CITY COUNCIL: Resolution Challenging Constitutionality of Seizure by State of City's Street Maintenance & Redevelopment Funds

Meeting Date: July 7, 2009
Prepared by: Rich Guillen

City Council
Agenda Item Summary

Name: Consideration of a Resolution of Support of the League of California Cities, Other Cities and Counties in Challenging the Constitutionality of Seizure by Any State Government of the City’s Street Maintenance and Redevelopment Funds.

Description: A legal opinion released by the League of California Cities concludes that the proposed seizure of almost $1 billion in city and county motor vehicle, or gas, tax funds to help close the state’s budget deficit is unconstitutional.

The opinion, prepared a prominent Sacramento law firm reports that in both 1974 and 1998, voters imposed restrictions on the state’s ability to use gas taxes for debt service on bonds and to divert local gas taxes for the state general fund—precisely what has been proposed by state leaders.

The proposed action risks the safety of all Californians who use the local streets and roads that make up the more than 80 percent of the state’s road system. Loss of the gas tax funds will seriously affect the ability of cities to perform critical safety related street maintenance such as street patching and resurfacing, street sweeping, street light and traffic signal maintenance,bridge maintenance and repair, sidewalk and curb ramp maintenance and repair, and much more.

Without these funds, many cities must eliminate part or all of their street maintenance operations and cut back in police and fire services to pay for basic street repair and maintenance. Poorly maintained streets will mean delays in emergency response times and increased costs for drivers whose vehicle repairs will rise because of worsening street and road conditions.

Overall Cost: N/A

Staff Recommendation: Adopt the Resolution.

Important Considerations: Beyond the immediate public safety concerns that would result from loss of street maintenance funds are the environmental impacts of this proposal. Reductions in street sweeping and worsening road conditions will mean increased water pollution runoff to nearby streams and the ocean, longer car idling times, higher greenhouse gas emissions and more respiratory problems for vulnerable populations.

Decision Record: None

Reviewed by:

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Rich Guillen, City Administrator Date

CITY OF CARMEL-BY-THE-SEA
RESOLUTION 2009–
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA SUPPORTING THE LEAGUE OF CALIFORNIA CITIES, THE CALIFORNIA REDEVELOPMENT ASSOCIATION, AND OTHER CITIES AND COUNTIES IN CHALLENGING THE CONSTITUTIONALITY OF ANY SEIZURE BY STATE GOVERNMENT OF THE CITY’S STREET MAINTENANCE AND REDEVELOPMENT FUNDS

WHEREAS, the current economic crisis has placed cities under incredible financial pressure and caused them to make painful budget cuts, including layoffs and furloughs of city workers, decreasing maintenance and operations of public facilities, and reductions in direct services to keep spending in line with declining revenues; and

WHEREAS, since the early 1990s the state government of California has seized over $10 billion of city property tax revenues statewide, now amounting to over $900 million each year to fund the state budget even after deducting public safety program payments to cities by the state; and

WHEREAS, since the early 1990s the state government also has seized $ 1.04 billion of redevelopment tax increment statewide, and the Governor and Legislature are now considering seizing $350 million each year for three years, beginning in the current fiscal year; and

WHEREAS, on April 30, 2009, in the case of CRA v. Genest, the Sacramento Superior Court found similar efforts by the State to seize redevelopment tax increment for the state general fund to be in direct violation of Article XVI, Section 16 of the State Constitution, added by the voters in 1952 as Proposition 18, which requires that tax increment be used exclusively for the benefit of redevelopment project areas; and

WHEREAS, in his proposed FY 2009-10 budget the Governor has proposed transferring $1 billion of local gas taxes and weight fees to the state general fund to balance the state budget, and over $700 million in local gas taxes permanently in future years, immediately jeopardizing the ability of the City to maintain the City’s streets, bridges, traffic signals, streetlights, sidewalks and related traffic safety facilities for the use of the motoring public; and

WHEREAS, the loss of almost all of cities’ gas tax funds will seriously compromise cities’ ability to perform critical traffic safety related street maintenance, possibly including, but not limited to, drastically curtailing patching, resurfacing, street lighting/traffic signal maintenance, payment of electricity costs for street lights and signals, bridge maintenance and repair, sidewalk and curb ramp maintenance and repair, and more; and

WHEREAS, cities and counties maintain 81% of the state road network while the state directly maintains just 8%, and according to a recent statewide needs assessment1 on a scale of zero (failed) to 100 (excellent), the statewide average pavement condition index (PCI) is 68, or “at risk.”

WHEREAS, in both Proposition 5 in 1974 and Proposition 2 in 1998, the voters of our state overwhelmingly imposed restrictions on the state’s ability to do what the Governor has proposed and the Legislature is considering, and any effort to permanently divert the local share of the gas tax would violate the state constitution and the will of the voters.

NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA hereby directs the City Attorney to take all necessary steps to cooperate with the League of California Cities, California Redevelopment Association, other cities, counties and redevelopment agencies in supporting litigation against the state of California if the legislature enacts and the governor signs into law legislation that unconstitutionally diverts the redevelopment tax increment and the City’s share of funding from the Highway Users Tax Account (HUTA), also known as the “gas tax,” to fund the state general fund; and

RESOLVED FURTHER, that the City Clerk shall send this resolution with an accompanying letter from the mayor to the Governor and each of the city’s state legislators, informing them in the clearest of terms of the City’s adamant resolve to oppose any effort to frustrate the will of the electorate as expressed in Proposition 18, Proposition 5 and Proposition 2 (1998) concerning the proper use and allocation of the redevelopment tax increment and the gas tax; and

1 California Statewide Local Streets and Roads Needs Assessment, Nichols Consulting Engineers, Chtd. (2008), sponsored by the League of California Cities, California State Association of Counties and County Engineers Association of California.

RESOLVED FURTHER, that a copy of this Resolution shall be sent by the City Clerk to the League of California Cities, the California Redevelopment Association, the local chamber of commerce, and other community groups whose members are affected by this proposal to divert funds from vital local services and projects.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this 7th day of July 2009, by the following roll call vote:

AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:

SIGNED,

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Heidi Burch, City Clerk

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ATTEST, SUE McCLOUD, MAYOR