November 18, 2005
Issue #45-2005
The Legislature is
in recess until
January 4.
WANT MORE DETAILS
ON BILLS?
Visit the League of
California Cities
website at
www.cacities.org/
billsearch.
FUEL CELL WORKSHOP TO BE HELD IN DECEMBER FUEL CELL WORKSHOP TO BE HELD IN DECEMBER FUEL CELL WORKSHOP TO BE HELD IN DECEMBER FUEL CELL WORKSHOP TO BE HELD IN DECEMBER FUEL CELL WORKSHOP TO BE HELD IN DECEMBER
Page 3 Page 3 Page 3 Page 3 Page 3
The Legislative Analyst Office (LAO), California’s non-partisan fiscal and policy
advisor, has released its projections on the state’s general fund revenues and
expenditures for 2005-06 through 2010-11. For more, see Page 3.
???????????????????????? ??????????????
LAO RELEASES REPORT ON CALIFORNIA’S FISCAL OUTLOOK LAO RELEASES REPORT ON CALIFORNIA’S FISCAL OUTLOOK LAO RELEASES REPORT ON CALIFORNIA’S FISCAL OUTLOOK LAO RELEASES REPORT ON CALIFORNIA’S FISCAL OUTLOOK LAO RELEASES REPORT ON CALIFORNIA’S FISCAL OUTLOOK
??????????????????????? ???????????????
The legislative and policy-making apparatus in Sacramento is revving up
for what could be a very busy 2006. Here is a summary of the key issues the
League has been working on – issues that again appear at the forefront of the
administration’s and Legislature’s agenda. For more, see Page 2.
LEAGUE PREPARES FOR BUSY 2006 LEGISLATIVE YEAR LEAGUE PREPARES FOR BUSY 2006 LEGISLATIVE YEAR LEAGUE PREPARES FOR BUSY 2006 LEGISLATIVE YEAR LEAGUE PREPARES FOR BUSY 2006 LEGISLATIVE YEAR LEAGUE PREPARES FOR BUSY 2006 LEGISLATIVE YEAR
A Court of Appeal has rejected a non-resident property owner’s legal
challenge to a voter-approved parcel tax. The parcel tax I in dispute is a
special tax to fund fire services, parks and recreation, police services, water
services, and street improvements. The property owner alleged that the
parcel tax violated various constitutional provisions, and also that the property
owner, and other non-resident property owners, should have been allowed to
vote on the parcel tax. The Court soundly rejected the property owner’s
arguments. For more, see Page 2.
PARCEL TAX CHALLENGE REBUFFED PARCEL TAX CHALLENGE REBUFFED PARCEL TAX CHALLENGE REBUFFED PARCEL TAX CHALLENGE REBUFFED PARCEL TAX CHALLENGE REBUFFEDVisit the League’s Official Website--www.cacities.org PAGE 2 - PRIORITY FOCUS
November 18, 2005 - Issue #45
PARCEL TAX PARCEL TAX PARCEL TAX PARCEL TAX PARCEL TAX from page 1 from page 1 from page 1 from page 1 from page 1
? ??????????
The property owner’s first argument was that
Proposition 13 does not permit the voters to place
a special tax on real property. The Court dis-
agreed, and held that both Propositions 13 and
218 do not prohibit special taxes on property.
The owner’s next argument was that this
parcel tax was in reality a general tax, not a
special tax, and that Proposition 13 prohibits a
general tax from being placed on property. The
Court again disagreed, and held that the multiple
governmental services being funded by the parcel
tax did not transform the tax into a general tax.
Lastly, the owner argued that he, and other
non-resident property owners, should have been
allowed to vote on the parcel tax. The Court held
that the City could properly limit eligible voters on
the parcel tax to only those persons living in the
city.
The case is Neilsen v. City of California City
(2005). As the property owner still has the oppor-
tunity to appeal this case to the Supreme Court,
the League will continue to monitor the case
through the Legal Advocacy Committee.
