measure and President Obama
has said he would sign the bill.
H.R. 413 would require local governments to collectively bargain with public safety officers and
outlines a number of minimum requirements including: granting safety officers the right to join and
form unions; provide for bargaining over hours, wages, and terms and conditions of employment;
make available an interest impasse resolution mechanism; and, require enforcement through the
courts.
According to Liebert Cassidy Whitmore analysis, California does meet the requirements set out in
the bill and it is likely that we would not be subject to it should it become law and California would
continue to bargain under the Meyers-Milias-Brown Act. However, if litigation is pursued
regarding this bill the courts may ultimately determine whether California’s collective bargaining
laws would be exempt.
Giving exclusive authority to the Federal Labor Relations Authority (FLRA) to enforce the
requirements laid out in H.R. 413 as well as tasking the entity with making the determination as to
whether California and other states satisfy the criteria has been a hot issue. Giving such authority
to a federal agency has raised a number of concerns among states that currently have
collectively bargaining laws in place.
____________________________________________________________________________
12
CalPERS Evaluates New Health Plan Design Options with Cost-Sharing In Mind
On May 29, members of the Health Benefits Committee of the CalPERS board continued to
evaluate new health plan design options in an effort to keep premiums as low as possible. This
discussion happened a few weeks after Gov. Arnold Schwarzenegger released the May budget
revise. The Governor, to save $132 million, proposed having the state negotiate and contract
directly with health care providers instead of through CalPERS.
While CalPERS hasn’t released any details as to what it’s considering, members of the Health
Benefits Committee contend that CalPERS’ goal is to "balance the members' need for low
premiums with an opportunity for each member to have meaningful benefit choices.”
Labor groups attending the meeting raised a number of concerns including the issue of adverse
selection or the pattern in the health care industry where individuals choose their health care plan
options based on their own assumed risk of getting ill. Those who see themselves using their plan
more may choose a more substantial plan, whereas individuals that assume they are less likely to
become sick may choose a less substantial plan. According to labor, by isolating individuals that
are more likely to use their health plan at a higher rate you may inadvertently make the cost of
those plans rise, but only on those the individuals that utilize their plan more and this can cause a
disparity.
CalPERS is considering a number of plan design options which would decrease monthly
premiums through increased cost-sharing in the form of higher co-pays and out-of-pocket
maximums. The new plan offering will consider cost-sharing in office visits, hospital inpatient and
outpatient services, emergency room services, generic and brand-name prescription drugs, and
out-of-pocket maximums.
Labor representatives asked the committee to think about this as a cost-shift option from
employer to employee not a cost-sharing option. Regardless of whether CalPERS’ health care
plan designs are going to be seen as a cost-shift or cost-sharing, health care costs continue to
rise and public employers are bearing the brunt. Employer groups have argued that with city
revenues declining, the Governor’s threat to raid city coffers, and the enormous cost of health
care—something has to be done.
CalPERS will be scheduling stakeholder meetings to discuss this concept. League staff will
continue to keep members informed.
Please contact Natasha Karl, legislative analyst, with any questions at nkarl@cacities.org.
_____________________________________________________________________________
Find a Bill, Legislators, Leg Committee, or Ask League Leg Staff
Visit (and bookmark!) the League’s Legislative Resources Web page
(www.cacities.org/legresources). You’ll find a roster and contact information for the League’s
legislative staff; the online Bill Search program, background materials on lobbying your
legislators, and more.
_____________________________________________________________________________
Upcoming Events
June
The American Recovery and Reinvestment Act of 2009: Capital Fund Recovery
Competition Grants. The federal Department of Housing and Urban Development
(HUD) will begin accepting applications from public housing authorities for $1 billion
available from this program. Applications for grants in the Energy Efficiency category are
due by July 21. Applications for the other three categories are due by Aug. 18. (For 13
more information see the section on Public Housing Capital Fund in the League’s City
Funding Book, www.cacities.org/federalstimulus.)
5 1 - 3 p.m., Redding, Eureka, Santa Rosa - The California Energy Commission,
administering the Energy Efficiency and Conservation Block Grant (EECBG) Program
funds for small cities and counties, will hold workshops in Redding at Shasta College,
Eureka at Eureka City Hall, and Santa Rosa at the Justice Joseph A. Rattigan State
Building to discuss the EECBG program and guideline development. For more
information please visit www.energy.ca.gov/recovery.
