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Home My WebLink About2010/10/26 Item 7CITY COUNCIL AGENDA STATEMENT ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA OPPOSING PROPOSITION 26 -PROPOSED CONSTITUTIONAL AMENDMENT: STATE AND LOCAL FEES AND CHARGES: VOTE REQUIREMENTS AND LIMITATIONS ON THE NOVEMBER 2010 BALLOT SUBMITTED BY: REVIEWED BY: ASSISTANT CITY SERVICES DIRECTOR CITY MANAGER MANAGEIDEVELOPMENT 4/STHS VOTE: YES ~ NO SUMMARY Proposition 26 has qualified for the November 2010 ballot. The measure restricts in various ways the ability of the state and local governments to adopt fees to recover the costs of providing specific services or regulatory activities. ENVIRONMENTAL REVIEW This proposed activity has been reviewed for compliance with the California Environmental Quality Act (CEQA) and it has been determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the envirorunent, 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. 7-1 Meeting Date: 10/ 26/10 Page 2 BOARDS /COMMISSION RECOMMENDATION Not applicable. DISCUSSION State and local governments impose a variety of taxes, fees, and charges on individuals and businesses. Taxes-such as income, sales, and property taxes-are typically used to pay for general public services such as education, prisons, health, and social services. Fees and charges, by comparison, typically pay for a particular service or program benefiting individuals or businesses. There are three broad categories of fees and charges: • User fees-such as state park entrance fees and garbage fees, where the user pays for the cost of a specific service or program. • Regulatory fees-such as fees on restaurants to pay for health inspections and fees on the purchase of beverage containers to support recycling programs. Regulatory fees pay for programs that place requirements on the activities of businesses or people to achieve particular public goals or help offset the public or environmental impact of certain activities. • Property charges-such as charges imposed on property developers to improve roads leading to new subdivisions and assessments that pay for improvements and services that benefit the property owner. State or local governments usually can create or increase a fee or charge with a majority vote of the governing body (the Legislature, city council, county board of supervisors, etcetera). In contrast, increasing tax revenues usually requires approval by two-thirds of each house of the state Legislature (for state proposals) or a vote of the people (for local proposals). Under current law, a "regulatory fee" may not exceed the reasonable cost of providing services necessary to the activity for which the fee is charged and may not be levied for unrelated revenue purposes. To demonstrate that a regulatory fee is not a special tax, the government must prove (1) the estimated costs of the service or regulatory activity; and (2) the basis for determining the manner in which the costs are apportioned, so that charges allocated to a payer bear a fair or reasonable relationship to the payer's burdens or benefits from the regulatory activity. Whether the fees collected exceed the cost of the regulatory program need not be proved on an individual basis. Rather, the agency is allowed to employ a flexible assessment of proportionality within a broad range of reasonableness in setting fees. The City of Chula Vista complies with the current law when adopting regulatory fees. The City conducts fee studies to assure that the fees charged do not exceed the reasonable costs of providing the service. Proposition 26 expands the definition of a tax and a tax increase so that more fee or charge proposals would require approval by two-thirds of the Legislature or by local voters. The definition of a tax would be modified to include "any levy, charge, or exaction of any kind 7-2 Meeting Date: 10/ 26/10 Page 3 imposed by a local government", excepting a few broadly defined charges, penalties or assessments. League of California Cities staff believes that if the measure is successful, it will take many years of litigation for the courts to interpret the definition of "tax" and the local exceptions. This will serve to further destabilize local government revenues. The League of California Cities is opposed to the measure because city officials aze concerned about the many potential negative effects of this measure on local revenue raising authority. This is consistent with the City of Chula Vista's 2010 Legislative Program to "Protect or enhance local government revenue sources. " DECISION-MAKER CONFLICTS: 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 Regulations Section 18704.2(a)(1) is not applicable to this decision. CURRENT YEAR FISCAL IMPACT None ONGOING FISCAL IMPACT Not presently determinable, but potentially substantial negative impact if Prop 26 passes and the City is unable to secure future revenues for operations that are presently supported by existing fees, or for new fee-based operations that would require amendments under Prop 26. 7-3 RESOLUTION NO. 2010- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA OPPOSING PROPOSITION 26 - PROPOSED CONSTITUTIONAL AMENDMENT: STATE AND LOCAL FEES AND CHARGES: VOTE REQUIREMENTS AND LIMITATIONS ON THE NOVEMBER 2010 BALLOT WHEREAS, cities are the economic engine of California and the vitality of cities and the state's economic recovery is dependant on their fiscal stability and local autonomy; and WHEREAS, the City of Chula Vista supports protecting local control and funding for vital local services; and WHEREAS, the City of Chula Vista has its own challenges to maintain service levels and that unwarranted fiscal limitations imposed on our community will lead to additional hardship and reduced services for our city's residents; and WHEREAS, all local taxes, assessments, and property-related fees (such as for water and sewer services) already are required to be subject to local voter approvals; and WHEREAS, similar voter approval requirements do not apply to tax increases proposed by the state legislature; and WHEREAS, local governments have made the necessary cuts and enacted local balanced budgets on time, which has not been the practice of the state legislature; and WHEREAS, the state legislature has repeatedly sought to raid local funding rather than adopt balanced budgets that reflect the state's resources; and WHEREAS, Proposition 26 on the November 2, 2010, California state ballot - while attempting to address the authority of the state legislature to raise revenue - overreaches and seeks to impose additional and unjustified constraints on local governments; and WHEREAS, by arbitrarily imposing a new definition of "taxes" applicable to local government in the state Constitution, Proposition 26, if approved, will invite additional litigation and destabilize existing funding for local public safety, health, transportation, and environmental protection, NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Chula Vista, hereby opposes Proposition 26 on the November 2, 2010, California state ballot. 7-4 Presented by: Gary Halbert, AICP, P.E. Assistant City Manager/Development Services Director Approved as to form by: ~ ~, .: ~. Bart C. Miesfeld ~ g,a~-~ y City Attorney 7-5