HomeMy WebLinkAboutStaff Report 365-10TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: CITY MANAGER'S OFFICE
DATE: SEPTEMBER 27,2010 CMR: 365:10
REPORT TYPE: ACTION
SUBJECT: Adoption of Three Resolutions Addressing Fall 2010 Ballot Initiatives
and Consideration of City Positions on Other State and Regional
Ballot Initiatives:
(1) Resolution Supporting Proposition 22, the Local Taxpayer,
Public Safety and Transportation Protection Act of 2010;
(2) Resolution Opposing Proposition 23, an Initiative to Suspend
AB 32, the Global Warming Solutions Act of 2006, Until
Unemployment Drops to 5.5% or Less for a Full Year; and
(3) Resolution Opposing Proposition 26, an Initiative that
Increases the Legislative Vote Requirement to Two-Thirds for State
Levies and Charges and Imposes an Additional Requirement for
Voters to Approve Local Levies and Charges.
RECOMMENDATION
Staff and the Utilities Advisory Commission (UAC) recommend that the City Council adopt a
resolution opposing Proposition 23, the "Suspension of AB 32" Ballot Initiative. Staff also
recommends that the City Council adopt a resolution supporting Proposition 22 and a resolution
opposing Proposition 26 consistent with the League of California Cities' positions on these
propositions. Staff is also presenting information on the other State ballot measures
(Propositions 19, 20, 21, 24, 25, and 27) and regional measures (Measures A, B, C and E) for
Council consideration and direction.
DISCUSSION
As part of the City's legislative program, staff brings forward resolutions supporting or opposing
statewide ballot measures for Council consideration. Typically, staff brings forth resolutions
consistent with positions taken by the League of California Cities or that are consistent with prior
Council policy guidance on legislative priorities.
This November, nine measures have qualified and will appear on the statewide ballot. The
League has taken official positions and provided guidance to cities on three of these
propositions: 19, 22, and 26. Staff took information on Proposition 23 to the UAC for
CMR: 365:10 Page 1 of6
consideration and the UAC recommended that the Council adopt a resolution opposing
Proposition 23. Staff is bringing forth resolutions on Propositions 22, 23, and 26 because of their
impacts on matters of importance to the City of Palo Alto. In addition, Council requested that
the other State and regional measures be brought forward for discussion. If the Council wishes
to take a formal position on any of these measures, staff can return at the next meeting with draft
resolutions for consideration and adoption.
Statewide Measures:
Attachment A provides the official titles, summaries, and analyses for the Statewide ballot
measures as background information for the Council. The discussion that follows begins with
those State propositions for which there is a clear nexus for the City taking an official position
and for which staff is recommending adoption of resolutions. After the discussion of those three
measures, staff has provided an overview of the remaining propositions for the Council to
consider and provide direction.
Proposition 22 (Position -Support): Despite the fact that. voters have repeatedly passed
measures to prevent the State from taking revenues dedicated to funding local government
services and transportation improvement projects, the State Legislature has seized and borrowed
billions of dollars in local government and transportation funds in the past few years. This year's
borrowing of local government, redevelopment and transit funds, as well as previous, ongoing
borrowing of local government and transportation funds have led to severe consequences. As a
result, the League of California Cities worked with numerous coalition partners to develop the
language in Proposition 22.' Approval of this ballot initiative would close loopholes.and change
the Constitution to further prevent State politicians in Sacramento from seizing, diverting,
shifting, borrowing, transferring, suspending or otherwise taking or interfering with tax revenues
dedicated to funding local governrnent services, including redevelopment, or dedicated to
transportation improvement projects and mass transit.
This position is consistent with previous Council direction to preserve local control and local
revenues. Attachment B presents a resolution in support of Proposition 22 for the Council's
consideration.
Proposition 23 (Position -Oppose): This initiative would suspend implementation of the
Global Warming Solutions Act of 2006 (AB 32) until unemployment drops to 5.5% or less for
one full year. AB 32 requires major sources of emissions to report and reduce greenhouse gas
(GHG) emissions that cause global warming. The Legislative Analyst's Office anticipates that
AB32 would remain suspended for many years, given that economic forecasts for the next five
years have the state's unemployment rate remaining above 8 percent.
The City of Palo Alto has supported the efforts to achieve GHG emission reductions in a manner
that does not impose undue burden on consumers. The passage of Proposition 23 will likely
foster regulatory uncertainty as existing regulations would be cast into doubt, could result in
costly and protracted litigation, and could also result in higher costs to consumers through
alternative command and control measures.
CMR: 365:10 Page 2 of6
The UAC considered staff's recommendation that Council oppose the ballot initiative at its
September 1,2010 meeting. There was no discussion. The commission voted 6 to 0, with Chair
Waldfogel abstaining, to recommend that the City Council oppose Proposition 23, the
"Suspension of AB 32" ballot initiative. Chair Waldfogel abstained because he believed the City
did not have a specific interest to protect in the debate. Draft notes from the UAC's September
1, 2010 meeting are provided as Attachment E.
The Palo Alto Chamber Government Action Committee (GAC) made a recommendation that
their board oppose Proposition 23 at the August meeting. The Chamber Board voted to oppose
the measure on September 16 (see Attachment F for letter from Chamber Board).
Attachment C presents a resolution opposing Proposition 23 for the Council's consideration.
Proposition 26 (Position -Oppose): This measure restricts in various ways, the ability of the
state and local governments to adopt fees. The measure also expands the definitions of a "tax"
so that more local government fees for service would be required to meet the provisions of
Proposition 218 for approval and/or modification.
Under current law, a "regulatory fee," may not exceed the reasonable cost of providing services
necessary to the activity for which the fee is charged and may not be levied for unrelated revenue
purposes. To demonstrate that a regulatory fee is not a special tax, the government must prove
(1) the estimated costs of the service or regulatory activity; and (2) the basis for determining the
manner in which the costs are apportioned, so that charges allocated to a payor bear a fair or
reasonable relationship to the payor's burdens on or benefits from the regulatory activity.
Whether the fees collected exceed the cost of the regulatory program need not be proved on an
individual basis. Rather, the agency is allowed to employ a flexible assessment of
proportionality within a broad range of reasonableness in setting fees.
Although there are numerous exemptions to what would be considered a local government "tax",
if this measure is approved by the voters, the true interpretation of how it will apply will likely
take years of litigation. The analysis by the Legislative Analyst and Director of Finance finds
that the measure would result in a "Potentially major decrease in state and local revenues and
spending, depending upon future actions of the Legislature, local governing bodies, and local
voters."
This position is consistent with previous Council direction to preserve local control and local
revenues. Attachment D presents a resolution opposing Proposition 26 for the Council's
consideration.
Proposition 19 (Position -To be Determined): The League considered an opposition position
on this measure primarily because City officials were concerned about the potential increase in
crime, the unsatisfactory experience with medical marijuana implementation, and the measure's
breadth and poor drafting. These policy concerns far outweighed the potential for additional
local revenue afforded under the measure's provisions that allow for the taxation of marijuana.
Although the measure suggests that the ability to tax marijuana will generate significant revenue
CMR: 365:10 Page 3 of6
at both the state and local levels, the tax allowed by this initiative cannot be a sales or use tax,
thereby making any revenue estimates suspect.
The City Council has not previously taken positions related to the regulation and/or use of
marijuana. As a result, even though the League has taken a position on this measure, staff is
requesting direction from the Council.
Proposition 20 (Position -To be Determined): This measure transfers the authority for
redistricting of Congressional districts from elected representatives to a 14-member redistricting
commission. Any new district lines would need to be approved by nine commissioners including
three Democrats, three Republicans, and three from neither party. The redistricting commission
is comprised of five Democrats, five Republicans, and four voters registered with neither party.
The Legislative Analyst estimates that this measure will not have a fiscal impact on local
governments.
Proposition 21 (Position -To be Determined): This measure would establish an $18 annual
vehicle license surcharge to help fund state parks and wildlife programs. A new trust fund would
be created for these funds and the funds would be used solely for the operation, maintenance and
repair of state parks and to protect wildlife and natural resources. There would be no fiscal
impact of this measure on local governments. The measure is anticipated to generate
approximately $250 million annually for state parks and wildlife conservation.
Proposition 24 (Position -To be Determined): This measure would repeal recent legislation
allowing businesses to shift operating losses to prior tax years and would extend the period
permitted to shift operating losses to future tax years. It also repeals other recent legislation
allowing businesses to lower their tax liabilities in a variety of mechanisms. There would be no
fiscal impact of this measure on local governments. Some increases to local K-12 school and
community college funding may result as the State General Fund revenues increase. The
measure is anticipated to generate increased state revenues of about $1.3 billion each year by
2012-2013.
Proposition 25 (Position -To be Determined): This measure would change the legislative
vote requirement to pass the State budget and budget-related legislation from two-thirds to a
simple majority. If the Legislature fails to pass a budget bill by June 15, all members would
forfeit any reimbursement for salary and expenses for every day until the day they pass a budget
bill. The lower vote requirement could affect the content of the budget and spending-related bills
but there is no clear fiscal impact of this measure on local governments.
Proposition 27 (Position -To be Determined): This measure would eliminate the State
Commission on redistricting and would consolidate the redistricting authority with elected state
representatives. It also reduces the budget and limits the amount the Legislature can spend on
redistricting and allows voters to reject district boundary maps approved by the Legislature.
There would be no fiscal impact of this measure on local governments. The measure may result
in a reduction of state redistricting costs of around $1 million over the next year.
Regional Measures:
CMR: 365:10 Page 4 of6
Measure A -Santa Clara County Children's Health Protection (Position -To be
Determined): This measure would enact a $29 annual parcel tax limited to 10 years. The
measure is anticipated to generate $13-14 million annually and would create a source of funding
to "protect and maintain children's health and prevent serious illnesses through regular medical
checkups, immunizations, and early detection; to reduce costs from unnecessary emergency
room use; and to prevent elimination of insurance coverage for low-income children of working
families." The measure would provide funding for the Healthy Kids Program, which provides
health care and medical insurance to approximately 8,400 children in the County. The program
is run by the Santa Clara Family Health Plan, which is a public, not-for-profit health plan that
operates solely in Santa Clara County. Attachment G provides a recent San Jose Mercury News
article about the measure.
Measure B -Santa Clara Valley Transportation Authority (position -To be Determined):
This measure would increase the motor vehicle registration fee (VRF) by $10 for each vehicle
registered in Santa Clara County to relieve traffic congestion, improve streets and reduce
polluted toxic roadway runoff. Approximately 80% of the revenues from the measure will go
towards local road improvement and repair, 15% will go towards regional programs (leverage for
other funds; regional intelligent transportation systems/technologies; county environmental
mitigation for autos/trucks), and the remaining 5% will go towards program administration. The
measure is anticipated to generate approximately $14 million in revenues annually.
Measure C -Santa Clara Valley Water District (Position -To be Determined): This
measure would limit Board members, whether elected or appointed, from serving more than
three successive 4-year terms. The term limits would not be retroactive.
Measure E -Foothill-De Anza Community College District (Position -To be Determined):
This measure would levy a $69 parcel tax annually for six years to provide additional revenues
for operations at the Foothill-De Anza Community College District. The meaS\lre is anticipated
to generate approximately $7 million annually in revenues. Approximately 45,000 students
attend either Foothill College in Los Altos Hills or De Anza College in Cupertino. Attachment
H provides a San Jose Mercury News article with further information about the measure.
RESOURCE IMPACT
There is no incremental resource impact associated with adoption of resolutions supporting or
opposing ballot initiatives.
If any of the ballot initiatives were approved, cost and revenue impacts to Palo Alto would need
to be considered at that time.
POLICY IMPLICATIONS
These recommendations are consistent with current Council legislative priorities and policy
direction.
CMR: 365:10 Page 5 of6
ENVIRONMENTAL REVIEW
Adoption of these Resolutions does not meet the California Environmental Quality Act's
definition of a project pursuant to Public Resources Code Section 21065, and therefore, no
environmental review is required.
ATTACHMENTS
A. Official Titles, Summaries, and Analyses for Statewide Ballot Measures:
a. Proposition 19 -p. 12 -15
b. Proposition 20 -p. 18 -21
c. Proposition 21 -p. 24 -27
d. Proposition 22 -p. 30 -35
e. Proposition 23 -p. 38 -43
f. Proposition 24 -p. 46 -49
g. Proposition 25 -p. 52 -53
h. Proposition 26 -p. 56 -59
i.. Proposition 27 -p. 62 -65
B. Resolution of the City of Palo Alto Supporting Proposition 22, an Initiative that Prohibits the
State from Taking Funds Used for Transportation or Local Government Projects and Services
C. Resolution of the City of Palo Alto Opposing Proposition 23, an Initiative to Suspend AB 32,
the Global Warming Solutions Act of2006, Until Unemployment Drops to 5.5% or Less for
a Full Year
D. Resolution of the City of Palo Alto Opposing Proposition 26, an Initiative thatlncreases the
Legislative Vote Requirement to Two-Thirds for State Levies and Charges and Imposes an
Additional Requirement for Voters to Approve Local Levies and Charges
E. Excerpted draft riotes from the Utilities Advisory Commission's September 1,2010 meeting.
F. Palo Alto Chamber of Commerce letter in opposition to Proposition 23
G. San Jose Mercury News Article on Measure A, 9113/2010
H. San Jose Mercury News Article on MeasUre E, 8/3/2010
PREPARED BY: DEBRA LLOYD
Acting Assistant Director, Resource Management
DEPARTMENT APPROVAL:
CITY MANAGER APPROVAL:
CMR: 365:10
KELLY MCADOO MORARIU
Assistant to the City Manager
VALERIE O. FONG
Director of Utilities
Page 6 of6
PROPOSITION LEGALIZES MARIJUANA UNDER CALIFORNIA BUT NOT FEDERAL LAW. Attachment A
19 PERMITS LOCAL GOVERNMENTS TO REGULATE AND TAX COMMERCIAL
PRODUCTION, DISTRIBUTION, AND SALE OF MARIJUANA. INITIATIVE STATUTE.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
LEGALIZES MARIJUANA UNDER CALIFORNIA BUT NOT FEDERAL LAW. PERMITS LOCAL GOVERNMENTS
TO REGULATE AND TAX COMMERCIAL PRODUCTION, DISTRIBUTION, AND SALE OF MARIJUANA.
INITIATIVE STATUTE. .
• Allows people 21 years old or older to possess, cultivate, or transport marijuana for personal use.
•. Permits local governments to regulate and tax commercial production, distribution, and sale of
marijuana to people 21 years old or older.
• Prohibits people from possessing marijuana on school grounds, using in public, or smoking it
while minors are present.
• Maintains prohibitions against driving while impaired.
• Limits employers' ability to address marijuana use to situations where job performance is actually
impaired.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• The fiscal effects of this measure could vary substantially depending on: (l) the extent to which
the federal gover~ment continues to enforce federal marijuana laws and (2) whether the state and
local governments choose to authorize, regulate, and tax various marijuana-related activities.
• Savings of potentially several tens of millions of dollars annually to the state and local governments
on the costs of incarcerating and supervising certain marijuana offenders.
