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Home My WebLink About0383.091, , - -;;111 -~'-.- o ~.i i!" .....•. ' 0 .~ -.,,~ . ~. August 2, 1991 HONORABLE CITY COUNCIL Paio Alto, California ErtlCl OF 19'1=ll... STATe BUDGET Members of the Council: Report in Brief This report is for information purposes only, and requires no Council action. On July 16, 19~1, the Governor signed the budget bill and related legislation approved by the Legisl,ature. Actions taken as a result of bUdget negotiati.ons 'Will affect the city of Palo Alto both positively a~d negatively. Until the City is given more information from the Fublic Employees Retirement System (PERS) the total impact of the budget measures will not be known defini tively; ho~ever, exclusive of the PERS rebate, staff estimates a loss of $280,200 in General Fund fine and forfeiture and cigarette tax revenues and additional parking citation charges, offset by $150,000 to $200,000 in additional sales tax revenues. Staff viII return to the cO'..lncil with the midyear financial report to make all adjustments req11ired to the 1991-92 adopted budget. ~s Tax/PERS Rebate Tt.ro budget measures will affect the City'S finances positively .. The City vill receive approximately $150,000 to $200,000 more in sales tax as a result of extension of sales tax to previously untaxed commodities such as candy, snack foods, bottled 'Water, newspapers, and fuels fer commercial ships and airplanes. In addition, Assembly Bill (AB) 702 enacte:.d changes in certain benefits in PERS 'Which ",,111 mean appro:dl'lately $439 million in savings to all California cities. The bill eliminates the -InVest ment Dividend Disbursement Account-(IODA) and the -Extraordinary CMR:38l:91 I ! ~ ! I , 1 I 1 i - '", .. " ... Performance Dividend Account" (EPDA), 'Which .'ere created to fund supplemental cost of living adjustments [or PERS retirees. A total or $1.6 to $1.7 million 'Will be credited back to the employer accounts in the system. At this time: it is not knovn hov much Palo Alto's share of the savings will be. AB 702 stipulates that PERS employers, in expending any of the savings ltI'~ich accrue as a result of the repeal of the rDDA and EPDrt progra~s, viII qive the highest priority to retalninq or rehiring as Jr,any as possible of tbase PERS ~embeTs subject to layoff or reduction. This would only affect one potential layoff in the 1991-92 budget, and staff is 'W'orkir-.g to resolve this one so that no funding lIlould be required~ staff is also investiqatinq the pote~tial for making adju~tments to the actuarial funding year ~ith PERS, and ~i11 return to Council with a recommendation if warranted, once all the relevant informa tion is reviewed~ Fines and Forfeiture Revenue rhe Legislature and the Governor have determined that cities should help finance the trial courts~ and through AB 1297 ~ill require that half of all non-parking fines and forfeitures attributable to cities will be shifted to the State prior to their normal alloca tion to cities. Palo Alto budgeted $263,500 in 1991-92 for such tines, so the I'evenue loss 'Will be $131,750, AB 1297 also requires that cities vho elect to accept parking panalties pay ~he County $1.50 per parking citation. A total of 50,400 citations are estimated to be issued during the year; this equates to $75 /600 in additional expenditures to pay the county. Cigarette Tax Rev_~~ In addition to revenues derived frem AB 1297, trial court funding will also come f~o~ a shift of 47 percent of cities' cigarette tax revenue. This was a compromise to the Governor's original proposal to take $~5 milli~n in city vehicle license fee reven~e. Palo ~lto budgeted $155,000 in cigarette tax revenue in 1991-92, so this .ill mean a loss of $72,850 to the Ge.neral Fund. The shift sunsets after five years~ on or after July 1, 1996. S8 2557: Book ing F~_~s [Property Tax Ad!'T1.n i.ni.$trati on senate Bill 2557, passed initially in 1990-91, ·t.'as not repealed in this legislative session, despite strong efforts by california cities. Palo Alto's 1991-92 budget includes $380,000 for the cost of booking prisoners. and a reduction of $130,000 in property tax revenue for the County-imposed charge for property tax administra tion. CMR: 383: 91 2 L , • i 1 o Senate sill 21 'Was intended hi" the legislature to provide sclta minor mitigation to citie~ by allo'iiinq cities to recover the cost of booking fees from arrested per6on~ 'Who are subsequently convicted of a crime related to their arrest. Ho~ever, while it is possible to t~ack a person from the bookin9 process through the County's criminal justice system, it is a time-consuming task that ".liQuId create a signif icant 'Workload probleIr.. Police staff make between 3,500 and 4,000 arrests a year, and the 1 enqth of time between booking and conviction in scme cases is several years. I~ addition, the rate of collection from the majority of convicted persons can be expected t~ be low: people placed on probation as a result of conviction frequently do not even report to their probation officers as required. Additionally, crimes are often committed to support narcotic habits, 50 it is unrealiatic to think these people will pay restitution for booking fees to the agency who put them in jail. Even legislative staff estimated that cities usinq this mechanism are likely to offset less than 10 percent of the cost of booking fees. Respectfully submitted, Director of Finance CMR,3B3,91 3 •