Here’s an opportunity to acquire the books
written by some of the speakers on the pro-
gram.
Freakonomics: A Rogue Economist Ex-
plores the Hidden Side of Everything, by Steven
D. Levitt & Stephen J. Dubner, item no. 115
Guide to California Planning, by William
Fulton & Paul Shigley, item no. 384
Sidewalk Strategies: Seven Winning Steps
for Candidates, Causes and Communities, by
Larry Tramutola, item no. 1607
Urban Sprawl and Public Health: Designing,
Planning, and Building for Healthy Communities
by Richard Jackson, item no. 1730
CityBooks can help increase your profes-
sional knowledge in vital areas. Don’t miss this
great way to expand and share your learning
with colleagues at city hall! Books may be
purchased online at www.cacities.org/store or
call (916) 658-8257 for an order form.
UNABLE TO ATTEND THE LEAGUE OF UNABLE TO ATTEND THE LEAGUE OF UNABLE TO ATTEND THE LEAGUE OF UNABLE TO ATTEND THE LEAGUE OF UNABLE TO ATTEND THE LEAGUE OF
CALIFORNIA CITIES 2005 ANNUAL CALIFORNIA CITIES 2005 ANNUAL CALIFORNIA CITIES 2005 ANNUAL CALIFORNIA CITIES 2005 ANNUAL CALIFORNIA CITIES 2005 ANNUAL
CONFERENCE? CONFERENCE? CONFERENCE? CONFERENCE? CONFERENCE?
HOUSING AND LAND USE/INFRASTRUCTURE
Discussions continue on legislative proposals
to address the state’s housing crisis.
League-Builders Housing/General Plan Task
Force
Last month the League’s board of directors
adopted, a housing proposal recommended by city
officials who had participated with the League-
Builders Housing/General Plan Task Force.
The goal of the proposal is to respond –
through an incentive-based approach – to provide
greater certainty about where and under what
conditions houses can be built, while preserving
local decision-making authority and identifying new
funding to pay for infrastructure and service needs.
??????????? ??????????????
Continued on Page 4
2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR from page 1 from page 1 from page 1 from page 1 from page 1
League officers have since met with represen-
tatives of the California Building Industry Associa-
tion. Both parties “agreed to disagree” about some
matters, but to keep the lines of communication
open as the League and the builders work their
preferred legislative proposals.
Task Forces: Possible Legislation
The Schwarzenegger Administration is explor-
ing its options through a series of task forces. In
October, the secretaries of Business, Transporta-
tion and Housing (BT&H), Resources, Food and
Agriculture and State and Consumer Services met
with representatives of other organizations in-
volved in land use (local government, environmen-
tal groups, housing advocates, farmland preserva-PRIORITY FOCUS - PAGE 3 Visit the League’s Official Website--www.cacities.org
November 18, 2005 - Issue #45
City officials interested in hydrogen fuel cell
technology and hydrogen-powered fuel cell ve-
hicles (council members and city managers, fire
chiefs and fire prevention/operations officials,
environmental personnel and others) are encour-
aged to attend a December 7 workshop on this
topic in Torrance, Calif. The workshop will be
sponsored by the Los Angeles Area Fire Marshals
Association (LAAFMA) and the California Fuel Cell
Partnership (CaFCP).
Experts will discuss a variety of topics related
to fuel cell technology, including fueling stations,
hydrogen myths, safety issues, vehicle design, and
much more. The workshop also includes a test
drive or ride in prototype hydrogen fuel cell vehicles
by a variety of automakers.
The day-long workshop symposium is offered
free of charge, and will be held from 9 a.m. to 4
p.m. at the Torrance Cultural Arts Center in the
Toyota Meeting Hall, located on 330 Torrance Blvd.
Business and industry personnel, along with
interested public officials, are all encouraged to
attend.
To register, please visit the LAAFMA website at
www.laareafiremarshals.org. To register by phone,
call (310) 781-7637 and follow the prompts for
registration.