• Increase in state and local government tax and fee revenues, potentially in the hundreds of millions
of dollars annually.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
Federal Law. Federal laws classify marijuana as
an illegal substance and provide criminal penalties
for various activities relating to its use. These laws
are enforced by federal agencies that may act
independently or in cooperation with state and
local law enforcement agencies.
State Law and Proposition 215. Under current
state law, the possession, cultivation, or
distribution of marijuana generally is illegal in
California. Penalties for marijuana-related
activities vary depending on the offense. For
example, possession of less than one ounce of
marijuana is a misdemeanor punishable by a fine,
while selling marijuana is a felony and may result
in a prison sentence.
In November 1996, voters approved Proposition
215, which legalized the cultivation and possession
of marijuana in California for medical purposes.
The U.S. Supreme Court ruled in 2005, however,
12 I Title and Summary / Analysis
that federal authorities could continue to
prosecute California patients and providers
engaged in the cultivation and use of marijuana
for medical purposes. Despite having this
authority, the U.S. Department ofJustice
announced in March 2009 that the current
administration would not prosecute marijuana
patients and providers whose actions are consistent
with state medical marijuana laws.
PROPOSAL
This measure changes state law to (1) legalize the
possession and cultivation of limited amounts of
marijuana for personal use by individuals age 21
or older, and (2) authorize various commercial
marijuana-related activities under certain
conditions. Despite these changes to state law,
these marijuana-related activities would continue
to be prohibited under federal law. These federal
prohibitions could still be enforced by federal
agencies. It is not known to what extent the
..
PROP
19
LEGALIZES MARIJUANA UNDER CALIFORNIA BUT NOT FEDERAL LAW.
PERMITS LOCAL GOVERNMENTS TO REGULATE AND TAX COMMERCIAL
PRODUCTION, DISTRIBUTION, AND SALE OF MARIJUANA. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
federal government would continue to enforce
them. Currently, no other state permits
commercial marijuana-related activities for non
medical purposes.
State Legalization of Marijuana Possession and
Cultivation for Personal Use
Under the measure, persons age 21 or older
generally may (1) possess, process, share or
transport up to one ounce of marijuana; (2)
cultivate marijuana on private property in an area
up to 25 .square feet per private residence or parcel;
(3) possess harvested and living marijuana plants
cultivated in such an area; and (4) possess any
items or equipment associated with the above
activities. The possession and cultivation of
marijuana must be solely for an individual's
personal consumption and not for sale to others,
and consumption of marijuana would only be
permitted in a residence or other "non-public
place." (One exception is that marijuana could be
sold and consumed in licensed establishments, as
discussed below.) The state and local governments
could also authorize the possession and cultivation
of larger amounts of marijuana.
State and local law enforcement agencies could
not seize or destroy marijuana from persons in
compliance with the measure. In addition, the
measure states that no individual could be
punished, fined, or discriminated against for
engaging in any conduct permitted by the
measure. However, it does specify that employers
would retain existing rights to address
consumption of marijuana that impairs an
employee's job performance.
This measure sets forth some limits on
marijuana possession and cultivation for personal
use. For example, the smoking of marijuana in the
presence of minors is not permitted. In addition,
the measure would not change existing laws that
prohibit driving under the influence of drugs or
that prohibit possessing marijuana on the grounds
of elementary, middle, and high schools.
Moreover, a person age 21 or older who knowingly
gave marijuana to a person age 18 through 20
could be sent to county jail for up to six months
For text of Proposition 19, see page 92.
CONTINUED
and fined up to $1,000 per offense. (The measure
does not change existing criminal laws which
impose penalties for adults who furnish marijuana
to minors under the age of 18.)
Authorization of Commercial Marijuana Activities
The measure allows local governments to
authorize, regulate, and tax various commercial
marijuana-related activities. As discussed below,
the state also could authorize, regulate, and tax
such activities.
Regulation. The measure allows local
governments to adopt ordinances and regulations
regarding commercial marijuana-related
activities-including marijuana cultivation,
processing, distribution, transportation, and retail
sales. For example, local governments could license
establishments that could sell marijuana to persons
21 and older. Local governments could regulate
the location, size, hours of operation, and signs
and displays of such establishments. Individuals
could transport marijuana from a licensed
marijuana establishment in one locality to a
licensed establishment in another locality,
regardless of whether any localities in between
permitted the commercial production and sale of
marijuana. However, the measure does not permit
the transportation of marijuana between
California and another state or country. An
individual who was licensed to sell marijuana to
others in a commercial establishment and who
negligently provided marijuana to a person under
21 would be banned from owning, operating,
being employed by, assisting, or entering a licensed
marijuana establishment for one year. Local
governments could also impose additional
penalties or civil fines on certain marijuana-related
activities, such as for violation of a local ordinance
limiting the hours of operation of a licensed
marijuana establishment.
Whether or not local governments engaged in
this regulation, the state could, on a statewide
basis, regulate the commercial production of
marijuana. The state could also authorize the
production of hemp, a type of marijuana plant
Analysis I 13
PROP
19
LEGALIZES MARIJUANA UNDER CALIFORNIA BUT NOT FEDERAL LAW.
PERMITS LOCAL GOVERNMENTS TO REGULATE AND TAX COMMERCIAL
PRODUCTION, DISTRIBUTION, AND SALE OF MARIJUANA. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
that can be used to make products such as fabric
and paper.
Taxation. The measure requires that licensed
marijuana establishments pay all applicable
federal, state, "and local taxes and fees currently
imposed on other similar businesses. In addition,
the measure permits local governments to impose
new general, excise, or transfer taxes, as well as
benefit assessments and fees, on authorized
marijuana-related activities. The purpose of such
charges would be to raise revenue for local 1
governments and/or to offset any costs associated
with marijuana regulation. In addition, the state
could impose similar charges.
FISCAL EFFECTS
Many of the provisions in this measure permit,
but do not require, the state and local
governments to take certain actions related to the
regulation and taxation of marijuana. Thus, it is
uncertain to what extent the state and local
governments would in fact undertake such actions.
For example, it is unknown how many local
governments would choose to license
establishments that would grow or sell marijuana
or impose an excise tax on such sales.
In addition, although the federal government
announced in March 2009 that it would no longer
prosecute medical marijuana patients and
providers whose actions are consistent with
Proposition 215, it has continued to enforce its
prohibitions on non-medical marijuana-related
activities. This means that the federal government
could prosecute individuals for activities that
would be permitted under this measure. To the
extent that the federal government continued to
enforce its prohibitions on marijuana, it would
have the effect of impeding the activities permitted
by this measure under state law.
Thus, the revenue and expenditure impacts of
this measure are subject to significant uncertainty.
Impacts on State and local Expenditures
Reduction in State and Local Correctional
Costs. The measure could result in savings to the
14 I Analysis
CONTINUED
state and local governments by reducing the
number of marijuana offenders incarcerated in
state prisons and county jails, as well as the
number placed under county probation or state
parole supervision. These savings could reach
several tens of millions of dollars annually. The
county jail savings would be offset to the extent
that jail beds no longer needed for marijuana
offenders were used for other criminals who are
now being released early because of a lack of jail
space.
Reduction in Court and Law Enforcement
Costs. The measure would result in a reduction in
state and local costs for enforcement of marijuana
related offenses and the handling of related
criminal cases in the court system. However, it is
likely that the state and local governments would
redirect their resources to other law enforcement
and court activities.
Other Fiscal Effects on State and Local
Programs. The measure could also have fiscal
effects on various other state and local programs.
For example, the measure could result in an
increase in the consumption of marijuana,
potentially resulting in an unknown increase in
the number of individuals seeking publicly funded
substance abuse treatment and other medical
services. This measure could also have fiscal effects
on state-and locally funded drug treatment
programs for criminal offenders, such as drug
courts. Moreover, the measure could potentially
reduce both the costs and offsetting revenues of
the state's Medical Marijuana Program, a patient
registry that identifies those individuals eligible
under state law to legally purchase and consume
marijuana for medical purposes.
Impacts on State and local Revenues
The state and local governments could receive
additional revenues from taxes, assessments, and
fees from marijuana-related activities allowed
under this measure. If the commercial production
and sale of marijuana occurred in California, the
state and local governments could receive revenues
from a variety of sources in the ways described
below.
PROP
19
LEGALIZES MARIJUANA UNDER CALIFORNIA BUT NOT FEDERAL LAW.
PERMITS LOCAL GOVERNMENTS TO REGULATE AND TAX COMMERCIAL
PRODUCTION, DISTRIBUTION, AND SALE OF MARIJUANA. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
•
•
Existing Taxes. Businesses producing and
selling marijuana would be subject to the
same taxes as other businesses. For instance,
the . state and local governments would
receive sales tax revenues from the sale of
marijuana. Similarly, marijuana-related
businesses with net income would pay
income taxes to the state. To the extent that
this business activity pulled in spending from
persons in other states, the measure would
result in a net increase in taxable economic
activity in the state.
New Taxes and Fees on Marijuana. As
described above, local governments are
allowed to impose taxes, fees, and
assessments on marijuana-related activities.
Similarly, the state could impose taxes and
fees on these types of activities. (A portion of
any new revenues from these sources would
For text of Proposition 19, see page 92.
CONTINUED
be offset by increased regulatory and
enforcement costs related to the licensing
and taxation of marijuana-related activities.)
As described earlier, both the enforcement
decisions of the federal government and whether
the state and local governments choose to regulate
and tax marijuana would affect the impact of this
measure. It is also unclear how the legalization of
some marijuana-related activities would affect its
overall level of usage arid price, which in turn
could affect the level of state or local revenues
from these activities. Consequently, the magnitude
of additional revenues is difficult to estimate; To
the extent that a commercial marijuana industry
developed in the state, however, we estimate that
the state and local governments could eventually
collect hundreds of millions of dollars annually in
additional revenues.
Analysis I 15
PROPOSITION
20
REDISTRICTING OF CONGRESSIONAL DISTRICTS.
INITIATIVE CONSTITUTIONAL AMENDMENT.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
REDISTRICTING OF CONGRESSIONAL DISTRICTS. INITIATIVE CONSTITUTIONAL AME.NDMENT.
• Removes elected representatives from the process of establishing congressional districts and
transfers that authority to the recently-authorized 14-member redistricting commission.
• Redistricting commission is comprised of five Democrats, five Republicans, and four voters
registered with neither party.
• Requires that any newly-proposed district lines be approved by nine commissioners including
three Democrats, three Republicans, and three from neither party.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• No significant net change in state redistricting costs.
ANALYSIS BY THE LEGISLATIVE ANALYST
This measure takes the responsibility to
determine boundaries for California's
congressional districts away from the State
Legislature. Instead, the commission recently
established by voters to draw district boundaries of
state offices would determine the boundaries of
congressional districts.
BACKGROUND
In a process known as "redistricting," the State
Constitution requires that the state adjust the
boundary lines of districts once every ten years
following the federal census for the State
Assembly, State Senate, State Board of
Equalization (BOE), and California's congressional
districts for the U.S. House of Representatives. To
comply with federal law, redistricting must
establish districts which are roughly equal in
population.
Recent Changes to State Legislature and BOE
Redistricting. In the past, district boundaries for
all of the offices listed above were determined in
bills that became law after they were approved by
the Legislature and signed by the Governor. On
some occasions, when the Legislature and the
Governor were unable to agree on redistricting
plans, the California Supreme Court performed
the redistricting.
18 I Title and Summary / Analysis
In Nqvember 2008, voters passed Proposition
11, which created the Citizens Redistricting
Commission to establish new district boundaries
for the State Assembly, State Senate, and BOE
beginning after the 2010 census. To be established
once every ten years, the commission will consist
of 14 registered voters-5 Democrats, 5
Republicans, and 4 others-who apply for the
position and are chosen according to specified
rules.
When the commission sets district boundaries, it
must meet the requirements of federal law and
other requirements, such as not favoring or
discriminating against political parties,
incumbents, or political candidates. In addition,
the commission is required, to the extent possible,
to adopt district boundaries that:
• Maintain the geographic integrity of any city,
county, neighborhood, and "community of
interest" in a single district. (The commission
is responsible for defining "communities of
interest" for its redistricting activities.)
• Develop geographically compact districts.
• Place two Assembly districts together within
one Senate district and place ten Senate
districts together within one BOE district.
..
PROP
20
REDISTRICTING OF CONGRESSIONAL DISTRICTS.
INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
Current Congressional Redistricting Process.
Currently, California is entitled to 53 of the 435
seats in the U.S. House of Representatives.
Proposition 11 did not change the redistricting
process for these 53 congressional seats. Currently,
therefore, redistricting plans for congressional seats
are included in bills that are approved by the
Legislature.
Proposition 11, however, did make some
changes to the requirements that the Legislature
must meet in drawing congressional districts. The
Legislature-like the commission-now must
attempt to draw geographically compact districts
and maintain geographic integrity of localities,
neighborhoods, and communities of interest, as
defined by the Legislature. Proposition 11,
however, does not prohibit the Legislature from
favoring or discriminating against political parties,
incumbent~, or political candidates when drawing
congressional districts.
PROPOSAL
Proposed New Methodfor Congressional
Redistricting. This measure amends the
Constitution to change the redistricting process
for California's districts in the U.S. House of
Representatives. Specifically, the measure removes
the authority for congressional redistricting from
the Legislature and instead gives this authority to
the Citizens Redistricting Commission. The
For text of Proposition 20, see page 95.
CONTINUED
commission would draw congressional districts
essentially as it draws other district lines under
Proposition 11. The commission, for example,
could not draw congressional districts in order to
favor incumbents, political candidates, or political
parties. The commission also is to consider the
geographic integrity of cities, counties,
neighborhoods, and communities of interest. As
under Proposition 11,· compliance with federal law
would be required.
"Community of Interest" Defined. In addition
to adding similar criteria for congressional
redistricting as those established in Proposition 11,
the measure defines a "community of interest" for
both congressional redistricting and redistricting
of State Assembly, State Senate, and BOE seats. A
community of interest is defined as "a contiguous
population which shares common social and
economic interests that should be included within
a single district for purposes of its effective and fair . " representatIon.
Two Redistricting-Related Measures on This
Ballot. In addition to this measure, another
measure on the November 2010 ballot
Proposition 27-concerns redistricting issues. Key
provisions of these two propositions, as well as
current law, are summarized in Figure 1. If both of
these measures are approved by voters, the
proposition receiving the greater number of "yes"
votes would be the only one to go into effect.
Analysis I 19
PROP
20
REDISTRICTING OF CONGRESSIONAL DISTRICTS.
INJTIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
Figure 1
CONTINUED.
Comparing Key Provisions of Current Law and
November 2010 Propositions on the Drawing of Political Districts
Entity that draws State
Assembly, State Senate,
and Board of Equalization
(BOE) districts
Entity that draws California's
congressional districts
Definition of a "community
of interest" b
Citizens Redistricting
Commission a
Legislature
Defined by Citizens
Redistricting
Commission/Legislature
a The commission was established by Proposition 11 of 2008.
