101-Staff Report.pdf
OFFICE OF THE CITY MANAGER
CITY HALL
10 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3212 www.cupertino.org
CITY COUNCIL STAFF REPORT
Meeting: September 7, 2010
Subject
Authorize support of Proposition 22, the Local Taxpayer, Public Safety and Transportation
Protection Act of 2010.
Recommended Action
Endorse proposition.
Description
Based on e-mail communications received from Vice Mayor Wong and Councilmember
Mahoney in support, it is the recommendation of the Legislative Committee that the council
support Proposition 22.
The State of California is once again facing a significant fiscal shortfall. The state has and will
most likely continue to rely on the borrowing and taking of monies from local governments
unless an action is taken to further limit the state's ability to redirect local funds for purposes of
balancing California's budget. In 2004 and 2006, California's voters amended the Constitution to
limit the state’s authority to use local funds to balance the state's budget. These new provisions in
the Constitution, however, did not eliminate state authority to temporarily borrow or redirect
some city, county, and special district funds. In addition, these earlier propositions did not
eliminate the state’s authority to redirect local redevelopment agency revenues.
In the 2009/10 fiscal year, the Legislature borrowed approximately $2 billion in property taxes
from local governments, despite no clear path to repay these funds; statewide took $2.05 billion
in local redevelopment funds; and shifted $1 billion in transit funding away from local transit
agencies. The courts have since ruled the transit shift unconstitutional. However, the "gas-tax
swap" in the 2010/2011 budget could result in the annual loss of $600 million of transit funding.
In October 2009, a coalition of local government, transportation, and transit advocates filed the
Local Taxpayer, Public Safety, and Transportation Act of 2010 with the California Attorney
General for potential placement on California's November 2010 statewide ballot. In April 2010,
the coalition submitted approximately 1.1 million signatures to county elections offices
throughout the state to qualify the measure for the November ballot. In July, it was announced by
Secretary of State Debra Bowen that the Local Taxpayer, Public Safety, and Transportation Act
of 2010 would appear on the California November 2010 statewide ballot as Proposition 22.
A substantial number of cities, local government organizations, public safety organizations,
transportation and transit organizations, labor organizations, water agencies, environmental,
taxpayer, and community, and business groups have already pledged support of this initiative.
The approval of this ballot initiative by the voters will further prevent state politicians from
seizing, diverting, shifting, borrowing, transferring, suspending, or otherwise taking or
interfering with tax revenues dedicated to funding local government services provided by
municipalities, counties and special districts.
Specifically, Proposition 22, the Local Taxpayer, Public Safety, and Transportation Act of 2010,
covers the following provisions:
Protects Locally Imposed Taxes such as Utility User Tax, Transient Occupancy, and
Sales Taxes : The measure prevents the Legislature from taking or directing how these
local taxes may be spent.
Property Tax Borrowing : The measure repeals the state's authority to borrow local
property taxes.
Reallocation of Property Tax or Vehicle License Fees : The measure prohibits the state's
ability to reallocate these revenues to pay off state mandates.
Borrowing or Stealing Local Highway User Tax Act (HUTA) : The measure provides
protection to local highway user taxes and requires hearings and study before state and
local shares are changed.
Borrowing or Stealing Proposition 42 Gas Tax: : The measure also provides the same
protection as HUTA taxes.
Borrowing or Stealing Public Transit Account (PTA) funds : The measure restricts the
use of PTA funds only for transportation planning and mass transportation purposes and
requires "Spillover" sales tax to be deposited in transit accounts.
Redevelopment Agency (RDA) funds : The measure prohibits taking, borrowing, or
directing the spending of RDA funds.
Enforcement : The measure provides a remedy requiring the state to re-pay funds taken
illegally if a court so finds.
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Prepared by: Rick Kitson, Public and Environmental Affairs Dir.
Approved for Submission by: David W. Knapp, City Manager