5 Last day for Assembly to pass Assembly and Senate bills
8 1 - 3 p.m., Modesto, Monterey, Riverside - The California Energy Commission,
administering the Energy Efficiency and Conservation Block Grant (EECBG) Program
funds for small cities and counties, will hold workshops in Modesto at Stanislaus County
Chambers, Monterey at Monterey Peninsula College, and Riverside at the California
Tower to discuss the EECBG program and guideline development. For more information
please visit www.energy.ca.gov/recovery.
15 Budget Bill must be passed by Midnight
19 The American Recovery and Reinvestment Act of 2009: Financing Opportunities
for California’s Public Agencies. All-day seminar sponsored by CA I-Bank and CA
Debt Investment and Advisory Commission. Information for public agencies on
accessing the “recovery Zone Economic Development Bonds”, a new type of financing
vehicle for infrastructure, job training and other projects authorized by the federal
stimulus legislation. For information and registration, go to
http://www.treasurer.ca.gov/cdiac/seminars.asp.
Upcoming League Events:
July
17-18 Summit on Governance and Fiscal Reform, Sacramento
June 12, 2009
Issue #22-2009
IN THIS ISSUE:
Page 4: Become a Recycling Market Development Zone
Page 5: Additional ARRA Funding Opportunities for Cities
Page 7: California I-Bank to Hold June 19 Briefing on New Bonding Option for Cities and Counties
Lobbying Time on Budget Issues during Sacramento Policy Committee Meetings
Court Rules for Counties in Property Tax Administration Fee Dispute
Page 8: Register Now for the 2009 National Summit on Your City’s Families
BUDGET CONFERENCE COMMITTEE TAKES LOCAL GAS TAX FOR TWO YEARS:
PROPOSAL WOULD DEVASTATE CITY STREET MAINTENANCE
AND TRAFFIC SAFETY
No Decision yet on Proposal to Borrow Local Property Taxes
Budget activities in the Capitol ended on Thursday with devastating news to local governments
when the Budget Conference Committee approved taking two years of local Highway User Tax
Account (HUTA) funds. This amounts to $986 million in FY 2009-10 and $750 million in FY 2010-
11. The vote was party-line: Democrats "Aye", Republicans "No." The action by the Budget
Conference Committee, if sustained by the legislature, will directly contradict limits placed on the
legislature’s use of HUTA funds in Proposition 5 in 1974 and Prop. 2 in 1998. The action also has
tremendous implications for city budgets which have relied on this stable source of revenue for
important transportation projects since the 1970s. The League will be delivering the Governor and
Legislature an authoritative legal opinion questioning the constitutionality of the HUTA raid.
For more, see Page 2.
••••••••••••••••••••••••••••••••••••
PARTICIPATE NOW IN LEAGUE SURVEY ON IMPACT OF BUDGET PROPOSALS
City officials that have not done so are urged to respond to a League survey on the impact cities
will experience if the state borrows 8 percent of local property tax, takes the local share of the gas
tax and borrows Proposition 42 funds to balance the state budget. For more, see Page 3.
••••••••••••••••••••••••••••••••••••
INVITATION TO LOCAL GOVERNMENT SUMMIT ON GOVERNANCE AND
FISCAL REFORM JULY 17-18, SACRAMENTO
City officials are invited to attend and participate in a historic summit meeting of city, county and
school officials in Sacramento, July 17-18 at the Hyatt Regency to discuss and debate the
emerging proposals to reform California’s governance and fiscal systems. For more, see Page 3.
••••••••••••••••••••••••••••••••••••
2
‘Budget’ Continued from Page 1…
The committee rejected a Legislative Analyst’s Office (LAO) proposal to borrow Prop. 42 (sales
tax on gas) funds. The committee also approved the release of $700 million in remaining Prop.
1B local street and road funds, of which $258 million remains available for cities. No action has
yet been taken by the committee on the Governor’s proposal to borrow local property taxes under
Prop. 1A. The committee also left open an LAO proposal to take half of the VLF money dedicated
to local public safety.
In Friday’s Budget Conference Committee meeting, members received new trailer bill language
from DOF that proposes to borrow the funds through an ERAF shift to get around the
maintenance of effort requirements. Because the members received the trailer bill language
within minutes of the discussion beginning, the committee closed down the meeting and
continued the discussion on borrowing property taxes until some time over the weekend or
Monday.