Citizens Redistricting
Commission
Citizens Redistricting
Commission
"A contiguous population which
shares common social and
economic interests that should
be included within a single
district for purposes of its
effective and fair representation"
Legislature
Legislature
Determined by the
Legislature
b ~nder cu~rent I.aw and bo~h .Prop~sition 20 and Proposition 27, redistricting entities generally are charged with attempting to hold together a
'community of Interest" within a district.
FISCAL EFFECTS
Redistricting Costs Prior to Proposition 11
and Under Current Law. The Legislature spent
about $3 million in 2001 from its own budget
specifically for redistricting activities, such as the
purchase of specialized redistricting software and
equipment. In addition to these costs, some
regular legislative staff members, facilities, and
equipment (which are used to support other day
to-day activities of the Legislature) were used
temporarily for redistricting efforts.
20 I Analysis
In 2009, under the Proposition 11 process, the
Legislature approved $3 million from the state's
General Fund for redistricting activities related to
the 2010 census. In addition, about $3 million has
been spent from another state fund to support the
application and selection process for commission
members. For future redistricting efforts,
Proposition 11 requires the commission process to
be funded at least at the prior decade's level grown'
for inflation. The Legislature currently funds
congressional redistricting activities within its
budget.
PROP
20
REDISTRICTING OF CONGRESSIONAL DISTRICTS.
INITIATIVE CONSTITUTION.AL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
Redistricting Costs Under This Proposal. This
measure would consolidate all redistricting activity
under the Citizens Redistricting Commission
process established by Proposition 11 in 2008.
The commission would experience increased costs
For text of Proposition 20, see page 95.
CONTINUED
from handling congressional redistricting
activities. These costs, however, would be offset by
a reduction in the Legislature's redistricting costs.
Any net change in future redistricting costs under
this measure probably would not be significant.
Analysis I 21
PROPOSITION
21
ESTABLISHES $18 ANNUAL VEHICLE LICENSE SURCHARGE TO HELP FUND
STATE PARKS AND WILDLIFE PROGRAMS. GRANTS SURCHARGED VEHICLES
FREE ADMISSION TO ALL STATE PARKS. INITIATIVE STATUTE.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
ESTABLISHES $18 ANNUAL VEHICLE LICENSE SURCHARGE TO HELP FUND STATE PARKS AND
WILDLIFE PROGRAMS. GRANTS SURCHARGED VEHICLES FREE ADMISSION TO ALL STATE PARKS.
INITIATIVE STATUTE.
• Requires deposit of surcharge revenue in a new trust fund and requires that trust funds be used
solely to operate, maintain and repair state parks and to protect wildlife and natural resources.
• Exempts commercial vehicles, trailers and trailer coaches from the surcharge.
• Requires annual audit by the State Auditor and review by a citizens oversight committee.
Summary of legislative Analyst's Estimate of Net State and local Government Fiscal Impact:
• Increased state revenues of about $500 million annually from an annual surcharge on vehicle
registrations.
• New revenues would be used to offset about $50 million loss of park day-use fee revenues, and
could be used to replace up to $200 million annually from existing state funds currently spent on
state parks and wildlife conservation programs.
• Increased funding for state parks and wildlife conservation of at least $250 million annually.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
The State Park System and State Wildlife
Conservation Agencies. California has 278 state
parks, of which 246 are operated and maintained
by the California Department of Parks and
Recreation (DPR) and 32 by local entities. Other
state departments, such as the Department of Fish
and Game (DFG) and various state conservancies,
own and maintain other lands for wildlife
conservation purposes. The State Wildlife
Conservation Board acquires property and
provides grants for property acquisition to state
and local entities for wildlife conservation
purposes. The Ocean Protection Council is a state
agency responsible for coordinating state activities
to protect ocean resources.
Fundingfor State Parks and Wildlife
Conservation. Over the last five years, state
funding for the operation of state parks has been
around $300 million annually. Of this amount,
about $150 million has come from the General
Fund, with the balance coming largely from park
user fees (such as admission, camping, and other
24 I Title and Summary / Analysis
use fees) and state gasoline tax revenues. The
development of new state parks and capital
improvements to existing parks are largely funded
from bond funds that have been approved in the
past by voters. There is a significant backlog of
maintenance projects in state parks, which have no
dedicated annual funding source. The DPR also
administers grant programs for local parks, funded
largely through bond funds.
Wildlife conservation programs in various other
state departments, such as DFG, are funded
through a combination of the General Fund,
regulatory fees, and bond funds. State funding for
wildlife conservation program operations is
around $100 million per year. Bond funds are the
primary funding source for land acquisitions and
other capital projects for wildlife conservation
purposes.
Annual Vehicle Registration Fees. The state
collects a number of charges annually when a
person registers a vehicle. The Department of
Motor Vehicles (DMV) collects these revenues on
behalf of the state.
PROP
21
ESTABLISHES $18 ANNUAL VEHICLE LICENSE SURCHARGE TO HELP FUND
. STATE PARKS AND WILDLIFE PROGRAMS. GRANTS SURCHARGED VEHICLES
FREE ADMISSION TO ALLSTATE PARKS. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
PROPOSAL
Imposition of an $18 Surcharge on Vehicle
Registrations. This measure places an $18 annual
surcharge on all vehicles registered on or after
January 1, 2011, except for commercial vehicles,
trailers, and trailer coaches. The surcharge would
be collected when annual vehicle registration fees
are paid. These surcharge revenues would be
deposited into the newly created State Parks and
Wildlife Conservation Trust Fund. The measure \
expressly prohibits these funds from being used for
purposes other than state parks and wildlife
conservation.
Free Day-Use Entry to All State Parks for
Surcharge Payers. Typically, most state parks
charge a vehicle day-use fee that covers entry into
~he park and parking. Currently, this single fee is
m the range of $ 5 to $15 per day depending on
the park and the time of year. Under this measure,
all California vehicles subject to the surcharge
Figure 1
CONTINUED
would have free vehicle admission, parking, and
day-use at all units of the state parks system,
including state parks currently operated by local
entities, as well as to other specified state lands and
wildlife areas. State parks would still be able to
charge fees for camping, tours, and other activities.
Allocation of Funds. This measure allows up to
1 percent of the revenues deposited into the trust
fund to be used for certain administrative and
oversight activities, discussed further below. The
remaining funds in the trust fund would be
allo~ated each year, upon appropriation by the
LegIslature, to various park and wildlife
conservation-related programmatic purposes. As
shown in Figure 1, these surcharge revenues would
be allocated as follows:
• Operations, Maintenance, and
Development of State Parks. Eighty-five
percent of the funds would be allocated to
DPR for the operations, maintenance, and
Proposition 21: Allocation of Surcharge Revenues
Among State Parks and Wildlife Prams
(In Millions)
Operations, Maintenance, and Development of State Parks:
• General state park funding
• Grants to local agencies for lost fee revenue
• Grants for urban river parkways
Subtotals
Wildlife Conservation Activities:
• Management and operation of Department of Fish and Game lands
• Ocean Protection Council
• State land conservancies
. • Wildlife Conservation Fund
Subtotals
76%
5
4
(85%)
7%
4
2
$375
25
20
($420)
$35
20
10
10
Totals, Allocations to State Parks and Wildlife Programs 100% $495
Administration and Oversight a
Total Allocations a $500
0sne peArc~nt of total revenues from the surcharge would be allocated for administration costs in the Department of Motor Vehicles the Bureau of
tate udlts, and the Natural Resources Agency. '
For text of Proposition 21, see page 97. Analysis I 25
PROP
21
ESTABLISHES $18 ANNUAL VEHICLE LICENSE SURCHARGE TO HELP FUND
STATE PARKS AND WILDLIFE PROGRAMS. GRANTS SURCHARGED VEHICLES
FREE ADMISSION TO ALL STATE PARKS. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
development of the state parks system. From
this amount, the department would award
grants to local entities to ~eplace the loss of
day-use fees at locally operated state park
units. (As we discuss below, some fee
revenues would no longer be collected
because this measure would. now allow
certain vehicles free access to these parks.)
From this amount, the department would
also provide grants to public agencies for
urban river parkways to provide recreational
benefits to underserved urban communities.
The measure requires DPR to develop a
strategic plan to improve access to the state
parks system for underserved groups and
regions of the state.
• Management and Operation of DFG
Lands. Seven percent of the funds would be
allocated to DFG for the management and
operation of wildlife refuges, ecological
reserves, and other DFG lands.
• Other Wildlife Conservation Activities.
Additional funds woul& be allocated to other
wildlife conservation activities, in some cases
for state-operated programs but in other
cases for grants to local agencies. Four
percent would be allocated to the Ocean
Protection Council, 2 percent to state
conservancies, and 2 percent to the Wildlife
Conservation Board.
Administration and Oversight. As discussed
above, this measure allows for up to 1 percent of
annual revenues to be used for collection,
administration, auditing, and oversight of the trust
fund. The D MV would collect the surcharge and
would deposit it into the trust fund. The measure
requires the State Auditor to conduct annual
audits of expenditures from the fund to be
reported to the Legislature and made publicly
available. It also directs the Secretary for Natural
Resources to establish a Citizens Oversight
Committee that would review the audits and issue
26 I Analysis
CONTINUED
reports on how the measure is being implemented
and its effectiveness in protecting state parks and
natural resources.
FISCAL EFFECTS
New State Revenues. The $18 surcharge
established by this measure would generate about
$500 million in revenues annually for the trust
fund. This amount would grow in line with any
increases in the number of annual vehicle
registrations.
Net Intrease in Fundingfor State Parks and
Wildlife Conservation. The $500 million in
annual revenues from the $18 surcharge is a new
source of funds for state parks and wildlife
conservation. However, not all of these monies
would have to be used to expand programs and
carry out new projects. A portion of these new
revenues could be used instead to take the place of
existing funds, such as monies from the General
Fund, currently used for the support of parks and
wildlife conservation activities. The savings to the
General Fund and other special funds could be as
much as $200 million annually. Also, since all
California vehicles subject to the surcharge would
receive free day-use entry to state parks, revenues
from day-use fees at state parks (including those
operated by local governments) would decline by
an estimated $50 million annually. .
Accounting for all of these factors, the net
increase in funding for state parks and wildlife
conservation programs would probably be at least
$250 million annually. A majority of this amount
would go to state parks and could be used to
address the significant deferred maintenance in
state parks or to develop and enhance existing park
programs. The remainder of the new funding
would be available to enhance the management of
state lands for wildlife conservation purposes and
for new wildlife habitat restoration projects (for
example, marine habitat protection).
PROP
21
ESTABLISHES $18 ANNUAL VEHICLE LICENSE SURCHARGE TO HELP FUND
STATE PARKS AND WILDLIFE PROGRAMS. GRANTS SURCHARGED VEHICLES
FREE ADMISSION TO ALL STATE PARKS. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
In addition, state parks may receive additional
revenues from other types of park fees, such as
from tours, camping, and park concessions. That
For text of Proposition 21, see page 97.
CONTINUED
is because the elimination under this measure of
day-use fees would result in a larger number of
visits to park facilities.
Analysis I 27
PROPOSITION
22
PROHIBITS THE STATE FROM BORROWING OR TAKI.NG FUNDS USED FOR
TRANSPORTATION,REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS
AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED FOR TRANSPORTATION,
REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS AND SERVICES. INITIATIVE CONSTITUTIONAL
AMENDMENT.
• Prohibits the State, even during a period of severe fiscal hardship, from delaying the distribution
of tax revenues for transportation, redevelopment, or local government projects and services.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
Due to restrictions on state authority over fuel and property taxes, the state would have to take
alternative actions-probably in the range of $1 billion to several billion dollars annually. This would
result in both: ,
• Reductions in General Fund program spending and/or increases in state revenues of those
amounts.
• Comparable increases in funding for state and local transportation programs and local
redevelopment.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
Under the State Constitution, state and local
government funding and responsibilities are
interrelated. Both levels of government share
revenues raised by some taxes-such as sales taxes
and fuel taxes. Both levels cVso share the costs for
some programs-such as many health and social
services programs. While the state does not receive
any property tax revenues, it has authOrity over the
distribution of these revenues among local
agencies and schools.
Over the years, the state has made decisions that
have affected local government revenues and costs
in various ways. Some of these decisions have
benefited the state fiscally, and others have
benefited local governments. For example, in the
early 1990s, the state permanently shifted a share
of city, county, and special district property tax
revenues to schools. These shifts had the effect of
reducing local agency resources and reducing state
costs for education. Conversely, in the late 1990s,
the state changed laws regarding trial court
program funding. This change had the effect of
shifting local agency costs to the state.
30 I Title and Summary / Analysis
In recent years, the state's voters have amended
the Constitution to limit the state's authority over
local finances. Under Proposition 1A of 2004, the
state no longer has the authority to permanently
shift city, county, and special district property tax
revenues to schools, or take certain other actions
that affect local governments. In addition,
Proposition 1A of 2006 restricts the state's ability
to borrow state gasoline sales tax revenues. These
provisions in the Constitution, however, do not
eliminate state authority to temporarily borrow or
redirect some city, county, and special district
funds. In addition, these propositions do not
eliminate the state's authority to redirect local
redevelopment agency revenues. (Redevelopment
agencies work on projects to improve blighted
urban areas.)
PROPOSAL
As Figure 1 summarizes, this measure reduces or
eliminates the state's authority to:
• Use state fuel tax revenues to pay debt service
on state transportation bonds.
• Borrow or change the distribution of state
fuel tax revenues.
PROP
22
PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED·FOR
TRANSPORTATION, REDEVElOPMENT, OR LOCAL GOVERNMENT PROJECTS
AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST CONTINUED
Figure 1
M or Provisions of Proposition 22
~ Restrictions Regarding State Fuel Taxes
• Reduces state's authority to use funds to pay debt service on transportation bonds.
• Prohibits borrowing of funds by the state.
• Limits state authority to change distribution of funds.
~ Other Restrictions on the State
• Prohibits redirection of redevelopment property tax revenues.
• Eliminates state authority to temporarily shift property tax revenues from cities, counties, and
special dis,tricts.
• Prohibits state from using vehicle license fee revenues to pay for state-imposed mandates.
~ Enforcement
• Repeals state laws enacted after October 20, 2009, if they conflict with the measure.
• Provides reimbursement if the state violates any term of the measure.
• Redirect redevelopment agency property
taxes to any other local government.
• Temporarily shift property taxes from cities,
counties, and special districts to schools.
• Use vehicle license fee (VLF) revenues to
reimburse local governments for state
mandated costs.
As a result, this measure affects resources in the
state's General Fund and transportation funds.
The General Fund is the state's main funding
source for schools, universities, prisons, health,
and social services programs. Transportation funds
are placed in separate accounts and used to pay for
state and local transportation programs.
Use of Funds to Pay for Transportation Bonds
State Fuel Taxes. As Figure 2 shows, the state
annually collects about $5.9 billion in fuel tax
revenues for transportation purposes-with most
of this amount coming from a 35.3 cents per
gallon excise tax on gasoline. The amounts shown
in Figure 2 reflect changes adopted in early 2010.