FUEL CELL WORKSHOP TO BE FUEL CELL WORKSHOP TO BE FUEL CELL WORKSHOP TO BE FUEL CELL WORKSHOP TO BE FUEL CELL WORKSHOP TO BE
HELD IN DECEMBER HELD IN DECEMBER HELD IN DECEMBER HELD IN DECEMBER HELD IN DECEMBER
LAO LAO LAO LAO LAO from page 1 from page 1 from page 1 from page 1 from page 1
Of special note to cities, the LAO highlighted
early repayment of the VLF gap loan debt owed to
cities and counties as a factor in reducing the
state’s long-term deficit, citing it as one reason for
the state’s improving fiscal situation.
The projections showed an overall improvement
in the state budget, with the current year ending with
a reserve of $5.2 billion – up approximately $4 billion
from prior estimates. Revenues since July have
gone up sharply, while expenditures have de-
creased at a modest rate.
Revenue increases were due to higher-than-
anticipated personal income tax returns, signifi-
cantly high corporate tax, and somewhat higher
sales and use tax receipts. The report cited mod-
est reductions in expenditures (about $80 million)
as an additional factor helping to improve the 2005-
06 budget picture. The largest changes consist of
lower spending for Proposition 98 education partly
offset by increases in state retirement costs (stem-
ming from an assumed one-year delay in the sale
of pension obligation bonds).
LAO also stated that the budget reserve should
be sufficient to keep the 2006-07 budget balanced,
without the need for significant program reductions
or additional revenues.
Despite the state’s improved economic outlook,
however, LAO cautioned that multi-billion dollar
operating deficits would be present through fiscal
year 2010-11. Although those deficits are projected
to decrease over time, the report encouraged the
Legislature to take further steps to minimize opera-
tion costs and to continue building the budgetary
reserve.
In addition to the budget overview, the LAO
report delivered projections on state economics,
demographics, revenues, and expenditures. The
state Department of Finance will come out with its
own revenue estimates next month in preparation
for the presentation of the administration’s budget
package, which is due by January 10, 2006.
For a copy of the full LAO report, please visit the
LAO website at www.lao.ca.gov.
?????????????????
Restore and protect local control for cities
through education and advocacy to
enhance the quality of life for all Californians.
Our MissionVisit the League’s Official Website--www.cacities.org PAGE 4 - PRIORITY FOCUS
November 18, 2005 - Issue #45
Continued on Page 5
???????????????????? ??????????????
tionists and others). The administration represen-
tatives asked for advice and consultation on
elements that they believe should be included in a
housing/planning reform package, including
possible reforms to the California Environmental
Quality Act (CEQA). The administration represen-
tatives said that while consensus was desirable, it
was not a requirement for a final package.
As a follow-up to that meeting the League is
working with other stakeholders to develop a
package of financial incentives for communities
that accept housing. This role is consistent with
the concerns about funding for services and
infrastructure that the League has stressed in its
discussions with the builders.
Conclusion
2006 will be a year when numerous housing/
land use proposals are introduced. The League is
committed to working toward meaningful solutions
– but will insist on proposals that preserve local
decision-making and which address cities’ critical
need for funding to pay for services and infrastruc-
ture.
INFRASTRUCTURE/TRANSPORTATION
There are several efforts at play to find more
money to pay for the state’s infrastructure needs,
particularly as they relate to transportation. The
League is participating in discussions with a
coalition of transportation stakeholders to explore
the potential for a ballot measure or initiative that
would permanently dedicate Prop. 42 funds – the
sales tax on gasoline – to transportation. Such a
constitutional amendment would put an end to the
annual fight to make sure these transportation-
derived revenues are always directed to transpor-
tation needs.
So far, however, the only proposed legislative
measure in print is Senate Pro Tem Don Perata’s
SB 1024, a $10.2 billion package that includes
$2.5 billion to repay Prop. 42 funds to projects that
lost Prop. 42 money in 2003 and 2004, when the
funds were transferred to other state needs.