The committee meetings this week follow a great deal of activity by the League and city officials
to fight proposals to borrow local property taxes as well as take these funds.
LAO had proposed borrowing local HUTA revenues for one year, which is authorized by the
Constitution, but this proposal was rejected during the discussion. While these funds go to
transportation projects, if the state takes them, it will have implications beyond what they
traditionally support. The “Big City” mayors told Gov. Arnold Schwarzenegger on Tuesday that
loss of these funds would impact public safety because cities would have to supplement
transportation project needs from the General Fund.
Another ripple effect of the state taking or borrowing HUTA is the potential violation of city storm
water National Pollutant Discharge Elimination System (NPDES) permits. A number of cities use
their HUTA funds for street sweeping and street maintenance. In addition, many of the city storm
water NPDES permits specifically state that the city must sweep the street a specified number of
times per week and list specific maintenance projects in the permits.
If HUTA funds are taken, cities would be forced to backfill the funds required to do street
sweeping and maintenance from other sources. Without the ability to fund street sweeping or
maintenance, cities could fall out of compliance with their NPDES permit fairly quickly.
A large transportation coalition sent the Governor a letter on Friday, June 5, calling the proposal
to divert and/or borrow gas taxes to close the budget gap fiscally reckless. The League joined this
coalition and has posted a copy of this letter on the League’s Web site.
http://www.cacities.org/resource_files/28102.June 2009 Joint CoalitionLetter No42Borrowing 6 5
09.pdf
While Thursday’s action by the Conference Committee will have many severe consequences on
local street and road programs, several things could alter this course:
1. The budget fight may bog down on other provisions, giving local government,
transportation groups, affected local employees and local residents time to rally
opposition to change or reverse this proposal.
2. The Republicans have the ability to hold out with the two-thirds vote, but some
Republicans on the committee indicated that they would support a one-year grab of these
funds.
3. Big-Five discussion may alter shape of the final deal (there has been some discussion of
the need to increase state fees or gas taxes.)
4. The League’s legal opinion on the unconstitutionality of this proposal will be shared soon
with the Governor, and may change his mind about the viability of this proposal.
5. A lawsuit could be filed to seek an injunction while the courts review the constitutionality
of this proposal.
League Officers Meet with Governor
3
A majority of the League’s executive officers came to Sacramento on Wednesday to meet with
the Governor. Present at the meeting was President and Rolling Hills Estates Mayor Judy
Mitchell, Second Vice President and Modesto Mayor Jim Ridenour, Immediate Past President
and former San Diego City Council Member Jim Madaffer, Executive Director Chris McKenzie
and Legislative Director Dan Carrigg.
It was a good meeting and the officers reiterated our strong opposition to a budget based on
borrowing as well as proposals to take Highway User Tax Account (HUTA), or gas tax, from cities
as a revenue source for the state budget.
Executive Director McKenzie told the Governor that DOF’s proposal to take the local share of
HUTA is unconstitutional and that the League would provide him with an authoritative legal
opinioin on the matter in the near future (see above). The Governor seemed very interested in
receiving the legal analysis the League has completed on this matter. The Governor also noted
the growing opposition to the Prop. 1A borrowing by Senate Republican Leader Dennis
Hollingsworth (R-Murrieta) and Senate President Pro Tem Darrell Steinberg (D-Sacramento).
This caused him to wonder if the Legislature is open to other cuts or steps to avoid it. The
Governor said that he does not want to implement policies that would cause permanent harm to
local government.
President Mitchell and Executive Director McKenzie delivered a memo to the Governor on June
10 outlining the impact of the proposed borrowing of Prop. 1A and the unconstitutional HUTA
raid. A copy of that letter has been posted on the League’s Web site
http://www.cacities.org/resource_files/28103.GovernorJune10.pdf.
Big City Mayors Meet with Governor
On Tuesday, a number of the “Big City” mayors met with the Governor, continuing their efforts
from last week to lobby on budget issues. Wednesday’s meeting included Sacramento Mayor
Kevin Johnson, Los Angeles Mayor Antonio Villaraigosa, San Diego Mayor Jerry Sanders,
Fresno Mayor Ashley Swearengin and Santa Ana Mayor Miguel Pulido. The mayors again told
the Governor how cities would be devastated if the state borrows or takes local revenues for the
state’s budget.