Prior to these changes, the state charged two taxes
For text of Proposition 22, see page 99.
on gasoline: an 18 cents per gallon excise tax and a
sales tax based on the cost of the purchase. Under
the changes, the state collects the same amount of
total revenues but does not charge a state sales tax
on gasoline. (These state fuel tax changes did not
affect the local sales tax on gasoline.) Part of the
reason the state made these changes is because
revenues from the gasoline excise tax can be used
more flexibly than sales tax revenues to pay debt
service on transportation bonds.
Figure 2
Current State Fuel Tax Revenues for
Transportation Purposes a
2010-11
(In Millions)
Gasoline
Diesel
Totals
$5,100
470
$5,570 $300
a local governments also charge taxes on fuels. The figure does
not show these local revenues.
Analysis I 31
PROP
22 PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED FOR
TRANSPORTATION, REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS
AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
Current Use 0/ Fuel Tax Revenues. The main
uses of state fuel tax revenues are (1) constructing
and maintaining highways, streets, and roads and
(2) funding transit and intercity rail services. In
addition, the state uses some of its fuel tax
revenues to pay debt-service costs on voter
approved transportation bonds. In the current
year, for example, the state will use about $850
million of fuel tax revenues to pay debt-service
costs on bonds issued to fund highway, road, and
transit projects. In future years, this amount is
expected to increase to about $1 billion annually.
Reduces State Authority. The measure reduces
state authority to use fuel tax revenues to pay for
bonds. Under the measure, the state could not use
fuel tax revenu~s to pay for any bonds that have
already been issued. In addition, the state's
authority to use fuel tax revenues to pay for bonds
that have not yet been issued would be
significantly restricted.
Because of these restrictions, the state would
need to pay about $1 billion of annual bond costs
from its General Fund rather than from
transportation accounts. (In the current year, the
amount would be somewhat less because the state
would have paid some of its bond costs using fuel
tax revenues by the time of the election.) This, in
turn, would (1) increase the amount of funds the
state would have available to spend for
transportation programs and (2) reduce the
amount of General Fund resources the state would
have available to spend on non-transportation
programs.
Borrowing of Fuel Tax Revenues
Current Authority to Borrow. While state fuel
tax revenues generally must be used for
transportation purposes, the state may use these
funds for other purposes under certain
circumstances. Specifically:
• Borrowing/or Cash Flow Purposes. The
state historically has paid out most of its
General Fund expenses between July and
December of each year, but received most of
its revenues between January and June. To
help manage this uneven cash flow, the state
32 I Analysis
CONTINUED
often borrows funds from various state
accounts, including fuel tax funds, on a
temporary basis. The cash flow loans of fuel
tax funds often total $1 billion or more.
• Borrowingfor Budget-Balancing Purposes.
In cases of severe state fiscal hardship, the
state may use fuel tax revenues to help
address a budgetary problem. The state must
pay these funds back within three years. For
example, at the time this analysis was
prepared, the proposed 2010-11 state budget
included a $650 million loan of state fuel tax
revenues to the state General Fund.
Prohibits Borrowing. This measure generally
prohibits fuel tax revenues from being loaned
either for cash flow or budget-balancing
purposes-to the General Fund or to any other
state fund. The state, therefore, would have to take
alternative actions to address its short-term
borrowing needs. These actions could include
borrowing more from private markets, slowing
state expenditures to accumulate larger reserves in
its accounts, or speeding up the collection of tax
revenues. In place of budgetary borrowing, the
state would have to take alternative actions to
balance future General Fund budgets-· such as
reducing state spending or increasing state taxes.
Distribution of Fuel Tax Revenues
Current Distribution. Roughly two-thirds of
the state's fuel tax revenues are spent by the state,
and the rest is given to cities, counties, and transit
districts. Although state law specifies how much
money local agencies shall receive, the Legislature
. may pass a law with a majority vote of each house
to change these funding distributions. For
example, the state has made various changes to the
allocation of transit funding over recent years.
Limits Changes to Distribution. This measure
constrains the state's authority to change the
distribution of state fuel tax revenues to local
agencies. In the case of fuel excise taxes, the
measure requires that the formula to distribute
these tax revenues to local governments for
the construction or maintenance of local
streets and roads be the one that was in effect on
PROP
22
PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED FOR
TRANSPORTATION, REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS
AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
June 30 j 2009. (At that time, local governments
received the revenues generated from 6 cents of
the 18 cents being collected from the fuel excise
tax.) Under this measure, the state could enact a
law to change this allocation, but only by a two
thirds vote of each house of the Legislature and
after the California Transportation Commission
conducted a series of public hearings.
In the case of diesel sales tax revenues (used
primarily for transit and transportation 'pla?ning),
current law requires that the funds bedlstnbuted
25 percent to the state and 75 percent to local
governments, beginnin~ in 2011-12 .. The measure
specifies that the funds Instead be spIlt equally
between local and state programs. This change in
diesel sales tax revenue distribution, therefore,
would provide somewhat lower ongoing.funding
for local transit purposes and more fundIng for
state transit purposes than otherwise would be the
case. Under the measure, the state could not
change this distribution of funds.
CONTINUED
Allocation of Property Tax Revenues
Current Property Tax Distribution. California
property owners pay a 1 percent ~ax on the value
of their homes and other properties, plus any
additional property tax rates for voter-approved
debt. State law specifies how county auditors are
to distribute these revenues among local
governments. Figure 3 shows the average share of
property tax revenues local governments receive.
State law allows the state to make some changes
to the distribution of property tax revenues. For
example; the state may require redevelopment
agencies to shift revenues to nearby schools.
Recently, the state required redevelopment
agencies to shift $2 billion of revenues to schools
over two years. (This amount is roughly 15
percent of total redevelopment revenues.) In
addition, during times of severe state fiscal
hardship, the state may require that a portion of
property tax revenues be temporarily shifted away
flStl1ll3 . .. . ..
e.timated<Local Government 9hares:ofthe·' Percent
PtU,.l'ty1ax
Sci1oo1sand
Cot\lIl'iunlty
Coll~~
E)(oludes efleo! of any temporary property tax shifts.
For text of Proposition 22, see page 99.
Special Districts
Analysis I 33
PROP
22
PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED FOR
TRANSPORTATION, REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS
AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
from cities, counties, and special districts. In this
case, however, the state must repay the local
agencies for their losses within three years,
including interest. Recently, the state required
these agencies to shift $1.9 billion of funds to
schools. The major reason the state made these
revenue shifts was to reduce state General Fund
costs for education and other programs.
Reduces State Authority. This measure
prohibits the state from enacting new laws that
require redevelopment agencies to shift funds to
schools or other agencies. The measure also
eliminates the state's authority to shift property
taxes temporarily during a severe state fiscal
hardship. Under the measure, therefore, the state
would have to take other actions to balance its
budget in some years-such as reducing state
spending or increasing state taxes.
Use of VLF Revenues
Current VLR California vehicle owners pay a
VLF based on their vehicle's value at a rate of 1.15
percent, including a 0.65 percent ongoing rate and
a 0.50 percent temporary rate. Most VLF revenues
are distributed to local governments.
Current Mandate Payments. The state
generally must reimburse local governments when
it "mandates" that they provide a new program or
higher level of service. The state usually provides
reimbursements through appropriations in the
annual budget act or by providing other offsetting
funds.
Restricts Use of VLF Funds. This measure
specifies that the state may not reimburse local
governments for a mandate by giving them an
increased share ofVLF revenues collected under
the ongoing rate. Under the measure, therefore,
the state would have to reimburse local
governments using other resources.
State Laws That Are in Conflict With This Proposition
Voids Recent Laws. Any law enacted between
October 20, 2009, and November 2, 2010, that is
in conflict with this proposition would be
repealed. Several factors make it difficult to
determine the practical effect of this provision.
34 I Analysis
CONTINUED
First, parts of this measure would be subject to
future interpretation by the courts. Second, in the
spring of2010, the state made significant changes
to its fuel tax laws, and the full effect of this
measure on these changes is not certain. Finally, at
the time this analysis was prepared (early in the
summer of2010), the state was considering many
new laws and funding changes to address its major
budget difficulties. As a result, it is not possible to
determine the full range of state laws that could be
affected or repealed by this measure.
Requires Reimbursement for Future Laws.
Under this measure, if a court ruled that the state
violated a provision of Proposition 22, the State
Controller would reimburse the affected local
governments or accounts within 30 days. Funds
for these reimbursements, including interest,
would be taken from the state General Fund and
would not require legislative approval.
FISCAL EFFECTS
State General Fund
Effect in 2010-11. This measure would (1) shift
some debt-service costs to the state General Fund
and (2) prohibit the General Fund from
borrowing fuel tax revenues. As a result, the
measure would reduce resources available for the
state to spend on other programs, probably by
about $1 billion in 2010-11. To balance the
budget, the state would have to take other actions
to raise revenues and/or decrease spending.
Overall, the measure's immediate fiscal effect
would equal about 1 percent of total General
Fund spending. As noted above, the measure also
would repeal laws passed after this analysis was
prepared that conflicted with its provisions.
Longer-Term Effect. Limiting the state's
authority to use fuel tax revenues to pay
transportation bond costs would increase General
Fund costs by about $1 billion annually for the
next couple of decades. In addition, the measure's
constraints on state authority to borrow or redirect
property tax and redevelopment revenues could
result in increased costs or decreased resources
available to the General Fund in some years. The
PROP PROHIBITS THE STATE FROM BORROWING OR TAKING FUNDS USED FOR 2-2 TRANSPORTATION, REDEVELOPMENT, OR LOCAL GOVERNMENT PROJECTS
AND SERVICES. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
total annual fiscal effect from these changes is not
possible to determine, but could range from about
$1 billion (in most years) to several billion dollars
(in some years).
State and Local Transportation Programs and Local
Government '
The fiscal effect of the measure on transportation
programs and local governments largely would be
the opposite of its effect on the state's General
Fund. Under the measure, the state would use
General Fund revenues-instead of fuel tax
revenues-to pay for transportation bonds. This
would leave more fuel tax revenues available for
state and local transportation progtams.
For text of Proposition 22, see page 99.
CONTINUED
In addition, limiting the state's authority to
redirect revenues likely would result in increased
resources being available for redevelopment and
state and local transportation programs. Limiting
the state's authority to borrow these revenues likely
would also result in more stable revenues being
available for local governments and transportation.
The magnitude of this fiscal effect is not possible
to determine, but could be in the range from
-about $1 billion (in most years) to several billions
of dollars (in some years).
Analysis I 35
PROPOSITION
23
SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW (AB 32) REQUIRING
MAJOR SOURCES OF EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS
EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL UNEMPLOYMENT DROPS TO
5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW (AB 32) REQUIRING MAJOR SOURCES OF
EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL
UNEMPLOYMENT DROPS TO 5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
• Suspen4s State law that requires greenhouse gas emissions be reduced to 1990 levels by 2020,
until California's unemployment drops to 5.5 percent or less for four consecutive quarters.
• Suspends comprehensive greenhouse-gas-reduction program that includes increase&renewable
energy and cleaner fuel requirements, and mandatory emissions reporting and fee requirements for
major emissions sources such as power plants and oil refineries.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• The suspension of AB 32 could result in a modest net increase in overall economic activity in the
state. In this event, there would be an unknown but potentially significant net increase in state and
local government revenues.
• Potential loss of a new source of state revenues from the auctioning of emission allowances by state
government to certain businesses that would pay for these allowances, by suspending the future
implementation of cap-and-trade regulations.
• Lower energy costs for state and local governments than otherwise.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
Global warming and Greenhouse Gases.
Greenhouse gases (GHGs) are gases that trap heat
from the sun within the earth's atmosphere,
thereby warming the earth's temperature. Both
natural 'phenomena (mainly the evaporation of
water) and human activities (principally burning
fossil fuels) produce GHGs. Scientific experts have
voiced concerns that higher concentrations of
GHGs resulting frdm human activities are
increasing global temperatures, and that such
global temperature rises could eventually cause
significant problems. Such global temperature
increases are commonly referred to as global
warming, or climate change.
As a populous state with a large industrial
economy, California is the second largest emitter
of GHGs in the United States and one of the
largest emitters of GHGs in the world. Climate
change is a global issue necessitating an
international approach. Actions in California
regarding GHGs have been advocated on the basis
38 I Title and Summary / Analysis
that they will contribute to a solution and may act
as a catalyst to the undertaking of GHG
mitigation policies elsewhere in our nation and in
other countries.
Assembly Bill 32 Enacted to Limit GHGs. In
2006, the state enacted the California Global
Warming Solutions Act of 2006, commonly
referred to as Assembly Bill 32 or ''AB 32." This
legislation established the target of reducing the
state's emissions of GHGs by 2020 to the level
that emissions were at in 1990. It is estimated
that achieving this target would result in about a
30 percent reduction in GHGs in 2020 from
where their level would otherwise be in the
absence of AB 32.
Assembly Bill 32 requires the state Air Resources
Board (ARB) to adopt rules and regulations to
achieve this reduction. The law also directs ARB,
in developing these rules and regulations, to take
advantage of opportunities to improve air quality,
thereby creating public health benefits frqm the
state's GHG emission reduction activities.
PROP
23
SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW (AB 32) REQUIRING
MAJOR SOURCES OF EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS
EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL UNEMPLOYMENT DROPS TO
5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
Other Laws Would Reduce GHG Emissions.
In addition to AB 32, a number of O'ther state laws
have been enacted by the Legislature that would
reduce GHG emissions. In some cases, the main
purpose of these other laws is specifically to reduce
GHG emissions. For example, a 2002 law requires
the ARB to adopt regulations to reduce GHG
emissions from cars and smaller trucks. Other laws
have authorized various energy efficiency programs
that could have the effect of reducing GHG
emissions, although this may not have been their
principal purpose.
"Scoping Plan" to Reach GHG Emission
Reduction Target. As required by AB 32, the
ARB in December 2008 released its plan on how
AB 32's GHG emission reduction target for 2020
would be met. The plan-referred to as the AB 32
Scoping Plan-encompasses a number of different
types of measures to reduce GHG emissions.
Some are measures authorized by AB 32, while
others are authorized by separately enacted laws.
Some of these measures have as their primary
objective something other than reducing GHGs,
such as reducing the state's dependency on fossil
fuels.
The plan includes a mix of traditional regulatory
measures and market-based measures. Traditional
regulations, such as energy efficiency standards for
buildings, would require individuals and
businesses to take specific actions to reduce
emissions. Market-based measures provide those
subject to them greater flexibility in how to achieve
GHG emission reductions. The major market
based measure included in the Scoping Plan is a
"cap-and-trade" program. Under such a program,
the ARB would set a limit, or cap, on GHG
emissions; issue a limited number of emission
allowances to emitters related to the amount of
GHGs they emit; and allow emitters covered by
the program to buy, sell, or trade those emission
allowances.
Some measures in the Scoping Plan have already
been adopted in the form of regulations. Other
regulations are either currently under development
or will be developed in the near future. Assembly
Bill32 requires that all regulations for GHG
For text of Proposition 23. see page 106.