SB 1024 also outlines proposed funding for
several other areas including: $2.3 billion to
improve the state’s ports and trade corridors; $1.2
billion for flood protection; $1 billion for high-speed
rail; $425 million for improvements to local streets
and roads for local governments that have hous-
ing elements that have been approved by the
State Department of Housing and Community
Development, and met other requirements.
Sen. Perata was joined this week by Sen. Tom
Torlakson (Antioch) in a press conference at the
Port of Oakland, during which they talked about
the need for this measure.
The League is also working on SAFETEA-LU,
the recently passed federal reauthorization for
distribution of the 18-cent federal gas tax to states
for transportation.
Under this new act, California will receive a 34
percent increase in revenues over TEA 21 (was
the previous federal transportation authorization).
This increase will result in approximately $5 billion
more in revenues for California’s transportation
needs, above those received in the six years of
the previous federal act.
SAFETEA-LU must now be implemented at
the state level through implementation legislation.
The League is working with a statewide coalition
of transportation stakeholders to collaborate and
provide input to ensure that an equitable approach
for distribution of the SAFETEA-LU revenues is
adopted.
We’re just getting started in this process, but
can anticipate that SAFETEA-LU will be a focus of
our efforts next year.
REDEVELOPMENT AND EMINENT DOMAIN
Protection of redevelopment funds was a key
priority for the League in 2005. While concerns
about protecting this funding from possible legisla-
tive action remains high, concern has shifted
since the Supreme Court decision in Kelo v. City
of New London to possible legislative action that
2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR from page 2 from page 2 from page 2 from page 2 from page 2PRIORITY FOCUS - PAGE 5 Visit the League’s Official Website--www.cacities.org
November 18, 2005 - Issue #45
?????????????? ????????????????????
Continued on Page 6
could impact the ability of redevelopment agencies
to use eminent domain to acquire property needed
for affordable housing and other redevelopment
projects.
The Senate Local Government Committee
held a joint hearing this week involving four other
committees, to explore reforms to the state’s rules
regarding the use of eminent domain. Reforms
could include changing the definition of a finding of
blight, which can trigger the involvement of a
redevelopment agency in a project where eminent
domain could be used. More action on this issue
could occur in January, when the Legislature
reconvenes.
Federal Action on Eminent Domain
Congress has also taken up the eminent
domain issue. Last week, the House of Repre-
sentatives overwhelmingly passed H.R. 4128,
which pre-empts local government from receiving
federal funds for any project involving the use of
eminent domain.
The Senate has not yet acted on the issue.
They could take up a different measure, adopt the
House measure, or take not action at all.
The League is working closely with the Na-
tional League of Cities (NLC) and other national
and regional local government organizations to
educate senators about the importance of pre-
serving this critical redevelopment tool.
TELECOMMUNICATIONS REFORM
The legislative session shut down in Septem-
ber without the Legislature having moved any
telecom reform measure. Assemblymember
Levine, chair of the Assembly Utilities and Com-
merce Committee, had committed to continue
discussions among all stakeholders throughout
the fall.
At the national level, there was sudden move-
ment the week of November 7, when the House
Commerce Committee released a new version
that was friendlier to the telephone industry than a
previous draft, and scheduled a hearing to con-
sider it on less than a week’s notice.
The League, NLC and other local government
partners do not support the new draft. As reported
by NLC, cities’ suggestions for changes to the first
draft were ignored and the bill, as Rep. John
Dingell (Mich.) explained, “shifted in the direction
of a selected group of stakeholders,” the tele-
phone companies.
NLC identified two major concerns with the
new draft:
• Local government has fewer means to
enforce public safety under the new draft than the
old draft. The industry sets public safety stan-
dards, not local government.
• Video franchise fees are limited to 5
percent of subscriber revenue, not the 5 percent
of gross revenues that is standard today. There is
also no recovery over 5 percent for public access
channels or institutional networks.
