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HomeMy WebLinkAboutMINUTES - 01191999 - SD4 11 _ ....... _...... ........ ........ . ......... ......... ......... .................................................... . ......................................................................................................................................................................................................................................... TO: BOARD OF SUPERVISORS Contra s 1 L FROM: PHIL. BATCHELOR, COUNTY ADMINISTRATOR � Costa �j t County .t DATE: January 12, t 999 SUBJECT. LEGISLATION SB 165 (RAINEY) - FREEZE AND ELIMINATION OF THE EDUCATIONAL REVENUE AUGMENTATION FUND (ERAF) SPECIFIC REOUEST(S)OR AECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: ADOPT a position in SU'PP'ORT of SB 165 by Senator Richard Rainey,which would freeze the growth of the Educational Revenue Augmentation Fund (ERAF) at the 1998-99 fiscal year level, and then reduce it by 10% each year until it is eliminated. BACKGROUND: The Board of Supervisors has included in its 1999 Legislative Program an item to support "the efforts of CSAC and the Urban Counties Caucus to at least cap the growth of ERAF, and preferably begin to return some of the base to counties and cities." Senator Richard Rainey has introduced SB 165 which, as introduced,expresses the intent of the Legislature to freeze the growth in the ERAF at the 1998-99 fiscal year level and allow existing taxing jurisdictions to retain the growth which would otherwise have been transferred to the school districts and county offices of education. The billfurther expresses the intent of the Legislature that the transfers to the ERAF be reduced by 10% each year until the amount to be shifted is reduced to zero. The precise formula for accomplishing this is not yet included in the bill, but the expression of intent is very clear. In view of the fact that SB 165 appears to be consistent with the Board's adopted 'Legislative Program, it is recommended that the Board indicate its support of SB CONTINUED d19"ATTACHMENT: YES SIGNATURE: / " �&*- e,-;e ,- -RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): a[UiT ACTION OF BOARD ON APPROVED AS RECOMMENDED 4TW6 i.. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ASSENT AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED O THE MINUTES OF THE BOARD ASSENT: ABSTAIN: OF SUPERVISO ON THE DATE SHOWN. ATTESTED Contac ee Page 2 HIL BATCHELOR,4dRK OF THE BOARD OF cc: S ERVISORS AND COUNTY ADMINISTRATOR s+r r 13Y DEPUTY cc. County Administrator Auditor-Controller Senator Richard Rainey 7th Senate District Room 4090 State Capitol Sacramento, CA 95814 Casey Sparks Kaneko, Executive Director Urban Counties Caucus 1100 K Street, Suite 109 Sacramento, CA 95814 Les Spahnn Heim, Noack, Kelly & Spahnn 1121 L Street, Suite 100 Sacramento, CA 95814 -2- . . . ............................................................................................................................................................................................... ...._.... ......... ......... ......... ......... .._.........................._............................................................._....... SENATE BILL No. 165 Introduced by Senator Rainey January 11, 1999 An act to amend Section 41204.1 of the Education Code, and to add Section 97.43 to the Revenue and Taxation Code, relating to local government finance, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 165, as introduced, Rainey. Local government finance: property tax revenue allocation: local agency relief. Existing property tax law requires the county auditor, in each fiscal year, to allocate property tax revenue to local jurisdictions in accordance with specified formulas and procedures, and generally requires that each jurisdiction be allocated an amount equal to the total of the amount of revenue allocated to that jurisdiction in the prior fiscal year, subject to certain modifications, and that jurisdiction's portion of the annual tax increment, as defined. Existing property tax law also reduces the amounts of ad valorem property tax revenue that would otherwise be annually allocated to the county, cities, and special districts pursuant to these general allocation requirements by requiring, for purposes of determining property tax revenue allocations in each county for the 1992-93 and 1993-94 fiscal years, that the amounts of property tax revenue deemed allocated in the prior fiscal year to the county, cities, and special districts be reduced in accordance with certain formulas. It requires that the revenues not allocated to the county, cities, and special districts as a result of these reductions be transferred to the 99 I SB 165 —- -- Educational Revenue Augmentation Fund in that county for allocation to school districts, community college districts, and the county office of education. This bill would modify these reduction and transfer requirements, commencing with the 1999-2000 fiscal year, by requiring that each reduction and transfer amount calculated for a local agency in a county be annually reduced in accordance with an unspecified schedule, and that the revenues not allocated to the county's Educational Revenue Augmentation Fund as a result of these reductions be instead allocated among the local agencies in the county, as provided. By imposing new duties in the annual allocation of ad valorem property tax revenues, this bill would impose a state-mandated local program. This bill would also state the intent of the Legislature, and would require the Director of Finance to make certain adjustments, with respect to ensuring that the modifications required by this bill to property tax revenue allocations do not have a net fiscal impact on school districts or community college districts, or upon the state's obligation under the California Constitution to provide funding to those districts. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2i3. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. The people of the State of California do enact as follows: 1 SECTION 1. The Legislature hereby finds and 2 declares that it is the intent of the Legislature in enacting 3 this act to do all of the following: 4 (a) Limit the amounts of property tax revenues that 5 are shifted from counties, cities, and special districts to 99 . . ........................................................................................................................................................................................I.....,..... _......._ ......__. ......... ......... ......... ..._.._.. ......_... . ......... ......... ......... ......... ......... iV 3 —3— SB 165 1 Educational Revenue Augmentation Funds to those 2 amounts that were so shifted in the 1998--99 fiscal year. 3 (b) Annually reduce the total amount of revenues that 4 are shifted to Educational Revenue Augmentation 5 Funds, estimated to be three billion four hundred million 6 dollars ($3,400,000,000) each year, by 10 percent per year 7 until the total amount of revenues that are so shifted is 8 reduced to zero. 9 (c) Ensure that those changes specified in this section 10 are made only after all calculations are made with respect 11 to those revenues that are to be allocated pursuant to 12 Section 8 of Article XVI of the California Constitution, in 13 order to ensure that schools, from the kindergarten level 14 to the community college level, inclusive, are fully 15 funded. 16 SEC. 2. Section 41204.1 of the Education Code is 17 amended to read: 18 41204.1. (a) (1) Pursuant to paragraph (2) of 19 subdivision (b) of Section 41204, the Director of Finance 20 shall annually adjust "the percentage of General Fund 21 revenues appropriated for school districts and 22 community college districts, respectively, in the 1986-87 23 fiscal year" for purposes of applying paragraph (1) of 24 subdivision (b) of Section 8 of Article XVI of the 25 California Constitution, to reflect those property tax 26 revenue allocation modifications, required by the 27 amendments made to Chapter 6 (commencing with 28 Section 95) of Part 0.5 of Division 1 of the Revenue and 29 Taxation Code by the aet ftdding Otis seetion qualifying 30 provisions, as defined in paragraph (2), in a manner that 31 ensures that those modifications will have no net fiscal 32 impact upon the amounts that are otherwise required to 33 be applied by the state for the support of school districts 34 and community college districts pursuant to Section 8 of 35 Article XVI of the California Constitution. 36 (2) For purposes of this section, "qualifying 37 provisions"means both of the following: 38 (A) The amendments made to Sections 97.2 and 97.3 39 of the Revenue and Taxation Cade by Chapter 1111 of the 40 Statutes of 1996. 99 SB 165 --4- 1 (B) Section 97.43 of the Revenue and Taxation Code. 2 (b) It is the intent of the Legislature i--efta „ 3 aef adding this seetieft to ensure both of the following: 4 (1) That the changes required by the 5 seems qualifying provisions in the allocations of ad 6 valorem property tax revenues do not have a net fiscal 7 impact upon school districts, as defined in accordance 8 with Section 41302.5, or community college districts. 9 (2) That the changes required by the aet—ac1ding this 10 seetieft qualifying provisions in the allocations of ad 11 valorem property tax revenues do not have a net fiscal 12 impact upon the amounts of revenue otherwise required 13 to be applied by the state for the support of school districts 14 and community college districts pursuant to Section 8 of 15 Article XVI of the California Constitution. 16 SEC. 3. Section 97.43 is added to the Revenue and 17 Taxation Code,to read: 18 97.43. (a) (1) Notwithstanding any other provision 19 of this article, for purposes of ad valorem property tax 20 revenue allocations for the 1999-2000 fiscal year and in 21 each fiscal year thereafter, the auditor shall allocate to the 22 county's Educational Revenue Augmentation Fund only 23 that percentage specified in paragraph (2) of each 24 amount of ad valorem property tax revenue that is 25 required to be allocated to that fund rather than a local 26 agency as a result of the total reductions calculated for 27 that local agency pursuant to Sections 97.2 and 97.3. 28 (2) For purposes of paragraph (1), the allocation 29 percentages are as follows: 30 31 Fiscal Year Percentage(%) 32 1999-2000 33 and each fiscal year thereafter 0 34 35 (b) In the 1999-2000 fiscal year and each fiscal year 36 thereafter, any amount of ad valorem property tax 37 revenue that is not allocated to a county's Educational 38 Revenue Augmentation Fund as a result of any limit or 39 reduction established in subdivision (a) shall instead be 40 allocated among the local agencies in the county in 99 ................................. SB 165 1 accordance with each local agency's proportionate share 2 of the total amount of ad valorem property tax revenues 3 that would be required to be allocated to the county's 4 Educational Revenue Augmentation Fund in the absence 5 of this section. 6 SEC. 4. No reimbursement is required by this act 7 pursuant to Section 6 of Article XIII B of the California 8 Constitution because this act provides for offsetting 9 savings to local agencies or school districts that result in 10 no net costs to the local agencies or school districts, within 11 the meaning of Section 17556 of the Government Code. 12 Notwithstanding Section 17580 of the Government 13 Code, unless otherwise specified, the provisions of this act 14 shall become operative on the same date that the act 15 takes effect pursuant to the California Constitution. 16 SEC. 5. This act is an urgency statute necessary for the 17 immediate preservation of the public peace, health, or 18 safety within the meaning of Article IV of the 19 Constitution and shall go into immediate effect. The facts 20 constituting the necessity are: 21 In order to commence as soon as possible a program of 22 fiscal relief that will allow local agencies to restore an 23 adequate level of essential public services, it is necessary 24 that this act take effect immediately. 0 99 Request to Speak Form Srzq ( THS ) MINUTE UM this form wW Plam ft In dw box r*v thethe Bowd. ►, MOM . � Phoni �iM4YOi��iitrilliiilll�r1111iI�.11Yw - - ��'*���w�M111n1�4ir�Ir�IM��1Ail�ilralM�l1l4rr� ECK ONE OmmOfOw ,WM to spa&an A#oftm4. oam t dry "A WIA to we& W' Ve call tV "'