CONTINUED
emission reduction measures be adopted by
January 1, 2011, and in effect by January 1, 2012.
Fee Assessed to Cover State's Administrative
Costs. As allowed under AB 32, the ARB has
adopted a regulation to recover the state's costs of
administering the GHG emission reduction
programs. Beginning in fall 2010, entities that
emit a high amount of GHGs, such as power
plants and refineries, must pay annual fees that
will be used to offset these administrative costs.
Fee revenues will also be used to repay various
state special funds that have made loans totaling
$83 million to the AB 32 program. These loans
have staggered repayment dates that run through
2014.
The Economic Impact of Implementing the
Scoping Plan. The implementation of the AB 32
Scoping Plan will reduce levels of GHG emissions
and related air pollutants by imposing various new
requirements and costs on certain businesses and
individuals. The reduced emissions and the new
costs will both affect the California economy.
There is currently a significant ongoing debate
about the impacts to the California economy from
implementing the Scoping Plan. Economists,
environmentalists, and policy makers have voiced
differing views about how the Scoping Plan will
affect the gross state product, personal income,
prices, and jobs. The considerable uncertainty
about the Scoping Plan's "bottom-line" or net
impact on the economy is due to a number of
reasons. First, because a number of the Scoping
Plan measures have yet to be fully developed, the
economic impacts will depend heavily on how the
measures are designed in the public regulatory
process. Second, because a number of the Scoping
Plan measures are phased in over time, the full
economic impacts of some measures would not be
felt for several years. Third, the implementation of
the Scoping Plan has the potential to create both
positive and negative impacts on the economy.
This includes the fact that there will be both
"winners" and "losers" under the implementation
of the Scoping Plan for particular economic
sectors, businesses, and individuals.
Analysis I 39
PROP
23 SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW (AB 32) REQUIRING
MAJOR SOURCES OF EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS
EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL UNEMPLOYMENT DROPS TO
5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
A number of studies have considered the
economic impacts of the Scoping Plan
implementation in 2020-the year when AB 32's
GHG emission reduction target is to be met.
Those studies that have looked at the economic
impacts from a relatively broad perspective have,
for the most. part, found that there will be some
modest reduction in California's gross state
product, a comprehensive measure of economic
activity for the state. These findings reflect how
such things as more expensive energy, new
investment requirements, and costs of regulatory
compliance combine to increase the costs of
producing materials, goods, and services that
consumers and businesses buy. Given all of the
uncertainties involved, however, the net economic
impact of the Scoping Plan remains a matter of
debate.
Figure 1
CONTINUED
PROPOSAL
This proposition suspends the implementation
of AB 32 until the unemployment rate in
California is 5.5 percent or less for four
consecutive quarters. During the suspension
period, state agencies are prohibited from
proposing or adopting new regulations, or
enforcing previously adopted regulations, that
would implement AB 32. (Once AB 32 went back
into effect, this measure could not suspend it
again.)
IMPACTS OF THIS PROPOSITION ON CLIMATE
CHANGE REGULATION
AB 32 Would Be Suspended, Likely for Many
Years. Under this proposition, AB 32 would be
suspended immediately. It would remain
suspended until the state's unemployment rate was
Historical Unemployment Rate in California
14%~------------------------
12
10
8
6
4 III Unemployment below 5.5% I
2
1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: United States Bureau of Labor Statistics; seasonally adjusted data.
40 I Analysis
PROP
23
SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW (AB 32) REQUIRING
MAJOR SOURCES OF EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS
EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL UNEMPLOYMENT DROPS TO
5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
5.5 percent or less for four consecutive quarters (a
one-year period). We cannot estimate when the
suspension of AB 32 might end. Figure 1 provides
historical perspective on the state's unemployment
rate. It shows that, since 1970, the state has had
three periods (each about ten quarters long) when
the unemployment rate was at or below 5.5
percent for four consecutive quarters or more. The
unemployment rate in California for the first two
quarters of 20 1 0 was above 12 percent. Economic
forecasts for the next five years have the state's
unemployment rate remaining above 8 percent.
Given these factors, it appears likely that AB 32
would remain suspended, for many years.
Wzrious Climate Change Regulatory Activities
Would Be Suspended. This proposition would
result in the suspension 6f a number of measures
in the Scoping Plan for which regulations either
have been adopted or are proposed for adoption.
Specifically, this proposition would likely suspend:
• The proposed cap-and-trade regulation
discussed above.
• The "low carbon fuel standard" regulation
that requires providers of transportation fuel
in California (such as refiners and importers)
to change the mix of fuels to lower GHG
emISSIOns.
• The proposed ARB regulation that is
intended to require privately and publicly
owned utilities and others who sell electricity
to obtain at least 33 percent of their supply
from "renewable" sources, such as solar or
wind power, by 2020. (The current
requirement that 20 percent of the electricity
obtained by privately owned utilities come
from renewable sources by 2010 would not
be suspended by this proposition.)
• The fee to recover state agency costs of
administering AB 32.
Much Regulation in the Scoping Plan Would
Likely Continue. Many current activities related
to addressing climate change and reducing GHG
emissions would probably not be suspended by
this proposition. That is because certain Scoping
For text of Proposition 23, see page 106.
CONTINUED
Pian regulations implement laws other than
AB 32. The regulations that would likely move
forward, for example, include:
• New vehicle emission standards for cars and
smaller trucks.
• A program to encourage homeowners to
install solar panels on their roofs.
• Land-use policies to promote less reliance on
vehicle use.
• Building and appliance energy efficiency
requirements.
We estimate that more than one-half of the
emission reductions from implementing the
Scoping Plan would come because of laws enacted
separately from AB 32.
FISCAL EFFECTS
Pote,ntiallmpacts on California Economy and State
and local Revenues
There would likely be both positive and negative
impacts on the California economy if AB 32 were
suspended. These economic impacts, in turn,
would affect state and local government revenues.
We discuss these effects below.
Potential Positive Economic Impacts. The
suspension of AB 32 would likely have several
positive impacts on the California economy.
Suspending AB 32 would reduce the need for new
investments and other actions to comply with new
regulations that would be an added cost to
businesses. Energy prices-which also affect the
state's economy-would be lower in 2020 than
otherwise. This is because the proposed cap-and
trade regulation, as well as the requirement that
electric utilities obtain a greater portion of their
electricity supplies from renewable energy sources,
would otherwise require utilities to make
investments that would increase the costs of
producing or delivering electricity. Such
investments would be needed to comply with
these regulations, such as by obtaining electricity
from higher-priced sources than would otherwise
be the case. The suspension of such measures by
Analysis I ,41
PROP
23
SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW (AB 32) REQUIRING
MAJOR SOURCES OF EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS
EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL UNEMPLOYMENT DROPS TO
5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
this proposition could therefore lower costs to
businesses and avoid energy price increases that
otherwise would largely be passed on to energy
consumers.
Potential Negative Economic Impacts. The
suspension of AB 32 could also have negative
impacts on the California economy. For example,
the suspension of some Scoping Plan measures
could delay investments in clean technologies that
might result in some cost savings to businesses and
consumers. Investment in research and
development and job creation in the energy
efficiency and clean energy sectors that support or
profit from the goals of AB 32 might also be
discouraged by this proposition, resulting in less
economic activity in certain sectors than would
otherwise be the case. Suspending some Scoping
Plan measures could halt air quality improvements
that would have public health benefits, such as
reduced respiratory illnesses. These public health
benefits translate into economic benefits, such as
increased worker productivity and reduced
government and business costs for health care.
Net Economic Impact. As discussed previously,
only a portion of the Scoping Plan measures
would be suspended by the proposition. Those
measures would have probably resulted in
increased compliance costs to businesses and/or
increased energy prices. On the other hand, those
measures probably would have yielded public
health-related economic benefits and increased
profit opportunities for certain economic sectors.
Considering both the potential positive and
negative economic impacts of the proposition, we
conclude that, on balance, economic activity in
the state would likely be modestly higher if this
proposition were enacted than otherwise.
42 I Analysis
CONTINUED
Economic Changes Would Affect State and
Local Revenues. Revenues from taxes on personal
and business income and on sales rise and fall
because of changes in the level of economic
activity in the state. To the extent that the
suspension of AB 32 resulted in somewhat higher
economic activity in the state, this would translate
into an unknown but potentially significant
increase in revenues to the state and local
governments.
Other Fiscal Effects
Impacts of Suspension of the Cap-and-Trade
Regulation. The suspension of ARB's proposed
cap-and-trade regulation could have other fiscal
effects depending on how this regulation would
otherwise have been designed and implemented.
One proposed approach provides for the
auctioning of emission allowances by the state to
emitters of GHGs. This approach would increase
costs to affected firms doing business in the state,
as they would have to pay for allowances. Such
auctions could result in as much as several billion
dollars of new revenues annually to the state that
could be used for a variety of purposes. For
example, depending on future actions of the
Legislature, the auction revenues could be used to
reduce other state taxes or to increase state
spending for purposes that mayor may not be
related to efforts to prevent global warming. Thus,
the suspension of AB 32 could preclude the
collection by the state of potentially billions of
dollars in new allowance-related payments from
businesses.
PROP
23
SUSPENDS IMPLEMENTATION OF AIR POLLUTION CONTROL LAW {AB 32} REQUIRING
MAJOR SOURCES OF EMISSIONS TO REPORT AND REDUCE GREENHOUSE GAS
EMISSIONS THAT CAUSE GLOBAL WARMING, UNTIL UNEMPLOYMENT DROPS TO
5.5 PERCENT OR LESS FOR FULL YEAR. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
Potential Impacts on State and Local
Government Energy Costs. As noted above, the
suspension of certain AB 32 regulations would
likely result in lower energy prices in California
than would otherwise occur. Because state and
local government agencies are large consumers of
energy, the suspension of some AB 32-related
regulations would reduce somewhat state and local
government energy costs.
Impacts on State Administrative Costs and
Fees. During the suspension of AB 32, state
administrative costs to develop and enforce
regulations pursuant to AB 32 would be reduced
significantly, potentially by the low tens of
millions of dollars annually. However, during a
suspension, the state would not be able to collect
the fee authorized under AB 32 to pay these
administrative costs. As a result, there would no
For text of Proposition 23, see page 106.
CONTINUED
longer be a dedicated funding source to repay
loans that have been made from certain state
special funds to support the operation of the
AB 32 program. This would mean that other
sources of state funds, potentially including the
General Fund, might have to be used instead to
repay the loans. These potential one-time state
costs could amount to tens of millions of dollars.
Once AB 32 went back into effect, revenues from
the AB 32administrative fee could be used to pay
back the General Fund or other state funding
sources that were used to repay the loans.
In addition, once any suspension of AB 32
regulations ended, the state might incur some
additional costs to reevaluate and update work to
implement these measures that was under way
prior to the suspension.
Analysis I 43
PROPOSITION
24
REPEALS RECENT LEGISLATION THAT WOULD ALLOW BUSINESSES TO
LOWER THEIR TAX LIABILITY. INITIATIVE STATUTE.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
REPEALS RECENT LEGISLATION THAT WOULD ALLOW BUSINESSES TO LOWER THEIR TAX LIABILITY.
INITIATIVE STATUTE.
• Repeals recent legislation that would allow businesses to shift operating losses to prior tax
years and that would extend the period permitted to shift operating losses to future tax
years.
• Repeals recent legislation that would allow corporations to share tax credits with affiliated
corporations.
• Repeals recent legislation that would allow multistate businesses to use a sales-based
income calculation, rather than a combination property-, payroll-, and sales-based income
calculation.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• Increased state revenues of about $1.3 billion each year by 2012-13 from higher taxes paid
by some businesses. Smaller increases in 2010-11 and 2011-12.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
This proposition would change three
provisions of California's laws for taxing
businesses. As indicated below, these provisions
have been changed recently as part of state
budget agreements between the Legislature and
the Governor. Under current law, all of these
recent changes will be in effect by the 2011 tax
year.
Businesses' Use of Financial Losses. Under
federal and state tax laws, in a year when a
business has more deductible expenses than
income, the business has a net operating loss
(NOL). A business with an NOL in one year
generally can use it to reduce its taxes when it
makes a profit in some later years. This is
known as a "carryforward" of losses. Federal
tax law also allows businesses to "carry back"
losses. In other words, federal law allows a
business to use an NOL from one year to
46 I Title and Summary / Analysis
reduce its taxes in an earlier year. These
mechanisms-both carryforwards and
carrybacks-have been put in place to
recognize that business income and/or
expenses can vary significantly from year to
year.
A law approved by the Legislature and the
Governor in 2008 allows carrybacks for state
business taxes for the first time, starting in
2011. Specifically, this new law will allow a
business to use an NO L from 2011 or later to
reduce its state taxes for the two years before
the NOL was generated. For example, a
business that had profits and paid taxes in
2009 but has a loss in 2011 may deduct its
2011 NOL against its 2009 taxable income.
The business would file an amended tax return
for 2009 and receive a tax refund. In addition,
the 2008 law extends the carryforward time
allowed from 10 years to 20 years.
PROP REPEALS RECENT LEGISLATION THAT WOULD ALLOW BUSINESSES TO 24 LOWER THEIR TAX LIABILITY. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
Determination of Income of Multistate
Businesses' Taxed by California. Businesses
often operate in many states. To determine
how much of the income of a multistate
business is taxed by the state, California law
now uses a formula that involves three factors:
• Property. The value of the business'
properties in California compared to the
val~e of its properties throughout the
natIon.
• Payroll. The value of the business'
compensation to its employees in
California compared to the value of its
compensation to its employees
throughout the nation.
• Sales. The value of the business' sales in
California compared to the value of its
sales throughout the United States. (For
most businesses, this factor counts more
heavily than the others.)
A law approved by the Legislature and the
Governor in 2009 will give multistate
businesses a new way to determine how much
of their income that California taxes. Starting
in 2011 under this new law, most multistate
businesses will be able to choose each year
between two formulas to set the level of
income California can tax. Businesses' two
options will be: (1) the three-factor formula
currently in use (described above), or (2) a new
formula based only on the portion of their
overall national sales that are in California
(known as the "single sales" factor). A business
typically will select the formula that minimizes
its California taxes. A business would be
allowed to switch back and forth between the
two formulas.
For text of Proposition 24, see page 106.
CONTINUED
Ability of Businesses to Share Tax Credits.
California tax law allows tax credits that can
reduce a business' taxes. If, for example, a
business is able to use tax credits worth $1
million, this reduces the business' state taxes by
$1 million. These tax credits are given to
businesses doing certain things that the state
wants to encourage. For example, a business
that spends money in California to develop a
new technology product may earn a "research
and development" tax credit. If a business has
credits which exceed the amount of taxes it
owes in a given year, it will have unused
credits. (Typically, these unused credits can be
carried forward to be used in future years.)
Many business organizations consist of a
group of business entities. This is called a
"unitary group" if it meets certain conditions,
such as operating jointly or operating under
the same management. For example, one
business in a group may develop a product,
and another business in the group may sell that
product. Tax credits are given to individual
business entities-not unitary groups.