The League of California Cities is working
closely with NLC on responses to this latest
development, including urging that the committee
work in a bipartisan way to consider proposals
that take local government concerns into account.
We will keep members apprised as these discus-
sions continue.
City Officials Need to “Get Smart” on
Telecom!
These recent developments underscore the
urgent need for California city officials to educate
themselves about the telecom issue, and how
reforms could affect local franchising authority.
The current issue of Western City magazine
includes a cover story on the telecom issue (“How
the Telecommunications Revolution Will Affect
Your City”). You may view a copy of the story on
the Western City website (www.westerncity.com).
Reprints of the story are also available by contact-
ing League staff member Adrienne Sprenger
(asprenger@cacities.org).
2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR from page 4 from page 4 from page 4 from page 4 from page 4Visit the League’s Official Website--www.cacities.org PAGE 6 - PRIORITY FOCUS
November 18, 2005 - Issue #45
??????????????????????? ???????????
PENSION REFORM
While pension reform stalled in 2005, the issue
is by no means dead. In September
Assemblymember Keith Richman introduced ACA
23, a “hybrid” version of the measures he intro-
duced last January (ACA 5 and ACAX1 3). Those
proposals incorporated the governor’s plan, by
offering to new state and local employees only a
defined contribution plan (like a 401k), rather the
defined benefit available to public employees today.
Richman’s new proposal would again apply to
both state and local agencies, but this time would
offer a defined benefit plan coupled with a defined
contribution pension plan. He has stated that if the
Legislature will not pass his measure, he will take it
to the ballot through the initiative process, probably
for the November 2006 election.
The League’s Pension Reform Task Force met
this week to confer about the new Richman pro-
posal, and to discuss the likelihood of legislative
action this year. The League’s position on pension
reform is that it must be based upon sound actu-
arial analysis of what approaches will demonstrate
cost savings to local government in the long-term.
The League also supports the task force
recommendations, reached last spring, which state
that any reform proposal should provide career
employees with a fair retirement benefit that will
maintain their standard of living in retirement; and
that defined benefit programs should be maintained
as the “central pension plan for retirees in Califor-
nia”.
The entire League Pension Reform Task Force
report is available in the Issues and Legislation –
Employee Relations section of the League’s
website (www.cacities.org).
FLOOD CONTROL
In this post-Hurricane Katrina environment,
flood control and development promises to be one
of the more lively topics of the 2006 session.
While the issue was on the middle-burner
during the 2005 session, the administration-
sponsored AB 1665 (Laird) and ACA 13
(Harman), as well as AB 802 (Wolk), all stalled.
In 2006, the issue of flood control and develop-
ment in flood prone areas will definitely be a front
burner concern.
Issues will include the status of levees in
California, whether flood insurance should be
mandatory or voluntary, property owner notifica-
tion, improved mapping of flood zones, liability,
and development in flood prone areas. The latter
issue is the one that will be of most interest to
and have the greatest impact on cities. The
League is participating in the stakeholder meet-
ings that have already begun on the topic of flood
control and testified at a joint hearing of the
Assembly Water Parks and Wildlife, Insurance
and Judiciary Committee earlier this fall.
In order to thoughtfully participate in the
legislative process, the League will form a work-
ing group of representatives from the League’s
Environmental Quality and Housing, Community
and Economic Development policy committees,
as well as other city experts. The working group
will evaluate the issues and propose guiding
principles to the policy committees and League
board for League staff to use as these issues
move through the Legislature.
Key to any proposal to improve the state’s
flood control system is funding. Thus, ACA 13,
which deals with storm water and flood control
fees and Proposition 218, is integral to any
legislative proposal.
The League will be working with the adminis-
tration, Assemblymember Harman’s office and
city officials to build the necessary legislative
support to move the bill out of committee, and to
secure the two-thirds vote necessary to pass it in
the Assembly and Senate and place it on the
ballot.
2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR 2006 LEGISLATIVE YEAR from page 5 from page 5 from page 5 from page 5 from page 5