Mayor Villaraigosa said that Los Angeles would be forced to lay off approximately 1,400 police
officers if his city loses 8 percent of property taxes. San Diego, Mayor Sanders said, would have
to cut an additional $75 million from the city budget beyond the $180 million they’ve already cut, if
the state takes these local funds.
Save Your City Campaign
The League has been working against the proposal to borrow 8 percent of cities’ share of
property tax since it emerged. Fighting this borrowing proposal was the impetus behind the
launch of www.SaveYourCity.net several weeks ago. The Web site’s momentum has been
tremendous with close to 400 video testimonials uploaded on the Web site.
This week, Assembly Member and Local Government Committee Chair Anna Caballero (D-
Salinas) came out against borrowing local revenues and posted her own video communicating
her stand. As former mayor of Salinas, the Assembly member knows first hand how this proposal
would impact cities. Assembly Member Caballero is the first Democratic legislator to come out
against borrowing.
Senate Republican Leader Dennis Hollingsworth (R-Murrieta) also posted a video on
www.SaveYourCity.net this week saying that the Senate Republican Caucus is against borrowing
Prop. 1A and that this is one of the worst kinds of borrowing because it affects public safety and
vital services at the local level.
When Senate President Pro Tem Darrell Steinberg (D-Sacramento) announced his budget plan
on Tuesday, June 9, he also said that he and his fellow Democrats were against the Governor’s
proposal to borrow the almost $2 billion in local property taxes for the state’s deficit. The Senate
President Pro Tem proposes using the state’s $4.5 billion reserve to close the $24 billion deficit. 4
Cities across California have continued to pass resolutions declaring a state of severe fiscal
hardship. Since May 11, 236 cities have taken this action to communicate the devastation of
proposals to borrow or take local government revenues would have on cities.
Assembly Speaker Outlines Revenue Generating Ideas
Assembly Speaker Karen Bass (D-Los Angeles) said on Wednesday that she’s seeking new
revenue sources to help balance the budget without decimating programs. However, as reported
in the Sacramento Bee on June 11, the Speaker did not comment on the specific options included
in her proposal.
_____________________________________________________________________________
‘Survey’ Continued from Page 1…
Participation in the survey is important because the information gathered is extremely helpful in
the League’s ability to communicate the full impact of these budget proposals on cities.
The survey is available online at:
http://cacities.qualtrics.com/SE?SID=SV_9GFyMiBtlAmy5VO&SVID=Prod.
The League wishes to thank the cities that have already taken the survey.
_____________________________________________________________________________
‘Summit’ Continued from Page 1…
Co-sponsored by the League through the City County School Partnership, the event is a great
opportunity to help influence the future direction of the state. The summit was originally proposed
by the League’s board of directors.
Summit participants will:
• Hear from experts;
• Consider whether we need a constitutional convention; and
• Work with peers to create a plan for reform local governments need.
Details
Registration for the summit is $80 for elected and senior appointed city and county officials and
school board members, $120 for others.
Register online at www.cacities.org/events. County officials should register through CSAC and
school board members through CSBA.
Hotel reservations can be made through Hyatt. Call (800) 233-1234 and ask for the special “Local
Government Summit” room block rate of $99 (reduced from $124) plus taxes for the night of
July 17.
________________________________________________________________________
Become a Recycling Market Development Zone
The California Integrated Waste Management Board began the 2009 cycle of its Recycling
Market Development Zone (RMDZ) Designation Program at its March meeting. This action was
taken to fill seven vacant RMDZ slots.
The program provides direct low-interest loans to businesses and local governments located in
designated zones that increase diversion of non-hazardous solid waste from landfills. Becoming a
RMDZ enables local governments to access a number of benefits including: relaxed building
codes and zoning laws, streamlined local permit processes, reduced taxes and licensing, and
increased and consistent secondary material feedstock supply.
The RDMZ 2009 Web site includes various resources including the application, instructions and a
question and answer section. http://www.ciwmb.ca.gov/rmdz/Designation/default.htm 5
Although the official application period doesn't start until July 1, the application and supporting
materials were released early to ensure that applicants have enough time to complete the
California Environmental Quality Act review process before the application deadline.
Interested applicants are strongly encouraged to begin this process as soon as possible.