A law approved by the Legislature and the
Governor in 2008 allows a business with
available tax credits to transfer unused tax
credits to another business in the same group.
Shared credits can be used to reduce taxes in
2010 and later years. There are certain
limitations to this credit sharing in the law.
Some of these credits have been transferred
already.
Analysis I 47
PROP REPEALS RECENT LEGISLATION THAT WOULD ALLOW BUSINESSES TO 24 LOWER THEIR TAX LIABILITY. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
PROPOSAL
This proposition repeals the business tax law
changes passed in 2008 and 2009 described
above. As such, this measure would return tax
policies in these areas to the way they were
prior to the recent law changes. The effects of
this proposition are summarized in Figure 1.
Figure 1
CONTINUED
Restricts Ability of a Business to. Use
Operating Losses to Lower Taxes. This
proposition prevents a business from using an
NOL carryback to reduce its taxes for previous
years. Businesses could still use NOLs to
reduce their taxes in future years-though they
would have 10 years to use each NOL, rather
than 20 years.
Effects of Proposition 24 on California Business Tax Law
Use of Operating Carrybacks. Business losses Carrybacks. Beginning in Same as prior
Losses cannot be used to get 2010, business losses can law.
refunds of taxes previously be used to get refunds of
paid. taxes paid in the prior two
years.
Carryforwards. Businesses Carryforwards. Beginning in Same as prior
can use losses to offset 2010, businesses can use law.
income in the 10 years losses to offset income in
following the loss. the 20 years following the
loss.
Income of A single formula determines Beginning in 2011, most Same as prior
Multistate the level of a multistate multistate businesses will law.
Businesses business' income that choose every year between
California taxes based two options to determine
on the business' sales, the level of income that
property, and payroll in California can tax: (1) the
California. formula under prior law, or
(2) a formula that considers
only the business' sales
in California relative to its
national sales.
Tax Credit Sharing Tax credits given to a Beginning in 2010, tax credits Same as prior
business entity can only given to a business entity law.
reduce that entity's taxes. can be used to reduce the
That entity cannot share taxes of other entities in
its tax credits with entities the same group of related
in the same group of businesses.
businesses.
a State law prior to changes adopted as part of 2008 and 2009 budget agreements.
48 I Analysis
PROP REPEALS RECENT LEGISLATION THAT WOULD ALLOW BUSINESSES TO 24 LOWER THEIR TAX LIABILITY. INITIATIVE STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
Ends Ability of a Multistate Business to
Choose How Its California Income Is
Determined. This proposition eliminates the
option that multistate businesses will have to
choose between two formulas to determine the
portion of their income subject to California
state taxes. Instead, businesses' taxable income
in California would continue to be determined
based on the formula currently in use which
considers businesses' sales, property, and
payroll. (The tax law used for businesses that
only do business in California would .b.e
unchanged by this P<lrt of the proposltlon.)
Ends Ability of a Business to Share Tax
Credits Within a Unitary Group. This
proposition prevents bu~iness entiti~s ,:ithin a
unitary group from shanng tax credIts m the
future. (While it is not certain, it appears that
businesses would be able to use tax credits that
already have been transferred to them.)
For text of Proposition 24, see page 106.
CONTINUED
FISCAL EFFECTS
Increased State Revenues. This proposition
would increase state General Fund revenues by
increasing the taxes paid by businesses. When
fully implemented by 2012-13, revenues
would increase by an estimated $1.3 billion
each year. There would be smaller increases in
2010-11 and 2011-12. More than one-half of
these estimated increased taxes would be paid
by multistate businesses as a result of th~
elimination of the single sales factor opnon.
Effects on Education Funding and the
State's General Fund. Proposition 98 (passed
by the voters in 1988) determines the .
minimum amount of state and local fundmg
for K-12 schools and community colleges each
year. Under the formulas of Proposition 98, a
significant part of Proposition 24's revenue
increases would be allocated to schools and
community colleges. The remaining revenues
would be available to the Legislature and the
Governor for any purpose.
Analysis I 49
PROPOSITION
25
CHANGES LEGISLATIVE VOTE REQUIREMENT TO PASS BUDGET AND BUDGET-RELATED
LEGISLATION FROM TWO-THIRDS TO A SIMPLE MAJORITY. RETAINS TWO-THIRDS VOTE
REQUIREMENT FOR TAXES. INITIATIVE CONSTITUTIONAL AMENDMENT.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
CHANGES LEGISLATIVE VOTE REQUIREMENT TO PASS BUDGET AND.BUDGET-RELATED LEGISLATION FROM
TWO-THIRDS TO A SIMPLE MAJORITY. RETAINS TWO-THIRDS VOTE REQUIREMENT FOR TAXES. INITIATIVE
CONSTITUTIONAL AMENDMENT.
• Changes the legislative vote requirement necessary to pass the state budget and spending bills
related to the budget from two-thirds to a simple majority.
• Provides that if the Legislature fails to pass a budget bill by June 15, all members of the Legislature
will permanently forfeit any reimbursement for salary and expenses for every day until the day the
Legislature passes a budget bill.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• In some years, the contents of the state budget and related legislation could be changed due to
the lower legislative vote requirements in this measure. The extent of these changes would depend
on a number of factors, including the state's financial circumstances, the composition of the
Legislature, and its future actions.
• In any year the Legislature has not sent a budget to the Governor on time, there would be a
reduction in state legislator compensation costs of about $50,000 for each late day.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
Process for Passing a Budget. The State
Constitution gives the Legislature the power to
appropriate (that is, allow the spending of) state
funds. The annual state budget is the Legislature's
primary method of authorizing state expenses for a
fiscal year (which runs from July 1 to June 30).
The Constitution requires that the Governor
propose a budget by January 10 for the next fiscal
year. Each of the two houses of the Legislature (the
State Assembly and the State Senate) then is
required to pass the annual budget bill by June 15
and send it to the Governor. The Governor may
either sign the budget approved by the Legislature
or veto (reject) all or a part of it. By a two-thirds
(67 percent) vote in each house of the Legislature,
a veto by the Governor may be overridden. While
the Constitution has a date by which the
Legislature must pass a budget, it does not have a
specific date by which a final budget must be put
into law.
52 I Title and Summary / Analysis
Two-Thirds Vote Requirement for Passage of
State Budget. The Constitution requires a two
thirds vote of each house of the Legislature for the
passage of "urgency" measures that take effect
immediately, bills that increase state tax revenues,
and General Fund appropriations (except
appropriations for public schools). Because the
state budget includes General Fund appropriations
and needs to take effect immediately, it requires a
two-thirds vote for passage. Certain budget
actions, such as a decision to change the services
that a state department is mandated to provide,
require changing state law. These changes often are
included in "trailer bills" that accompany passage
of the budget each year. In general, bills passed by
the Legislature take effect on January 1 of the next
year. In order for trailer bills to take effect
immediately, however, they must be passed by a
two-thirds vote of each house of the Legislature.
PROP CHANGES LEGISLATIVE VOTE REQUIREMENT TO PASS BUDGET AND BUDGET-RELATED 25 LEGISLATION FROM TWO-THIRDS TO A SIMPLE MAJORITY. RETAINS TWO-THIRDS VOTE
REQUIREMENT FOR TAXES. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
Late Budgets. Since 1980, the Legislature has
met itsJune IS constitutional deadline for sending
a budget to the Governor five times. During that
same period, a final budget-passed by the
Legislature and approved by the Governor-was
in place prior to the July 1 start of the fiscal year
on ten occasions, including three times since
2000. When a fiscal year begins without a state
budget in place, some state expenses are not paid
as scheduled. For example, state elected officials
(such as the Governor and Members of the
Legislature) have not received salaries after July 1
until a final budget is in place. Salary payments
withheld from these officials have been paid in full
when the final budget goes into effect.
PROPOSAL
Lowers Legislative ViJte Requirements for the
Budget Bill and Related Legislation. This
measure amends the Constitution to lower the
vote requirement necessary for each house of the
Legislature to pass a budget bill and send it to the
Governor. Specifically, the vote requirement would
be lowered from two-thirds to a majority (50
percent plus one) of each house of the Legislature.
The lower vote requirement also would apply to
trailer bills that appropriate funds and are
identified by the Legislature "as related to the
budget in the budget bill." Both the budget bill
and these trailer bills would take effect
immediately after being signed by the Governor
(or on a later date specified in the bill). A two
thirds vote of the Legislature would still be
required to override any veto by the Governor.
This measure's constitutional provisions do not
specifically address the legislative vote requirement
for increasing state tax revenues, but the measure
states that its intent is not to change the existing
two-thirds vote requirement regarding state taxes.
For text of Proposition 25, see page 113.
CONTINUED
Loss of Pay and Reimbursements by
Legislators. In any year when the Legislature has
not sent a budget bill to the Governor by June 15,
this measure would prohibit Members of the
Legislature from collecting any salary or
reimbursements for travel or living expenses. This
prohibition would be in effect from June 15 until
the day that a budget is presented to the Governor.
These salaries and expenses could not be paid to
legislators at a later date.
FISCAL EFFECTS
State Budget May Be Easier to Approve. This
measure could make it easier for the Legislature to
send a state budget bill to the Governor. That is
because it would lower the voting requirement for
the budget from two-thirds to a majority of each
house of the Legislature. Given the current
composition of each house, this would allow
members of the Legislature's majority political
party to approve a budget bill without the support
of any members of the minority party. Currently,
some members of the minority party must support
a budget to reach the two-thirds vote requirement.
In some years, the lower vote requirement could
affect the content of the budget and bills identified
by the Legislature as related to the budget.
Spending priorities in a given budget could be
different. The extent of these changes would
depend on a number of factors-including the
state's financial circumstances, the composition of
the Legislature, and its future actions. Accordingly,
the exact changes that would occur in future state
budgets cannot be estimated.
Some Legislative Pay May Be Lost. In years
when the Legislature does not send a budget bill
to the Governor by the June 15 deadline,
Members of the Legislature would lose portions of
their annual salaries and reimbursem.ents for living
and travel expenses. In such cases, the measure
would reduce state costs by around $50,000 per
day until a budget bill was sent to the Governor.
Analysis I 53
PROPOSITION
26
REQUIRES THAT CERTAIN STATE AND LOCAL FEES BE APPROVED BY lWO-THIRDS VOTE.
FEES INCLUDE THOSE THAT ADDRESS ADVERSE IMPACTS ON SOCIETY OR THE ENVIRONMENT
CAUSED BY THE FEE-PAYER'S BUSINESS. INITIATIVE CONSTITUTIONAL AMENDMENT.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
REQUIRES THAT CERTAIN STATE AND LOCAL FEES BE APPROVED BY TWO-THIRDS VOTE.
FEES INCLUDE THOSE THAT ADDRESS ADVERSE IMPACTS ON SOCIETY OR THE ENVIRONMENT
CAUSED BY THE FEE-PAYER'S BUSINESS. INITIATIVE CONSTITUTIONAL AMENDMENT.
• Requires that certain state fees be approved by two-thirds vote of Legislature and certain local fees be
approved by two-thirds of voters.
• Increases legislative vote requirement to two-thirds for certain tax measures, including those that do
not result in a net increase in revenue, currently subject to majority vote.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• Decreased state and local government revenues and spending due to the higher approval requirements
for new revenues. The amount of the decrease would depend on future decisions by governing bodies
and voters, but over time could total up to billions of dollars annually.
• Additional state fiscal effects from repealing recent fee and tax laws: (1) increased transportation
program spending and increased General Fund costs of $1 billion annually, and (2) unknown
potential decrease in state revenues.
ANALYSIS BY THE LEGISLATIVE ANALYST
BACKGROUND
State and local governments impose a variety of
taxes, fees, and charges on individuals and
businesses. Taxes-such as income, sales, and
property taxes-are typically used to pay for general
public services such as education, prisons, health,
and social services. Fees and charges, by comparison,
typically pay for a particular service or program
benefitting individuals or businesses. There are three
broad categories of fees and charges:
• User fees-such as state park entrance fees and
garbage fees, where the user pays for the cost of
a specific service or program.
Figure 1
• Regulatory fees-such as fees on restaurants to
. pay for health inspections and fees on the
purchase of beverage containers to support
recycling programs. Regulatory fees pay for
programs that place requirements on the
activities of businesses or people to achieve
particular public goals or help offset the public
or environmental impact of certain activities.
• Property charges-such as charges imposed on
property developers to improve roads leading
to new subdivisions and assessments that pay
for improvements and services that benefit the
property owner.
Approval Requirements: State and Local Taxes, Fees, and Charges
Tax Two-thirds of each house
of the Legislature for
measures increasing state
revenues.
Fee Majority of each house of
the Legislature.
Property Charges Majority of each house of
the Legislature.
56 I Title and Summary / Analysis
• Two-thirds of local voters if the local
government specifies how the funds will be
used.
• Majority of local voters if the local government
does not specify how the funds will be used.
Generally, a majority of the governing body.
Generally, a majority of the governing body.
Some also require approval by a majority of
property ownersor two-thirds of local voters.
PROP REQUIRES THAT CERTAIN STATE AND LOCAL FEES BE APPROVED BY TWO-THIRDS VOTE. 26 FEES INCLUDE THOSE THAT ADDRESS ADVERSE IMPACTS ON SOCIETY OR THE.ENVIRONMENT
CAUSED BY THE FEE-PAYER'S BUSINESS. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
State law has different approval requirements
regarding taxes, fees, and property charges. As
Figure 1 shows, state or local governments usually
can create or increase a fee or charge with a majority
vote of the governing body (the Legislature, city
council, county board of supervisors, etc.). In
contrast, increasing tax revenues usually requires
approval by two-thirds of each house of the state
Legislature (for state proposals) or a vote of the
people (for local proposals).
Disagreements Regarding Regulatory Fees. Over
the years, there has been disagreement regarding the
difference between regulatory fees and taxes,
particularly when the money is raised to pay for a
program of broad public benefit. In 1991, for
example, the state began imposing a regulatory fee
on businesses that made products containing lead.
The state uses this money to screen children at risk
for lead poisoning, follow up on their treatment, and
identify sources of lead contamination responsible
for the poisoning. In court, the Sinclair Paint
Company argued that this regulatory fee was a tax
Figure 2
Major Provisions of Proposition 26
CONTINUED
because: (1) the program provides a broad public
benefit, not a benefit to the regulated business, and
(2) the companies that pay the fee have no duties
regarding the lead poisoning program other than
payment of the fee.
In 1997, the California Supreme Court ruled that
this charge on businesses was a regulatory fee, not a
tax. The court said government may impose
regulatory fees on companies that make
contaminating products in order to help correct
adverse health effects related to those products.
Consequently, regulatory fees of this type can be
created or increased by (1) a majority vote of each
house of the Legislature or (2) a majority vote of a
local governing body.
PROPOSAL
This measure expands the definition of a tax and a
tax increase so that more proposals would require
approval by two-thirds of the Legislature or by local
voters. Figure 2 summarizes its main provisions.
.,f' Expands the Scope of What Is a State or Local Tax
• Classifies as taxes some fees and charges that government currently may impose with a majority vote.
