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HomeMy WebLinkAbout2008/08/05 Item 3 CITY COUNCIL AGENDA STATEMENT - AUGUST 5, 2008, Item~ ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA OPPOSING THE USE OF LOCAL FUNDS TO BALANCE THE STATE BUDGET LEGIS LA TIVE SUBCOMMITTEE CITY MANAGER Jh\t': ASSISTANT CITY t'~AGER ~ 4/5THS VOTE: YES D NO ~ SUBMITTED BY: REVIEWED BY: SUMMARY The California State Legislature has missed its Constitljtional deadline to pass a budget. As the leaders of the Legislature debate fiscal policy, there has been discussion of invoking the 'severe fiscal hardship' provisions of Proposition IA and Proposition 42. This would result in borrowing funds from local government which would not be required to be repaid to cities and counties for three years. ENVIRONMENTAL REVIEW The Environmental Review coordinator has reviewed the proposed activIty for compliance with the California Environmental Quality Act (CEQA) and has determined: "The activity is not a 'Project' as defined under Section 15378 of the State CEQA Guidelines; registering opposition to a State use of local funds does not result in a physical change to the environment and the resolution addresses only State fiscal/accounting policy; therefore, pursuant to Section 15060( c )(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. " RECOMMENDATION Council adopt the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. 3-1 - AUGUST 5, 2008, Item :5 Page 2 of2 DISCUSSION The Chula Vista City Council revised its 2007/2008 City Budget, and adopted the 2008/2009 budget after making many difficult choices to reduce or eliminate valuable programs and services to the public. The General Fund budget was reduced by 16% and authorized staff levels were cut by 12% in the course of this process. The Legislature of the State of California has consistently avoided making these same kinds of difficult decisions in recent years, relying instead on the use of one-time revenues, borrowing funds, or shifting the dates by which they record revenues and expenses to avoid the appearance of a budget deficit. As the Legislature grapples "'1th a multi-billion dollar gap in the budget, they are once again looking at diverting local government revenues to the State. Due to the overwhelming voter approval of Proposition 42 in 2002 and Proposition IA in 2004 & 2006 to protect local resources, the State can only 'borrow' funds from cities and counties. Further, the money may only be borrowed in cases of 'extreme fiscal hardship', and must be repaid (with interest) in 3 years. The Governor and the Budget Conference Committee have each proposed budgets that do not rely on borrowing from local government, however the Legislature has rejected those proposals and remains at an impasse. It is unlikely that the voters who passed Propositions IA and 42 would consider the Legislators' inability to work together to develop a balanced budget as an 'extreme fiscal hardship.' The League of California Cities has asked its members to adopt formal Resolutions opposing the use of local funds to balance the state budget, and to forward those Resolutions to the Governor and other leaders in Sacramento. That resolution is submitted to the Council with this Agenda Statement. DECISION MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500 foot rule found in California Code of Regulation section 18704.2(a)(I) is not applicable to this decision. FISCAL IMPACT Undetermined, but possibly significant. An action by the State to divertlborrow funds that the Council has already accounted for in its adopted 2008/2009 budget would result in a budget that is no longer balanced. ATTACHMENTS None. Prepared by: Colleen M Carnevale, Government Relations Liaison, Office of the City Manager 3-2 RESOLUTION NO. 2008- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA OPPOSING THE USE OF LOCAL FUNDS TO BALANCE THE STATE BUDGET WHEREAS, on July 1, 2008, the State Legislature missed its Constitutional budget deadline; and WHEREAS, both the Governor and the Legislative Budget Conference Committee have recommended balanced budgets without resorting to "loans" or seizures of local government property tax, redevelopment tax increment or transportation sales tax funds; and WHEREAS, in 1952, California voters approved Article XVI, Section 16 of the California Constitution, providing for tax increment financing for community revitalization-not balancing the state budget, and the voters never authorized the legislature to take or "borrow" community redevelopment funds for state programs; and WHEREAS, in 2002, 84 percent of California voters approved Proposition 42 to protect transportation funding for state and local transportation projects, including important street maintenance and public transit programs; and WHEREAS, in 2004, 77 percent of California voters approved Proposition lA, a clear signal to state leaders that they should stop taking local government funds to finance the state budget and paper over the state deficit; and WHEREAS, both ballot measures allow the Governor to declare a "severe state of fiscal hardship" and borrow these funds if they are repaid in three years with interest; and WHEREAS, refusal by the Legislature to carryout its constitutional obligation to compromise on a balanced budget is not a "severe state of fiscal hardship" and does not justify reductions in critical local services, community revitalization programs and infrastructure maintenance as cities struggle to balance their own budgets during the current economic downturn; and WHEREAS, city investments in infrastructure, affordable housing and basic public safety and other community services create jobs and speed California's economic recovery; and WHEREAS, the Legislature should balance the state budget with state revenues and respect the overwhelming support of voters for not using local property taxes, redevelopment tax increment and transportation sales taxes to fund the day-to-day operating cost of state programs; and WHEREAS, the use of these funds does not correct the State's structural budget imbalance but merely papers-over the deficit with more borrowing. J:\Attomey\RESQILEGlSLATIVE10pposing use aflocul funds to balance slale bUdgel_08-05-0~~ ~c Resolution No. 2008- Page 2 NOW, THEREFORE, BE IT RESOLVED that the City of Chula Vista hereby opposes any and all efforts by state government to "borrow" or seize local tax funds, redevelopment tax increment and transportation sales tax funds to finance state operations. Presented by Approved as to form by David R. Garcia City Manager J:'AltomeyIRESOILEGISLATIVE\Opposing use orlocal funds to balance state bUdgel_08-il:g1!!2t'_dOC