HomeMy WebLinkAbout2003-01-27 City Council (3)City of Palo Alto
C ty Mar ager’s Repor
TO:
FROM:
|
HONORABLE CITY COUNCIL _1_
CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:
SUBJECT:
JANUARY 27, 2003 CMR:140:03
APPROVAL OF A RESOLUTION URGING THE
CALIFORNIA LEGISLATURE TO REJECT THE
GOVERNOR’S PROPOSED SHIFT OF LOCAL VEHICLE
LICENSE FEE (VLF) REVENUESAND TO HONOR THE
1998 STATE COMMITMENT TO RESTORE THE VLF
RECOMMENDATION
Approve the attached resolution "urging the California legislature to reject the
Governor’s proposed shift of local Vehicle License Fee (VLF) revenues and to honor the
1998 State commitment to restore the VLF."
REPORT IN BRIEF
As a result of the State of California’s budget crisis, the Governor has proposed
eliminating its payments to local jurisdictions ~known as the VLF "backfill." The
Governor has not proposed raising the VLF to automobile owners so as to keep local
jurisdictions financially whole, as was promised by the State when VLF fees to vehicle
owners were reduced. From its inception, the VLF was dedicated as local revenue, which
the State is obligated to maintain.
If the Governor’s proposal is implemented, the City of Palo Alto is expected to lose $1.1
million in 2002-03 and $2.4 million in 2003-04 and thereafter. This compounds an
already weak revenue environlnent, in which the City finds it necessary to reduce
expenses. The VLF "backfill" reduction will have a major effect on the City’s ability to
deliver public safety and other services to the community.
At Council’s request, staff has drafted a Resolution opposing the VLF reduction and
recommends Council’s approval.
CMR:140:03 Page 1 of 2
ATTACHMENTS
Attachment A:Resolution Urging the California Legislature to Reject the
Governor’s Proposed Shift of Local Vehicle License Fee (VLF)
Revenues and to Honor the 1998 State Commitment to Restore the
VLF
PREPARED BY: r, ~
~ACCIO
mty Director, Administrative Services
/
C~RL YEAT~
Director, Adrfiinistrative Services
CITY MANAGER APPROVAL:
EM~Y HARRIS ON
Assistant City Manager
CMR: 140:03 Page 2 of 2
RESOLUTION NO.
RESOLUT!ON OF THE COUNCIL OF THE CITY OF PALO
ALTO URGING THE CALIFORNIA LEGISLATURE TO REJECT
THE GOVERNOR’S PROPOSED SHIFT OF LOCAL VEHICLE
LICENSE FEE (VLF) REVENITES AND TO HONOR THE 1998
STATE COMMITMENT TO RESTORE THE VLF
WHEREAS, prior to 1935 cities and counties collected
property taxes on motor vehicles to fund essentia! !ocal public
health and safety services; and
WHEREAS, in 1935 the Legislature first enacted the
Vehicle License Fee (VLF) Act, replacing the property tax on
vehicles with a 1.75 percent fee charged against the value of
the motor vehicle; and
WHEREAS, in 1948 the rate of the VLF was increased to 2
percent of the value of the vehicle; and
WHEREAS, in 1986 the voters voted overwhelmingly to
constitutionally dedicate the proceeds of the VLF to fund city
and county services; and
WHEREAS, in 1998 the Legislature approved using state
general funds to reduce VLF payments by vehicle owners that have
grown to 67.5 percent of the VLF owed (amount paid by state to
local jurisdictions is known as the "VLF backfill" or "offset");
and
WHEREAS, the 1998 legislation and subsequent legal
enactments contain clear provisions that when insufficient state
backfill funds are available the VLF to vehicle owners shal! be
increased; and
WHEREAS, VLF and backfill revenues constitute 15 to 25
percent of typical city and county genera! revenues and that, on
average, more than 60 percent of these revenues support law
enforcement, fire, emergency medica!, and health care services;
and
WHEREAS, any failure by the Legislature to maintain the
VLF backfil! or restore the VLF wil! cause a widespread and
disquieting disruption in !ocal services essentia! to the we!l-
being of California citizens; and
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WHEREAS, the City of Palo Alto will lose backfill
revenues of $i.i million in 2002-03 and $2.4 million in 2003-04
that equates to the reduction of 22 police officers and
firefighters; and
WHEREAS, Governor Davis’ proposal to divert $4 billion
in !ocal VLF backfil! payments over the next 17 months fails to
honor the 1998 legislative commitment, ignores prior
constitutional requirements, and undermines the fabric of local
government; and
WHEREAS, shifting $4 billion in !oca! revenues is
disproportionate and inequitable given the $5 billion burden
loca! governments shouldered in the last recession and given the
burden state programs and departments have been asked to absorb.
NOW, THEREFORE, the Council of the City of Palo Alto
does RESOLVE as follows:
SECTION I. That if the state General Fund can no longer
afford the VLF "backfill," that~the Legislature and Governor of
California are hereby respectfully urged to implement the
provisions of current law providing for restoration of the VLF
fee; and
SECTION 2. That the City of Palo Alto hereby expresses
its profound appreciation to the legislators who support such
VLF restoration legislation.
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SECTION 3. The Counci! finds that this is not a project
under the California Environmenta! Quality Act and, therefore,
no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
City Attorney City Manager
Director of Administrative
Services
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