Regulations require that applicants submit their RMDZ application to the board no later than 120
days after the designation cycle begins—Oct. 29 at 4 p.m.
For more information or questions regarding this program, please contact Mitch Delmage, RMDZ
Designation Coordinator, at (916) 341-6290.
_____________________________________________________________________________
Additional ARRA Funding Opportunities for Cities
The League has continued to update the “City Funding Book,” which was originally published in
February to highlight funding opportunities for cities contained in the American Recovery and
Reinvestment Act (ARRA).
The most recent update includes information on several additional programs that present
important opportunities for cities. The following summarizes these additions. (For more
information see the June 12 version of the “City Funding Book”, available on the League Web site
at www.cacities.org/federalstimulus.)
New Financing Options—Bonds and Tax-Credit: ARRA provides significant new financing
methods for state and local governments by expanding the types of projects that can be financed
on a tax-exempt basis, creating several new categories of tax-exempt and tax-credit bonds, and
giving issuers the temporary ability to issue governmental obligations as either taxable tax-credit
bonds or subsidy bonds. ARRA also increases the tax benefits afforded to banks and other
holders of tax-exempt bonds. The majority of these provisions are temporary and only apply
to obligations issued in 2009 and 2010.
The following information summarizes key information on the types of bonds available. Local
agencies may be eligible to utilize all of these options. Cities should consult with bond counsel to
learn more about these options and their applicability to city projects.
Build America Bonds (BABs): These are “taxable” bonds that can be issued by the city. The
city however can chose to:
• Direct a federal interest subsidy to the issuer equal to 35 percent of the interest payable on
the BAB (subsidy BABs); or
• Elect to authorize a federal tax credit to bondholders equal to 35 percent of each interest
payment payable on each interest payment date (credit BABs).
Recovery Zone Economic Development Bonds (RZEDBs): This bonding option is available to
cities with a population of over 100,000 and counties that have designated a “recovery zone”
within their jurisdiction. Bonds under this category may be issued by qualifying cities and counties
as “taxable.”
In contrast to the BAB subsidy or credit of 35 percent, RZEDBs provide:
• A direct federal subsidy to the issuer equal to 45 percent of interest; or
• A federal tax credit to bond holders equal to 45 percent of interest.
• Issuers must be in control of “recovery zone” designations.
Recovery Zone Facility Bonds: ARRA creates a new tax-exempt qualified private activity bond,
known as Recovery Zone Facility Bonds (RZFBs), to support trades or businesses in areas
suffering from economic distress, and provides $15 billion of authority for counties and large cities
(but not states or other governmental units) to issue such bonds. Typically, the bonds would be
issued by the city or county and proceeds loaned (or the project leased or sold) to a for-profit
company as the true borrower and real party in interest. 6
Small Issue Industrial Development Bonds (IDBs): ARRA provides for a significant expansion
of the current ability of state and local governments to issue small issue IDBs in 2009 and 2010 to
finance facilities beyond manufacturing of tangible personal property. As under current law,
projects are subject to a $10 million maximum issue size.
Tax-Credit Bonds: There are several tax-credit bond provisions in ARRA, in addition to the tax
credit type of “Build America Bonds” described in No. 1 (above) and in the “Recovery Zone
Economic Development Bonds” described in No. 2 (above).
These target the following sectors:
1. Recovery zones as described above;
2. “Green” energy; and
3. Public schools.
Unlike bonds that bear interest that is exempt from income tax, tax-credit bonds pay the holder a
federal tax credit in lieu of interest. With tax-credit bonds, the federal government is directly
providing the subsidy to the bondholder rather than the issuer paying the bondholder interest.
Of particular interest to cities are:
• New Clean Renewable Energy Bonds (CREBs): Up to $2.4 billion ($1.6 billion more than
available currently) may be issued by all types of state and local government issuers,
municipal utilities, electric cooperatives and certain cooperative lenders. A broad range of
renewable generation facilities are eligible for financing. The project must be owned by a
municipal utility, a state or local government, or a cooperative electric company, but may be
leased to or operated by or its output sold to a private company. New CREBs provide
bondholders with federal tax credits equal to 70 percent of the interest on the bonds. The
balance of any interest is paid by the issuer.
