HomeMy WebLinkAboutMINUTES - 05202008 - C.29 sE-.L ontra
TO: BOARD OF SUPERVISORS -� -��
FROM: JOHN CULLEN, Costa
County Administrator y a
~
DATE: May 20, 2008 Countyc"U
SUBJECT: SUPPORT POSITION on SB 301 (Romero): Local government
finance
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION
SUPPORT Senate Bill 301 (Romero), a bill that deletes the requirement that a city be incorporated
before July 1, 2009 in order to be allocated Vehicle License Fee revenues, as recommended by
Supervisor Mary N. Piepho.
FISCAL IMPACT:
No fiscal impact to the County. The additional Vehicle License Fee (VLF) allocations provided to new
city incorporations and city annexations of inhabited territory have no fiscal effect on counties' VLF
revenues and no net fiscal effect on the state, because state officials recover their administrative
costs. The fiscal effect of the additional VLF allocations falls exclusively on other cities.
BACKGROUND:
Under existing law, in lieu of a property tax on motor vehicles, the state collects an annual Vehicle
License Fee (VLF) and allocates the revenues, minus administrative costs, to cities and counties. In
1998, the Legislature began cutting the VLF rate from two percent to 0.65 percent of a vehicle's
value. The state General Fund backfilled the lost VLF revenues to cities and counties.
As part of the 2004-05 budget agreement, the Legislature enacted the "VLF-property tax swap,"
which replaced the backfill from the state General Fund with property tax revenues that otherwise
would have gone to schools through the Educational Revenue Augmentation Fund (ERAF). In turn,
the state General Fund backfills schools for the lost ERAF money.
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RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMII E
APPROVE OTHER
SIGNATURES :
ACTION OF BO ON S �V APPROVED AS RECOMMENDED V 4HER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY
OF AN ACTION TAKEN AND ENTERED ON MINUTES OF THE
UNANIMOUS(ABSENT �CJ
�( BOARD OF SUPERVISORS ON THE DATE SHOWN.
)
AYES: NOES:
ABSENT: ABSTAIN:
Contact:
L.Delaney 5-1097 �n
Cc: ATTESTED
L.DeLaney,CAO's Office JOHN C4LEN,CLERK OF THE BOARD OFSUPERVISORS
BY: �� DEPUTY
SB 301 (Incorporations)—p. 2
May 20, 2008
In response, the Legislature passed AB 1602 (Laird), Chapter 556, Statutes of 2006, which changed
the allocation of VLF funds to cities in three ways:
1. For cities that incorporated between August 5, 2004 and July 1, 2009, AB 1602 (Laird)
allocated an additional $50 per capita that is adjusted over time to reflect changes in total VLF
revenues relative to changes in the total population of all cities.
2. For cities that incorporated between August 5, 2004 and July 1, 2009, those cities' shares of
VLF funds and revenues from specified state fuel taxes are allocated according to a formula that
increases a new city's actual population by 50 percent in its first year after incorporation, 40 percent in
the second year, 30 percent in the third year, 20 percent in the fourth year, and 10 percent in the fifth
year. After five years, cities receive VLF funding and fuel tax revenues in proportion to their actual
populations.
3. For cites that incorporated before August 5, 2004, which annex new areas between August
5, 2004 and July 1, 2009, AB 1602 (Laird) allocated an additional $50 per capita for the population in
those newly annexed areas at the time of annexation. This per capita amount is adjusted over time to
reflect changes in total VLF revenues relative to changes in the total population of all cities.
SB 301 extends indefinitely the method used to determine the population of a city that was
incorporated from unincorporated territory after August 5, 2004 and would delete the method for
determining the population of a city that was incorporated after July 1 , 2009.
By abruptly reducing the allocation of VLF funds to newly incorporated cities and for inhabited city
annexations, the VLF-property tax swap pulled the rug out from under communities that were
planning to incorporate or annex inhabited areas. The Laird bill offered those communities a window
in which to complete annexations or incorporations with VLF funding approximating the amount that
would have been allocated before the VLF-property tax swap changed the rules. Some communities
that are actively trying to incorporate will not meet next year's deadline, which may render their
incorporation proposals financially infeasible. By extending the deadline, SB 301 gives these
communities a fair chance to obtain crucial VLF funding.