• As a result, more state revenue proposals would require approval by two-thirds of each house of the
Legislature and more local revenue proposals would require local voter approval.
.,f' Raises the Approval Requirement for Some State Revenue Proposals
• Requires a two-thirds vote of each house of the Legislature to approve laws that increase taxes on any
taxpayer, even if the law's overall fiscal effect does not increase state revenues .
.,f' Repeals Recently Passed, Conflicting State Laws
• Repeals recent state laws that conflict with this measure, unless they are approved again by two-thirds
of each house of the Legislature. Repeal becomes effective in November 2011.
For text of Proposition 26, see page 114. Analysis I 57
PROP . REQUIRES THAT CERTAIN STATE AND LOCAL FEES BE APPROVED BV TWO-THIRDS VOTE. 26 FEES INCLUDE THOSE THAT ADDRESS ADVERSE IMPACTS ON SOCIETY OR THE ENVIRONMENT
CAUSED BV THE FEE-PAVER'S BUSINESS. INITIATIVE CONSTITUTIONAL AMENDMENT. .
ANALYSIS BY THE LEGISLATIVE ANALYST
Definition of a State or Local Tax
Expands Definition. This measure broadens the
definition of a state or local tax to include many
payments currently considered to be fees or charges.
As a result, the measure would have the effect of
increasing the number of revenue proposals subject
to the higher approval requirements summarized in
Figure 1. Generally, the types of fees and charges
that would become taxes under the measure are ones
that government imposes to address health,
environmental, or other societal or economic
concerns. Figure 3 provides examples of some
regulatory fees that could be considered taxes, in
part or in whole, under the measure. This is because
these fees pay for many services that benefit the
public broadly, rather than providing services
directly to the fee payer. The state currently uses
these types of regulatory fees to pay for most of its
environmental programs.
Certain other fees and charges also could be
considered to be taxes under the measure. For
example, some business assessments could be
considered to be taxes because government uses the
assessment revenues to improve shopping districts
Figure 3
Regulatory Fees That Benefit the Public Bro
Oil Recycling Fee
CONTINUED
(such as providing parking, street lighting, increased
security, and marketing), rather than providing a
direct and distinct service to the business owner.
Some Fees and Charges Are Not Affected. The
change in the definition of taxes would not affect
most user fees, property development charges, and
property assessments. This is because these fees and
charges generally comply with Proposition 26's
requirements already, or are exempt from its
provisions. In addition, most other fees or charges in
existence at the time of the November 2,2010
election would not be affected unless:
• The state or local government later increases or
extends the fees or charges. (In this case, the
state or local government would have to
comply with the approval requirements of
Proposition 26.)
• The fees or charges were created or increased
by a state law-passed between January 1,
2010 and November 2, 2010-that conflicts
with Proposition 26 (discussed further below).
Approval Requirement for State Tax Measures
Current Requirement. The State Constitution
currently specifies that laws enacted "for the purpose
The state imposes a regulatory fee on oil manufacturers and uses the funds for:
• Public information and education programs.
• Payments to local used oil collection programs.
• Payment of recycling incentives.
• Research and demonstration projects.
• Inspections and enforcement of used-oil recycling facilities.
Hazardous Materials Fee
The state imposes a regulatory fee on businesses that treat, dispose of, or recycle hazardous waste and uses the
funds for:
• Clean up of toxic waste sites.
• Promotion of pollution prevention.
• Evaluation of waste source reduction plans.
• Certification of new environmental technologies.
Fees on Alcohol Retailers
Some cities impose a fee on alcohol retailers and use the funds for:
• Code and law enforcement.
• Merch~nt educati.on .to reduce public nuisance problems associated with alcohol (such as violations of alcohol
laws, Violence, 10ltenng, drug dealing, public dnnking, and graffiti). .
58 I Analysis
PROP REQUIRES THAT CERTAIN STATE AND LOCAL FEES BE APPROVED BY TWO-THIRDS VOTE 26 FEES INCLUDE THOSE THAT AQDRESS ADVERSE IMPACTS ON SOCIETY OR THE ENVIRONMENT
CAUSED BY THE FEE-PAYER'S BUSINESS. INITIATIVE CONSTITUTIONAL AMENDMENT.
ANALYSIS BY THE LEGISLATIVE ANALYST
ofJncreasing revenues" must be approved by two
thIrds of each house of the Legislature. Under
current practice, a law that increases the amount of
taxes charged to some taxpayers but offers an equal
(or lar~er) reductio~ in tax.es for other taxpayers has
been vIewed as not IncreasIng revenues. As such, it
can be approved by a majority vote of the
Legislature.
New Approval Requirement. The measure
spe~ifies t~at state laws that result in any taxpayer
paymg a hIgher tax must be approved by two-thirds
of each house of the Legislature.
State Laws in Conflict With Proposition 26
Repeal Requirement. Any state law adopted
between January 1, 2010 and November 2,2010
that conflicts with Proposition 26 would be repealed
one year after the proposition is approved. This
repeal would not take place, however, if two-thirds
of each house of the Legislature passed the law again.
Recent Fuel ~ax Law Changes. In the spring of
2010,. the state mcreased fuel taxes paid by gasoline
supp~Iers, b~t decreased other fuel taxes paid by
gasolIne retaIlers. Overall, these changes do not raise
more state tax revenues, but they give the state
greater spending flexibility over their use.
Using this flexibility, the state shifted about $1
billion of annual transportation bond costs from the
state's General Fund to its fuel tax funds. (The
General Fund is the state's main funding source for
schools, universities, prisons, health, and social
services programs.) This action decreases the amount
of money available for transportation programs, but
helps the state b~lance its General Fund budget.
B~cause t~e ~egIslat~re approved this tax change
wIth a maJonty vote In each house, this law would
be repealed in November 201 I-unless the
Legislature approved the tax again with a two-thirds
vote in each house.
Other Laws. At the time this analysis was
prepared (early in the summer of2010), the
Legislature and Governor were considering many
new laws and funding changes to address the state's
major budget difficulties. In addition, parts of this
measure would be subject to future interpretation by
the courts. As a result, we cannot determine the full
range of state laws that could be affected or repealed
by the measure.
For text of Proposition 26, see page 114.
CONTINUED
FISCAL EFFECTS
Approval Requirement Changes. By expanding
the scope of what is considered a tax, the measure
would make it more difficult for state and local
governments to pass new laws that raise revenues.
This change would affect many environmental,
health, and other regulatory fees (similar to the ones
in Figure 3), as well as some business assessments
and other levies. New laws to create-or extend
these types of fees and charges would be subject to
the higher approval requirements for taxes.
The fiscal effect of this change would depend on
future actions by the Legislature, local governing
boar~s, and local vote~s. If the increased voting
reqUIrements resulted In some proposals not being
approved, government revenues would be lower than
otherwise wo~ld have occurred. This, in turn, likely
would result In comparable decreases in state
spending.
Given the range of fees and charges that would be
subject to the higher approval threshold for taxes,
t~e fiscal eff~ct of this change could be major. Over
tIme, we estImate that it could reduce government
revenues and spending statewide by up to billions of
dollars annually compared with what otherwise
would have occurred.
Repeal of Conflicting Laws. Repealing conflicting
state laws could have a variety of fiscal effects. For
example, repealing the recent fuel tax laws would
increase state General Fund costs by about $1 billion
annually for about two decades and increase funds
available for transportation programs by the same
amount.
Because this measure could repeal laws passed after
this analysis was prepared and some of the measure's
provisions would be subject to future interpretation
by the courts, we cannot estimate the full fiscal effect
of this repeal provision. Given the nature of the
proposals the state was considering in 2010,
however, it is likely that repealing any adopted
proposals would decrease state revenues (or in some
cases increase state General Fund costs). Under this
proposition, these fiscal effects could be avoided if
the Legislature approves the laws again with a two
thirds vote of each house.
Analysis I 59
PROPOSITION
27
ELIMINATES STATE COMMISSION ON REDISTRICTING. CONSOLIDATES
AUTHORITY FOR REDISTRICTING WITH ELECTED REPRESENTATIVES.
INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE.
OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL
ELIMINATES STATE COMMISSION ON REDISTRICTING. CONSOLIDATES AUTHORITY FOR REDISTRICTING
WITH ElECTED REPRESENTATIVES. INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE.
• Eliminates 14-member redistricting commission selected from applicant pool picked by
government auditors.
•
•
Consolidates authority for establishing state Assembly, Senate, and Board of Equalization district
boundaries with elected state representatives responsible for drawing congressional districts.
Reduces budget, and imposes limit on amount Legislature may spend, for redistricting.
• Provides that voters will have the authority to reject district boundary maps approved by the
Legislature.
• Requires populations of all districts for the same office to be exactly the same.
Summary of Legislative Analyst's Estimate of Net State and Local Government Fiscal Impact:
• Possible reduction of state redistricting costs of around $1 million over the next year.
• Likely reduction of state redistricting costs of a few million dollars once every ten years beginning
in 2020.
ANALYSIS BY THE LEGISLATIVE ANALYST
This measure returns the responsibility to
determine district boundaries of state offices back
to the Legislature. Under this measure, the
commission recently established by voters to
determine these district boundaries would be
eliminated.
BACKGROUND
In a process known as "redistricting," the State
Constitution requires that the state adjust the
boundary lines of districts once every ten years
following the federal census for the State
Assembly, State Senate, State Board of
Equalization (BOE), and California's congressional
districts for the U.S. House of Representatives. To
comply with federal law, redistricting must
establish districts which are roughly equal in
population.
62 I Title and Summary / Analysis
Recent Changes to State Legislature and BOE
Redistricting. In the past, district boundaries for
all of the offices listed above were determined in
bills that became law after they were approved by
the Legislature and signed by the Governor. On
some occasions, when the Legislature and the
Governor were unable to agree on redistricting
plans, the California Supreme Court performed
the redistricting.
In November 2008, voters passed Proposition
11, which created the Citizens Redistricting
Commission to establish new district boundaries .
for the State Assembly, State Senate, and BOE
beginning after the 2010 census. To be established
once every ten years, the commission will consist
of 14 registered voters-S Democrats, 5
Republicans, and 4 others-who apply for the
position and are chosen according to specified
rules.
PROP ELIMINATES STATE COMMISSION ON REDISTRICTING. CONSOLIDATES 27 AUTHORITY FOR REDISTRICTING WITH ELECTED REPRESENTATIVES.
INITIATIVE CONSTITUTIONAL AME,NDMENT AND STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
When the commission sets district boundaries, it
must meet the requirements of federal law and
other requirements, such as not favoring or
discriminating against political parties,
incumbents, or political candidates. In addition,
the commission is required, to the extent possible,
to adopt district boundaries that:
• Maintain the geographic integrity of any city,
county, neighborhood, and "community of
interest" in a single district. (The commission
is responsible for defining "communities of
interest" for its redistricting activities.)
• Develop geographically compact districts.
• Place two Assembly districts together within
one Senate district and place ten Senate
districts together within one BOE district.
Current Congressional Redistricting Process.
Currently, California is entitled to 53 of the 435
seats in the U.S. House of Representatives.
Proposition 11 did not change the redistricting
process for these 53 congressional seats. Currently,
therefore, redistricting plans for congressional seats
are included in bills that are approved by the
Legislature.
Proposition 11, however, did make some
changes to the requirements that the Legislature
must meet in drawing congressional districts. The
Legislature-like the commission-now must
attempt to draw geographically compact districts
and maintain geographic integrity of localities,
neighborhoods, and communities of interest, as
defined by the Legislature. Proposition 11,
however, does not prohibit the Legislature from
favoring or discriminating against political parties,
incumbents, or political candidates when drawing
congressional districts.
For text of Proposition 27, see page 115.
CONTINUED
PROPOSAL
This measure amends the Constitution and
other state laws to change the way that district
boundaries are determined for the State Assembly,
State Senate, BOE, and California's seats in the
U.S. House of Representatives. .
Legislative and BOE Redistricting Returns to
Legislature. This measure returns authority to
draw district boundaries for the State Assembly,
State Senate, and BOE to the Legislature. The
responsibility to determine congressional districts
would remain with the Legislature. Under this
measure, therefore, district boundaries for all of
these congressional and state offices would be
determined in bills passed by the Legislature. The
Citizens Redistricting Commission that was
created by Proposition 11 would be eliminated. As
a result, the process currently underway for
appointing members of that commission would
end, and the Legislature would undertake the
redistricting resulting from the 2010 and future
censuses.
New Requirements for Redistricting
Boundaries and Process. Proposition 27 creates
certain requirements for district boundaries.
Under this measure, the population of each
district would be almost equal with other districts
for the same office (with a difference in population
of no greater than one person). This measure
further requires the Legislature to hold hearings
before and after district boundary maps are
created, as well as provide the public access to
certain redistricting data.
Analysis I 63
PROP ELIMINATES STATE COMMISSION ON REDISTRICTING. CONSOLIDATES 27 AUTHORITY FOR REDISTRICTING WITH ELECTED REPRESENTATIVES.
INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
Deletes Some Existing Requirements. This
measure also deletes some existing rules on what
must be considered during the redistricting
process, such as requirements related to:
• Not favoring or discriminating against
political parties, incumbents, or political
candidates.
• Developing geographically compact districts.
• Placing two Assembly districts together
within one Senate district and placing ten
Senate districts together within one BOE
district.
Two Redistricting-Related Measures on This
Ballot. In addition to this measure, another
measure on the November 2010 ballot
Proposition 20-concerns redistricting issues. Key
provisions of these two propositions, as well as
current law, are summarized in Figure 1. If both of
these measures are approved by voters, the
proposition receiving the greater number of "yes"
votes would be the only one to go into effect.
Figure 1
CONTINUED
FISCAL EFFECTS
Redistricting Costs Prior t~ Proposition 11
and Under Current Law. The Legislature spent
about $3 million in 200 1 from its own budget
specifically for redistricting activities, such as the
purchase of specialized redistricting software and
equipment. In addition to these costs, some
regular legislative staff members, facilities, and
equipment (which are used to support other day
to-day activities of the Legislature) were used
temporarily for redistricting efforts.
In 2009, under the Proposition 11 process, the
Legislature approved $3 million from the state's
General Fund for redistricting activities related to
the 20 1 a census. In addition, about $3 million has
been spent from another state fund to support the
application and selection process for commission
members. For future redistricting efforts,
Proposition 11 requires the commission process to
be funded at least at the prior decade's level, grown
for inflation. The Legislature currently funds
congressional redistricting activities within its
budget.
Comparing Key Provisions of Current Law and
November 2010 Propositions on the Drawing of Political Districts
Entity that draws State
Assembly, State Senate,
and Board of Equalization
(BOE) districts
Entity that draws California's
congressional districts
Definition of a "community
of interest" b
Citizens Redistricting
Commission a
Legislature
Defined by Citizens
Redistricting
Commission/Legislature
a The commission was established by Proposition 11 of 2008.