• Qualified Energy Conservation Bonds (QECBs): ARRA provides authority to issue an
additional $2.4 billion (for a total of $3.2 billion) of Qualified Energy Conservation Bonds
(QECBs) originally authorized by legislation in 2008. All types of state and local governments
may issue these bonds to fund a broad array of “green” expenditures including: (1)
implementing green community programs, (2) grants to support research in emerging energy
technologies, (3) rail and bus facilities, (4) public education programs, (5) renewable energy
facilities, and (6) demonstration projects for emerging energy technologies.
Information for the preceding section was obtained by League staff through consultation with
Congressional staff, the State Treasurer’s office, the California Infrastructure Bank, and a
publication by Orrick Herrington & Sutcliffe LLP, entitled “The American Recovery and
Reinvestment Act of 2009: What It Means to You and Your Financing Options”. The League
thanks Orrick for granting permission to adapt their publication. For more details on these
bonding options, please visit www.orrick.com/fileupload/1657.pdf.
2009 Summer Youth Employment Program: ARRA includes $1.2 billion in grants to states to
supplement existing Workforce Investment Act (WIA) youth activities, including summer
employment. WIA youth funds provide economically disadvantaged youth with training and other
services to provide them with the skills necessary to obtain unsubsidized employment, complete
secondary or post-secondary education, enter the military service, or enroll in a qualified
apprenticeship program. The $415 million allocated to California nearly doubles the amount of
WIA funds the federal government has made available to California in the current fiscal year.
Strengthening Communities Fund – Nonprofit Capacity Building Program: Cities are among
the organizations eligible to apply for grants up to $1 million and serve as a sponsoring
organization under the Strengthening Communities Fund (SCF) Nonprofit Capacity Building
program. (Grantees must provide at least 20 percent of the total approved cost of the project.)
The goal of this program is to better equip community organizations to help low-income
individuals secure and retain employment, earn higher wages, obtain better-quality jobs, and gain
greater access to State and Federal benefits and tax credits. 7
Transportation Investment Generating Economic Recovery (TIGER): This program
administered by the Department of Transportation consists of $1.5 billion in discretionary grants
for projects that include, but are not limited to, capital investments in:
1. Highway or bridge projects;
2. Public transportation projects;
3. Passenger and freight rail transportation projects; and
4. Port infrastructure investments, including projects that connect ports to other modes of
transportation and improve the efficiency of freight movement.
Local governments are eligible, along with states, U.S. territories, tribal governments, transit
agencies, port authorities, other political subdivisions of state or local governments, and multi-
state or multi-jurisdictional applicants.
Check the City Funding Book Regularly. To view new and updated information on these and
other funding opportunities, visit the League’s Web site at www.cacities.org/federalstimulus.
_____________________________________________________________________________
California I-Bank to Hold June 19 Briefing on New Bonding Option for Cities and Counties
The California Infrastructure Bank (I-Bank) is interested in working with eligible cities and counties
to pool bond sales within California of Recovery Zone Economic Development Bonds (RZEDBs),
as authorized under the federal American Recovery and Reinvestment Act.
I-Bank representatives believe that the larger offerings will be more attractive to the bond buyers,
and benefit the cities and counties issuing bonds by achieving greater economies of scale that
will allow them to access the taxable market in a cost effective manner, achieve lower interest
costs, and achieve lower administrative costs to participating local agencies.
The I-Bank will conduct a detailed briefing on this program on June 19, at the Ziggurat Building in
West Sacramento, from 8:30 a.m. to 3:15 p.m. Registration is $75. Online registration is available
at www.treasurer.ca.gov/cdiac/seminars.asp. Interested cities may also contact the I-Bank via
email at ibank@ibank.ca.gov.
____________________________________________________________________________
Lobbying Time on Budget Issues during Sacramento Policy Committee Meetings
With budget discussions in the Capitol likely still in full gear when the League’s policy committees
meet in Sacramento, June 25-26, there will be special budget briefings for committee members
and opportunity to lobby.
Both days of policy committee meetings with begin with a budget briefing at 10 a.m. in room 315
(3
rd
floor) in the Sacramento Convention Center. Following the briefings, members will move to
their individual policy committee meetings to address their full agendas.
Policy committee meetings will end early at 1:30 p.m. so that members can go across the street
to the Capitol to lobby on the budget.
The League’s regional representatives will be contacting policy committee members from their
regions to help set up meetings with the appropriate legislators or staff.