The July 1, 2009 deadline established by AB 1602 (Laird) gave communities five years from the date
that the VLF-property tax swap took effect to complete annexations or incorporations that were
initiated under the assumption that VLF funding is available. Oakhurst (Madera County) Menifee
Valley (Riverside County), and Wildomar (Riverside County) are scheduled to seek voter approval of
incorporation proposals in elections later this year. Alamo (Contra Costa County), Arden Arcade
(Sacramento County), and San Martin (Santa Clara County) also may place incorporation proposals
on the ballot before July 1, 2009.
SB 301's extension makes additional VLF funding available to city incorporations that were not
initiated, or even envisioned, until many years after the VLF-property tax swap. The new VLF funding
would no longer offer targeted relief to communities that were disadvantaged by a sudden change in
VLF funding rules. Rather, the funding formulas would roughly replicate the broad fiscal incentive for
city incorporations that existed before the VLF-property tax swap.
The additional VLF allocations provided to new city incorporations and city annexations of inhabited
territory have no fiscal effect on counties' VLF revenues and no net fiscal effect on the state, because
state officials recover their administrative costs. The fiscal effect of the additional VLF allocations
falls exclusively on other cities. This arrangement replicates the effect of new incorporations and
annexations under the previous law, which provide additional VLF revenues to new cities or annexed
areas by decreasing all other cites' per capita allocations.
SUPPORT .-
Alamo
Alamo Incorporation Movement
California Association of Local Agency Formation Commissions
East Los Angeles Residents Association
Eastvale Incorporation Committee
League of California Cities
Nahas Company, LLC
Orange County Local Agency Formation Commissions
AMENDED IN ASSEMBLY APRIL 29, 2008
AMENDED IN SENATE JANUARY 18, 2008
AMENDED IN SENATE JANUARY 7, 2008
SENATE BILL No. 301
Introduced by Senator Romero
(Coauthors: Assembly Members Dymally, Huff, and Laird)
February 15, 2007
An act to amend Sections 11005 and 11005.3 of the Revenue and
Taxation Code, relating to local government finance.
LEGISLATIVE COUNSEL'S DIGEST
SB 301, as amended, Romero. Local government finance.
The Vehicle License Fee (VLF) Law establishes, in lieu of any ad
valorem properly tax upon vehicles,an annual license fee for any vehicle
subject to registration in this state. Under existing law, the Controller
is required to allocate VLF revenues in the Motor Vehicle License Fee
Account in a specified order to, among others, each city that was
incorporated from an unincorporated territory after August 5,2004,but
before July 1, 2009. Existing law also requires cities that were
incorporated before August 5, 2004, be allocated additional VLF
revenues in an amount determined pursuant to a specified formula. For
purposes of this formula, existing law specifies that the population of
a city that is incorporated before August 5, 2004, is that city's actual
population, as defined,residing in areas annexed after August 5, 2004,
but before July 1, 2009.
This bill wouldrequire that eities that tted from an
�ed territory after August 5,2004,but.delete the requirement
that a city be incorporated before July 1,-2014, 2009, in order to be
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SB 301 —2—
allocated
2—
allocated VLF revenues. This bill would specify, for purposes of this
formula used to determine additional VLF revenues for cities that were
incorporated before August 5,2004,that the city's actual population is
the population residing in areas annexed after August 5, 2004.
Existing law, for purposes of these allocations of VLF revenues,
establishes a formula to determine the population of a city that was
incorporated from an unincorporated territory after August 5,2004,and
before July 1,2009, and provides that the population of a city that was
incorporated from an unincorporated territory after July 1, 2009, shall
be its actual population.