Citizens Redistricting
Commission
Citizens Redistricting
Commission
"A contiguous population which
shares common social and
economic interests that should
be included within a single
district for purposes of its
effective and fair representation"
Legislature
Legislature
Determined by the
Legislature
b Under current law and both Proposition 20 and Proposition 27, redistricting entities generally are charged with attempting to hold together a
"community of ii1terest" within a district.
64 I Analysis
PROP ELIMINATES STATE COMMISSION ON REDISTRICTING. CONSOLIDATES 27 AUTHORITY FOR REDISTRICTING WITH ELECTED REPRESENTATIVES.
INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE.
ANALYSIS BY THE LEGISLATIVE ANALYST
Redistricting Costs Under This Proposal This
measure forbids the Legislature from spending
more than $2.5 million for redistricting activities
once every ten years. This spending limit would be
adjusted every ten years for inflation. There would
be no future costs for the Citizens Redistricting
Commission process. In total, these changes likely
would reduce state redistricting costs by a few
million dollars for the redistricting process once
every ten years beginning in 2020.
For text of Proposition 27. see page 115.
CONTINUED
The savings would be smaller for the
redistricting process related to the 2010 census
because some funds will already have been spent
on Proposition 11 's Citizens Redistricting
Commission process by the time of the election.
The savings from this measure over the next year
could be around $1 million.
Analysis I 65
Attachment B **NOT YET APPROVED**
Resolution No. ---
Resolution of the Council of the City of Palo Alto in Support of
Proposition 22, the Local Taxpayer, Public Safety and Transportation
Protection Act of 20 1 0
WHEREAS, California voters have repeatedly and overwhelmingly passed separate
ballot measures to stop State raids oflocal government funds, and to dedicate the taxes on gasoline
to fund local and state transportation improvement projects; and
WHEREAS, these local government funds are critical to provide the police and fire,
emergency response, parks, libraries, and other vital local services that residents rely upon every day,
and gas tax funds are vital to maintain and improve local streets and roads, to make road safety
improvements, relieve traffic congestion, and provide mass transit; and
WHEREAS, despite the fact that voters have repeatedly passed measures to prevent the
State from taking these revenues dedicated to funding local government services and transportation
improvement projects, the State Legislature has seized and borrowed billions of dollars in local
government and transportation funds in the past few years; and
WHEREAS, this year's borrowing and raids of local government, redevelopment and
transit funds, as well as previous, ongoing raids of local government and transportation funds have
lead to severe consequences, such as layoffs of police, fire and paramedic first responders, fire
station closures, stalled" economic development, healthcare cutbacks, delays in road safety
improvements, public transit fare increases and cutbacks in public transit services; and
WHEREAS, State politicians in Sacramento have continued to ignore the will of the
voters, and current law provides no penalties when state politicians take or borrow these locally
dedicated funds; and
WHEREAS, a coalition oflocal government, transportation and transit advocates filed a
constitutional amendment with the California Attorney General, called the Local Taxpayer, Public
Safety, and Transportation Protection Act of201O, which will be on the November 2010 statewide
ballot as Proposition 22; and
WHEREAS, approval of this ballot initiative would close loopholes and change the
constitution to further prevent State politicians in Sacramento from seizing, diverting, shifting,
borrowing, transferring, suspending or otherwise taking or interfering with tax revenues dedicated to
funding local government services, including redevelopment, or dedicated to transportation
improvement projects and mass transit.
NOW, THEREFORE, the City Council of the City of Palo Alto does hereby RESOLVE
as follows:
SECTION 1. The City of Palo Alto formally endorses Proposition 22, the Local
Taxpayer, Public Safety and Transportation Protection Act of 2010, a proposed constitutional
amendment.
100921 sh 8261427 1
**NOT YET APPROVED**
SECTION 2. We hereby authorize the listing of the City of Palo Alto in support of
Proposition 22, the Local Taxpayer, Public Safety and Transportation Protection Act of 2010, and
instruct staff to fax a copy of this resolution to campaign offices at 916.442.3510.
SECTION 3. The Council finds that adoption of this resolution does not meet the
California Environmental Quality Act's definition of a project pursuant to Public Resources Code
Section 21065, and therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Deputy City Attorney
Director of Administrative Services
100921 sh 8261427 2
Attachment C **NOT YET APPROVED**
Resolution No. ---
Resolution of the Council of the City of Palo Alto Opposing
Proposition 23, an Initiative to Suspend AB 32, the Global Warming
Solutions Act of2006, Until Unemployment Drops to 5.5% or Less
For a Full Year
WHEREAS, Proposition 23, the "Suspension of AB 32" Ballot Initiative (Initiative) has
qualified for the November 2,2010 Statewide General Election; and
WHEREAS, the suspend implementation of the Global Warming Solutions Act of2006
(AB 32), which requires major sources of emissions to report and reduce greenhouse gas (GHG)
emissions that cause global warming, until unemployment drops to 5.5% or less for one full year;
and
WHEREAS, the Legislative Analyst's Office anticipates that AB32 would remain
suspended for many years, given that economic forecasts for the next five years have the state's
unemployment rate remaining above. 8 percent; and
WHEREAS, the City of Palo Alto has supported the State's efforts to achieve GHG
emission reductions in a manner that does not impose undue burden on consumers; and
WHEREAS, passage of Proposition 23 will likely foster regulatory uncertainty as
existing regulations would be cast into doubt, could result in costly and protracted litigation, and
could also result in higher costs to consUmers through alternative command and control measures.
NOW, THEREFORE, the City Council of the City of Palo Alto does hereby RESOLVE
as follows:
SECTION 1. The Council by adopting this resolution does hereby oppose Proposition
23 on the November 2010 ballot.
SECTION 2. The City Council and staff ,are authorized to provide impartial
informational materials on the Initiative as may be lawfully provided by the City'S representatives.
No public funds shall be used to campaign for or against the initiative.
SECTION 3. The residents of the City of Palo Alto are encouraged to become well
informed on the Initiative and its possible impacts.
II
II
II
II
100921 sh 8261428 1
**NOT YET APPROVED**
SECTION 4. The Council fmds that adoption of this resolution does not meet the
California Environmental Quality Act's definition of a proj ect pursuant to Public Resources Code
Section 21065, and therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Deputy City Attorney
Director of Administrative Services
100921 sh 8261428 2
Attachment D
**NOT YET APPROVED**
Resolution No. ---
Resolution of the Council of the City Of Palo Alto Opposing
Proposition 26, an Initiative that Increases the Legislative Vote
Requirement to Two-Thirds for State Levies and Charges and
Imposes an Additional Requirement for Voters to
Approve Local Levies and Charges
WHEREAS, cities are the economic engine of California and the vitality of cities and the
state's economic recovery is dependant on their fiscal stability and local autonomy; and
WHEREAS, the City of Palo Alto supports protecting local control and funding for vital
local services; and
WHEREAS, the City of Palo Alto has had to cut its recent budget by nearly 20% to
ensure a balanced budget, and that unwarranted fiscal limitations imposed on our community will
lead to additional hardship and reduced services for our city's residents; and
WHEREAS, all local taxes, assessments, and property-related fees (such as for water and
sewer services)already are required to be subject to local voter approvals; and
WHEREAS, similar voter approval requirements do not apply to tax increases proposed
by the state legislature; and
WHEREAS, local governments have made the necessary cuts and enacted local balanced
budgets on time, which has not been the practice of the state legislature; and
WHEREAS, the state legislature has repeatedly sought to raid local funding rather that
adopt balanced budgets that reflect the state's resources; and
WHEREAS, Proposition 26 on the November 2,2010, California state ballot -while
attempting to address the authority of the state legislature to raise revenue -overreaches and seeks to
impose additional and unjustified constraints on local governments; and
WHEREAS, by arbitrarily imposing a new definition of "taxes" applicable to local
government in the state Constitution, Proposition 26, if approved, will invite additional litigation and
destabilize existing funding for local public safety, health, transportation, and environmental
protection.
NOW, THEREFORE, the City Council of the City of Palo Alto does hereby RESOLVE
as follows:
SECTION 1. The Council of the City of Palo Alto hereby opposes Proposition 26 on
the November 2,2010, California state ballot.
100921 sh 8261430 1
**NOT YET APPROVED**
SECTION 2. The Council finds that adoption of this resolution does not meet the
California Environmental Quality Act's definition of a project pursuant to Public Resources Code
Section 21065, and therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
. City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Deputy City Attorney
Director of Administrative Services
100921 sh 8261430 2
ATTACHMENTE
EXCERPT FROM DRAFT UAC MEETING MINUTES
SEPTEMBER 1, 2010
Attachment E
ITEM 4: DLSCUSSION: Recommendation to Oppose Proposition 23, an Initiative to Suspend
AB 32, the Global Warming Solutions Act of 2006, Until Unemployment Drops to 5.5% or Less
for a Full Year
There was no discussion on this item.
ACTION:
Commissioner Melton made a motion to move the staff recommendation. Commissioner Eglash
seconded the motion. The motion passed (6-0) with Chair Waldfogel abstaining. Chair
Waldfogel stated his reason for abstaining is that he did not believe the City had a specific
interest to protect in the debate.
Attachment F
1
CHAiR
Dan Oykwel
Keller Wiiliams Realty
VICE CHAIRS
Carla Cumpston, CFF'
Edward Jones
Rachael Gibson
Santa Clara Valley Water District
Carroll Harrington
Harrington Design
RogerSmilh
Smith Venture Group
Lanle Wheeler
Palo Alto Community Chila Care
Justin Wilcox
Bay Area NawsGroup
D!RECTORS
AndyCoe
Slanford Hospital & Clinics
Jo Coffaro
Lucile Packard Children's Hospital
MehTall Farahani
Comenca Bank
Tommy Fehrenbach
Berel Private Bank and
Trust Company
Colleen Gel'$tner
The Sheraton & Westin Peb Alto
Harold "Skip" Justman
Law Offices of Harold Justman
Jaml!S MacGregor
Silicon Valley/San Jose
BuSiness Journal
Adam M;!son
Jungle Digital
Erin MeDerm11
ThoUs, love, Herschbergar &
McLean
Hal Mickelson
Hewlett-Packard Company
Rebecca Teutschel
Burr, Pilger & Mayer
Lucy Wicks
Stanford University
PRESIDENT & CEO
Paula Sandas
10
September 17, 2010
Hon. City Council
City of Palo Alto
250 Hamilton Ave.
Palo Alto, CA 94301
Dear Mayor Burt,
o Chambe oP Commerce
The Board of Directors of the Palo Alto Chamber of Commerce recommends a NO
vote on Proposition 23.
Sincerely,
Paula Sandas
President/CEO
122 Hamilton Avenue. Palo Alto, CA 94301 • T: 650-324-3121 • F: 650-324-1215 • www.paloaltochamber.com
http://www.mercurynews.comllos-gatos/ci_16067432 Page 1 of 1
Santa Clara County ballot
measure asks voters to
stretch dollars for
children's health care
By Stephen Baxter
sbaxter@community-newspapers.coin
Posted: 09/13/2010 07:35:30 PM PDT
Pay now or pay later. That is the pitch from
supporters of the children's health care measure on
the Nov. 2 Santa Clara County ballot.
If more than 66 percent of voters approve Measure
A, a $29 annual parcel tax will be collected for 10
years to help pay for the Healthy Kids Program.
Roughly 8,400 children in the county receive health
care and medical insurance through Healthy Kids-
but for the first time, the program has a waiting list.
Much of the private foundations' funding for the
nine-year-old program has timed out. Supporters
say that if voters choose not to pay for children's
health care now, it would likely mean more
emergency room visits, missed school and missed
work for parents taking care of sick children.
However,. the measure comes at a shaky economic
time for Santa Clara County taxpayers who are trying
to pay their own bills.
When Healthy Kids started in 2001, it was the first
universal children's health insurance program in the
nation.
Advertisement
Attachment G
Money from a tobacco tax, the city of San Jose, First
5 Santa Clara County, private foundations and other
sources paid for it.
Roughly 12.5 percent of children in the county did
not have health insurance in 2001, and the program
helped lower the ratio of uninsured children to 3
percent. At its peak, the Healthy Kids program
covered 13,000 children in the county--it is now
down to 8,400 children.
"It's going to be rougher if we don't take care of our
children':'
said Jolene Smith, the executive director of First 5
Santa Clara County.
"The economic impact will create more of a problem
not just for the families but for the systems they
serve," Smith said. "There's a whole host of domino
effects on health insurance."
Opponents of the measure question whether the new
national health care law would cover some or all of
the children.
Kathleen King, the executive director of the Santa
Clara Family Health Foundation, said the national
law is more aimed at uninsured adults.
Although some children would qualify for
subsidized health coverage on a new exchange, the
premiums would likely be too high for families, King
wrote in an e-mail.
For more information on Measure A, visit the county
registrar of voters website at www.sccgov.
org/portal/site/rov.
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Foothill-De Anza
Community College
District proposes $69
annual parcel tax
By Lisa M. Krieger
Ikrieger@mercurynews.com
Posted: 08/03/201007:38:41 PM PDT
Suffering from state budget cutbacks, the Foothill
De Anza Community College District is appealing to
local residents for help in keeping doors open.
A measure on the Nov. 2 ballot, costing property
owners $69 annually for six years, would fund
classrooms and labs, keep libraries open, maintain
job retraining programs and provide support
services for students at Foothill and De Anza
community colleges. No money would be spent on
administrative salaries or benefits.
"This measure provides stable funding that the state
can't take away," said Foothill-De Anza Chancellor
Linda M. Thor. District officials say state budget
deficits are expected to continue fo'r several more
years and that more budget cuts seem likely.
Open to all California residents, Foothill and De
Anza colleges traditionally rely on the state for
almost their'entire $180 million annual budget. The
state gets this money through property and sales
taxes.
But the state has cut its support about $20 million
over two years --forcing the district to reduce
course offerings and eliminate hundreds of faculty a
rage 1 or L
Attachment H
nd staff jobs. Many students have not been able to
get the classes they need to graduate or transfer.
The Foothill-De Anza Educational Opportunity and
Job Training Measure would generate $7 million a .
year.
A poll showed that local residents place a high
value on higher education --and indicated voter
support for a $69 parcel tax, according to college
district spokeswoman Becky Bartindale. It needs to
be approved by two-thirds of voters to pass.
Community colleges are considered an efficient
route to educate students. The state spends about
$5,400 a year per community college student,
compared with $8,000 for K-12 students, $11,600
for California State University students and $20,600
for University of California students.. .
Voters have previously passed bonds to help the
district, which includes the communities of
Cupertino, Los Altos, Los Altos Hills, Mountain
View, Palo Alto, Stanford, Sunnyvale and portions of
San Jose.
But bond money can only be used for facilities and
equipment, not operations.
If passed, the measure could help local businesses
py providing more skilled employees, said Pearl
Cheng, vice president of the district's board of
trustees.
"Local employers tell us that they rely on our
graduates --whether it's the nurses, paramedics
and other health care professionals who staff
hospitals and clinics in the region, or students with
strong backgrounds in math, science and
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engineering that local high-tech companies need,"
she said.
Contact Lisa M. Krieger at 408-920-5565.
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