_____________________________________________________________________________
Court Rules for Counties in Property Tax Administration Fee Dispute
The Los Angeles County Superior Court recently ruled in favor of counties in the long-running
dispute between cities and counties over the Property Tax Administration Fee (PTAF). The
dispute centers over how to calculate the reimbursement a county is entitled to for its costs of
administering the Triple Flip and the VLF Backfill.
Cities contend that state law entitles counties to only their actual costs. Counties, on the other
hand, contend that since both the Triple Flip and the VLF Backfill are funded through property tax,
they are allowed to include the amount of this property tax in the PTAF calculation. 8
In real numbers, Los Angeles County’s actual cost for administering the Triple Flip and the VLF
Backfill is $35,000 per year. By including the Triple Flip and the VLF Backfill in the PTAF
calculation, the county collected additional fees of more than $4.8 million in FY 2006-07, and
more than $5.3 million in FY 2007-08.
Forty-seven cities in Los Angeles County sued the county in 2008 seeking a change in how the
county calculates the PTAF. Last week, the Superior Court rejected the cities’ argument that the
county was only entitled to its actual costs of administering the Triple Flip and the VLF Backfill.
The court noted that the Legislature had expressed an intent to more fairly apportion the counties’
burden of collecting property tax revenue, and further noted that the counties’ burden is a
substantial one. The court stated that it is undisputed that the source of revenues to fund the
Triple Flip and the VLF Swap is property tax revenue, and there is nothing to indicate that the
Legislature intended to permanently exclude counties from recouping costs for collecting this
property tax revenue. Therefore, the court concluded that counties are entitled to include the
Triple Flip and the VLF Swap in the PTAF calculation.
The League has been informed that the cities in this case are weighing whether to appeal, but as
yet no decision has been made. You may find a copy of the court’s decision by going to
www.cllaw.us and clicking on “Cases”.
_____________________________________________________________________________
Register Now for the 2009 National Summit on Your City’s Families
City leaders are invited to attend the 2009 National Summit on Your
City’s Families, Oct. 11-13, in Boston. Sponsored by the National
League of Cities’ (NLC) Institute for Youth, Education, and Families,
this biennial summit is the nation’s largest gathering of municipal
leaders working to improve the lives of children, youth, and families.
Helping Children and Families in Tough Economic Times
As cities confront the worst recession and foreclosure crisis in generations, city officials across
the nation are working to find creative solutions for ensuring the success of young people and
financial security for their families. The summit’s sessions, workshops, and site visits will focus on
cutting-edge city innovations and strategies to help families cope with the economic crisis
including:
• Family financial stability;
• School improvement/dropout prevention;
• Youth employment;
• Afterschool programming;
• Access to college;
• Youth violence prevention;
• Early literacy/school readiness;
• Youth civic engagement;
• Childhood obesity prevention;
• Strategies for reengaging disconnected youth; and
• Citywide “infrastructure” to sustain local initiatives.
Keynote Speakers
Attendees will hear keynote addresses from Boston Mayor Thomas M. Menino and William
Strickland, president and CEO of Pittsburgh’s Manchester Bidwell Corporation.
Currently serving his fourth term, Mayor Menino is the founding chair of NLC’s Council on Youth,
Education, and Families. During his tenure, Mayor Menino has spearheaded efforts that place
Boston at the cutting edge of municipal innovation in areas ranging from school reform and youth
violence prevention to family economic success and community wellness. As host of the 2009 9
Summit, Mayor Menino will share lessons from Boston’s experience and his perspective on the
future of city leadership for children, youth, and families.
William Strickland is a nationally-recognized social entrepreneur whose arts, education, and job
training centers have served youth and adults in Pittsburgh’s disadvantaged Manchester
neighborhood since 1969. As President and CEO of Manchester Bidwell Corporation, Strickland
has enabled thousands of students to work with visiting artists and jazz musicians, and has
helped displaced steelworkers and underemployed residents develop skills relevant to
Pittsburgh’s emerging industries.
Early Registration
Early registration discounts are available until July 17. In addition, community teams of three or
more people will be invited to participate in a special pre-conference session to strengthen
citywide collaboration and advance local planning efforts. To learn more and register, visit
www.nlc.org/iyef/yefsummit.aspx or contact Sharie Wood at (202) 626-3087 or wood@nlc.org
with questions.
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