This bill would-instead extend indefinitely the formulary method used
to determine the population of a city that was incorporated from an
unincorporated territory after August 5,2004, ,
and would delete the method for determining the population
of a city that was unincorporated from an incorporated territory after
July 1, 2014,would be its aettial popttlation 2009.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
1 SECTION 1. Section 11005 of the Revenue and Taxation Code
2 is amended to read:
3 11005. After payment of refunds therefrom and after making
4 the deductions authorized by Section 11003 and reserving the
5 amount determined necessary by the Pooled Money Investment
6 Board to meet the transfers ordered or proposed to be ordered
7 pursuant to Section 16310 of the Government Code,commencing
8 with the 2004-05 fiscal year, the balance of all motor vehicle
9 license fees and any other money appropriated by law for
10 expenditure pursuant to this section and deposited to the credit of
11 the Motor Vehicle License Fee Account in the Transportation Tax
12 Fund and remaining unexpended therein at the close of business
13 on the last day of the calendar month, shall be allocated by the
14 Controller by the 10th day of the following month in accordance
15 with the following:
16 (a) First,to the County of Orange. For the 2004-05 fiscal year,
17 that county shall be allocated fifty-four million dollars
18 ($54,000,000)in monthly installments.For the 2005-06 fiscal year
19 and each fiscal year thereafter,that county shall receive,in monthly
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1 installments, an amount equal to the amount allocated under this
2 section for the prior fiscal year,adjusted for the percentage change
3 in the amount of revenues credited to the Motor Vehicle License
4 Fee Account in the Transportation Tax Fund from the revenues
5 credited to that account in the prior fiscal year. Moneys allocated
6 to the County of Orange under this subdivision shall be used first
7 for the service of indebtedness as provided in paragraph (1) of
8 subdivision(a) of Section 11001.5.Any amounts in excess of the
9 amount required for this service of indebtedness may be used by
10 that county for any lawful purpose.
11 (b) Second,to each city,the population of which is determined
12 under Section 11005.3 on August 5, 2004, in an amount equal to
13 the additional amount of vehicle license fee revenue, including
14 offset transfers,that would be allocated to that city under Sections
15 11000 and 11005, as those sections read on January 1, 2004, as a
16 result of that city's population being determined under subdivision
17 (a) or(b) of Section 11005.3.
18 (c) Third, to each city that was incorporated from an
19 unincorporated territory after August 5, 2004,-b ,
20 20+4; in an amount equal to the product of the following two
21 amounts:
22 (1) The quotient derived from the following fraction:
23 (A) The numerator is the product of the following two amounts:
24 (i) Fifty dollars ($50)per year.
25 (ii) The fraction determined as the total amount of vehicle
26 license fee revenue collected during the most recent fiscal year
27 divided by the total amount of vehicle license fee revenue collected
28 during the 2004-05 fiscal year.
29 (B) The denominator is the fraction determined as the actual
30 population, as defined in subdivision (e) of Section 11005.3, of
31 all cities during the most recent fiscal year, divided by the actual
32 population, as defined in subdivision (e) of Section 11005.3, of
33 all cities in the 2004-05 fiscal year.
34 (2) The city's population determined in accordance with Section
35 11005.3.
36 (d) Fourth, to each city that was incorporated before August 5,
37 2004, in an amount equal to the product of the following two
38 amounts:
39 (1) The quotient derived from the following fraction:
40 (A) The numerator is the product of the following two amounts:
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SB 301 —4-
1
4-1 (i) Fifty dollars ($50)per year.
2 (ii) The fraction determined as the total amount of vehicle
3 license fee revenue collected during the most recent fiscal year
4 divided by the total amount of vehicle license fee revenue collected
5 during the 2004-05 fiscal year.
6 (B) The denominator is the fraction determined as the actual
7 population, as defined in subdivision (e) of Section 11005.3, of
8 all cities during the most recent fiscal year, divided by the actual
9 population, as defined in subdivision (e) of Section 11005.3, of
10 all cities in the 200445 fiscal year.
11 (2) The actual population, as defined in subdivision (e) of
12 Section 11005.3, residing in areas annexed after August 5, 2004,
13 as of the date of annexation.
