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HomeMy WebLinkAboutMINUTES - 06091998 - C54 TO: BOARD OF SUPERVISORS �£ Contra FROM: PHIL BATCHELOR, COUNTY ADMINISTRATOR Costa DATE: June 4, 1 99$ ^q G,3� C1..J ) 1� June SUBJECT: POSITION ON PROPOSE© RED'U'CTION OF THE VEHICLE LICENSE FEE SPECIFIC REQUEST(S)OR RECOMMENDATION(S)6 BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ADOPT the following as the Board's position on the subject of the proposed reduction of the Vehicle License Fee. As a precondition to discussing reductions in the Vehicle License Fee, the State Budget must insure financially healthy counties by taking the fallowing steps. r The growth in the property tax shift must be capped. + One or more of the following funding needs must be addressed. ✓ Base return of the property tax shift. ✓ Additional State funding for the trial courts. ✓ Return of trial court fines and forfeitures. ✓ State assumption of an additional portion of non-Federal foster care costs. ✓ Payment of the schools' share of property tax administration. ✓ Elimination or reduction of the California Youth Authority(CYA)fees. CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON June APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE --UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: T T., IV, 3z,--J-NOES: .TTI_ AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: none ABSTAIN: T One OF SUPERVISORS THE DATE SHOWN ATTESTED Contact: HIL BATCHELOR,CLERK OF THE BOARD OF cc: SUPERVISORS AND COUNTY ADMiNISTRATOR See Page 3 , BY - /../ ry DEPUTY 2. ADOPT the following as the Board's position on the proposed reduction of the Vehicle License Fee (VLF) itself. • Agree to support the Governor's proposal for a 75% reduction in the VLF (from 2% of market value to 'I%effective January 1, 1999 and to .5% effective January 1, 2002), providing the following items are all addressed. i A Constitutional amendment is placed on the November 3, 1998, ballot which reduces the VLF to I%effective January '1, 1999 and to .5% effective January 1, 2002. + The Constitutional amendment begins the process of returning the property tax (ERAF) and also mandates a backfill of funds to cities and counties each year equal to the amount lost by the reduction of VLF so cities and counties are essentially held harmless for the reduction. This backfill must also provide for growth equal to the growth that would have occurred with the VLF. 3. AUTHORIZE members of the Board of Supervisors, the County Administrator and County's lobbyist to contact members of this County's legislative delegation, hold meetings with them, and present the Board's position on this issue to the members of the delegation, asking them to support and carry this position to their respective caucuses and leadership. BACK- BOUND: The State appears to have a $4 billion surplus for the current year and 1998-99 fiscal year. A tax cut is an obvious and popular way to distribute at least some of the surplus. A reduction in the VLF is an especially popular mechanism for providing a tax cut because it is a relatively high profile tax that is paid in a lump sum annually by essentially every person who owns a motor vehicle that is registered in California. The California State Association of Counties (CSAC) has noted that information released by the State Department of Finance indicates that even with the mitigation provided by Proposition 172 sales tax revenue ($1.7 billion) and Trial,Court Funding ($300 million), counties are still short approximately $700 million per year from recovering the annual $2.7 billion loss of property tax revenue, which is growing annually by over $100 million. Now that the economy has turned around and the State has a surplus, it seems only fair that the State return this remaining $700 million to the counties. The VLF represents the last remaining Constitutionally guaranteed source of revenue available to counties. It is anticipated that in the 1997-98 fiscal year, VLF revenue to this County will equal $61.8 million. By the 2002-03 fiscal year when the Governor's proposal to reduce the VLF by 75% is fully implemented, the loss to this County would be $67 million, according to estimates made by the Auditor- Controller's Office, based on actual experience for the past three years. We believe it is important to join with many other counties in insisting that before the idea of a tax cut is seriously entertained, the State return to the counties the equivalent of the $700 million balance of the property tax revenue which they took when the State was in economic trouble six years ago that has not already been mitigated by Proposition 172 or the Trial Court Funding. The first and most important thing which the State should do is to cap the growth in the property tax transfer by allowing future growth on the property tax which has been transferred to the State to remain with the taxing jurisdictions that generated the base property tax. 2 Other funding issues can also be addressed as a part of insuring that counties are treated equitably and are able to return to a more healthy financialcondition. Once this is achieved, then the VLF may be an appropriate mechanismfor sharing a tax cut with many of the residents of the State. However, we want to insure that counties do not suffer again as they did when the property tax was transferred to the State. Therefore, we should insist that there be a full and complete backfill of lost VLF revenue and that this backfill be locked into the Constitution so the Legislature in the future cannot reduce or eliminate it as they did with the property tax. We would even suggest that the reduced VLF rate of .5% be locked into the Constitution so the Legislature in the future cannot by statute simply further reduce or eliminate the remaining VLF, as they can do under current law. Finally, we recommend that the backfill be a charge against the State General Fund, without tying it to a particular revenue source like the sales tax and that the growth in the backfill parallel the growth in the VLF. This can be accomplished by tracking the growth rate of the remaining 25% of the VLF and insuring that the backfill to cities and counties equals the growth rate of this 25% of the current VLF. CSAC has tracked the growth in the sales tax and the VLF for the past several years. The VLF has grown substantially faster than has sales tax. For this reason, we do not want the backfill to come from a single source of revenue. We are, therefore, recommending that the Board approve these recommendations and authorize staff and Board members to urge members of our delegation to support this same position with their colleagues in the Legislature. cc: County Administrator Steve Szaley, Executive Director California State Association of Counties 1100 K Street, Suite 101 Sacramento, CA 95814 Casey Sparks Kaneko, Executive Director Urban Counties Caucus 1100 K Street, Suite 101 Sacramento, CA 95814 Les Spahnn Heim, Noack, Kelly & Spahnn 1121 L Street, Suite 100 Sacramento, CA 95814 All Department Heads {Via CAO} 3 ...... . Request to Speak Form if. � (THREE ) MINUTE LIMIT) ww pUm it in Ow box nw da Weaken'rafibum rigs the # rnrrw�^' WWII CHEM ONE: z � jwMtoWwkonAgerWaftwn # wish to � 1an doe*bled I ,do not rnrbb to qxwk hd lave d t lgiVa"a forto ...rr.r,...