14 (e) Fifth,to the cities and cities and counties of this state in the
15 proportion that the population of each city or city and county bears
16 to the total population of all cities and cities and counties in this
17 state, as determined by the Demographic Research Unit of the
18 Department of Finance. For the purpose of this subdivision, the
19 population of each city or city and county shall be determined in
20 accordance with Section 11005.3.
21 SEC. 2. Section 11005.3 of the Revenue and Taxation Code
22 is amended to read:
23 11005.3. (a) In the case of a city that incorporated on or after
24 January 1, 1987, and before August 5, 2004, the Controller shall
25 determine that the population of the city for its first 10 full fiscal
26 years, and any portion of the first year in which the incorporation
27 is effective if less than a full fiscal year, is the greater of either:
28 (1) The number of registered voters in the city multiplied by
29 three.The number of registered voters shall be calculated as of the
30 effective date of the incorporation of the city.
31 (2) The actual population, as defined in subdivision(e).
32 (b) In the case of a city that incorporated on or after January 1,
33 1987, and before August 5, 2004, and for which the application
34 for incorporation was filed with the executive officer of the local
35 agency formation commission pursuant to subdivision (a) of
36 Section 56828 of the Government Code on or after January 1,
37 1991,the Controller shall determine that the population of the city
38 for its first seven full fiscal years, and any portion of the first year
39 in which the incorporation is effective if less than a full fiscal year,
40 is the greater of either:
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1 (1) The number of registered voters in the city multiplied by
2 three.The number of registered voters shall be calculated as of the
3 effective date of the incorporation of the city.
4 (2) The actual population, as defined in subdivision(e).
5 (c) In the case of a city that was incorporated from
6 unincorporated territory after August 5, 2004, and before itly 1,
7 2044;the Controller shall determine the population of the city as
8 follows:
9 (1) For its first 12 months, 150 percent of the city's actual
10 population.
11 (2) For its 13th through 24th months, 140 percent of the city's
12 actual population.
13 (3) For its 25th through 36th months, 130 percent of the city's
14 actual population.
15 (4) For its 37th through 48th months, 120 percent of the city's
16 actual population.
17 (5) For its 49th through 60th months, 110 percent of the city's
18 actual population.
19 (6) After its 60th month, the city's actual population.
20
21 '
22 population shall be its aetual popttlation7
23 fe)
24 (d) For purposes of this section, "actual population"means the
25 population determined by the last federal decennial or special
26 census, or a subsequent census validated by the Demographic
27 Research Unit of the Department of Finance or subsequent estimate
28 prepared pursuant to Section 2107.2 of the Streets and Highways
29 Code.
30 (fj
31 (e) In the case of unincorporated territory being annexed to a
32 city, during the 10-year, seven-year,or five-year period following
33 incorporation, as the case may be, subsequent to the last federal
34 census, or a subsequent census validated by the Demographic
35 Research Unit of the Department of Finance, the unit shall
36 determine the population of the annexed territory by the use of
37 any federal decennial or special census or any estimate prepared
38 pursuant to Section 2107.2 of the Streets and Highways Code.The
39 population of the annexed territory as determined by the
40 Demographic Research Unit shall be added to the city's population
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SB 301 —6-
1
6-1 as previously determined by the Controller pursuant to paragraph
2 (1) or (2) of subdivision (a), paragraph (1) or (2) of subdivision
3 (b), or subdivision(c), as applicable.
4 {g�
5 69 After the 10-year, seven-year, or five-year period following
6 incorporation, as the case may be, the Controller shall determine
7 the population of the city as the city's actual population,as defined
8 in subdivision{ (d).
9 (l)
10 (g) The amendments made to this section by the act adding this
11 subdivision shall not apply with respect to either of the following:
12 (1) Any city that has adopted an ordinance or resolution,
13 approved a ballot measure, or is subject to a consent decree or
14 court order, that annually limits the number of housing units that
15 may be constructed within the city.
16 (2) Any city that has not prepared and adopted a housing element
17 in compliance with Section 65585 of the Government Code.
18
19 (h) This section shall become operative July 1, 1991.
O
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