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L E AG U E 1400 K Street, Suite 400 • Sacramento, California 95814 OF CALIFORNIA Phone: 916.658.8200 Fax: 916.658.8240 CITIES www.cacities.org LOCAL GOVERNMENT BALLOT INITIATIVE--AN OVERVIEW November 2004 Election State-Local Fiscal System Broken. There is widespread agreement that the state-local fiscal relationship is broken. One of the reasons is because state leaders no longer respect the difference between state and local tax revenues. In recent years, the state legislature and governor have approved laws that divert, use or delay the payment of local tax revenues to local governments that finance public safety, public health, park, library, street maintenance and other vital community services. This has caused pressure far higher local fees that can increase the cost of housing. Local Funds Drained for Higher State Spending. Since 1991 more than $30 billion of local property taxes have been drained from local governments. The state has used these funds to finance its constitutional funding obligation to public education, allowing it to increase state general fund spending for other state programs. This has come at the expense of vital local public safety and other services--costing cities alone more than $800 million this year-or $6.9 billion in lost local property taxes over the last twelve years. State Shifts Costs to Local Governments. In recent years the state also has shifted costs for state-sponsored programs and delayed constitutionally required reimbursements to local governments for state mandated programs and services. In the last two fiscal years, the state has "deferred" over $1 billion in constitutionally required reimbursements to local governments for mandated services and programs. Constitutional Protection Needed Now. City and other local government leaders know that in the current state budget crisis this problem will only get worse if something isn't done. As a result, the League and other local government associations have joined forces to sponsor a ballot initiative in November 2004 to put the voters in charge of whether local tax dollars should be used to fund state services. It would not prevent structural reform of the fiscal system. It would simply require that structural changes be planned collaboratively by state and local leaders and approved by the voters. It would not raise taxes. It would not repeal laws the state has already passed. It would not require the return of property taxes already taken. It would do two simple things: Public Vofe Required. Require a 2/3 legislative vote and approval by a majority of the electorate before a proposed state law may take effect that appropriates, reallocates, redistributes, reduces or suspends the payment of local tax revenues (sales, property and VLF) to cities, counties and special districts; and Reimburse for Mandated Costs. Clarify that the state must reimburse local governments for a new mandated program or higher level of service and when revenues previously allocated to local government are reallocated or redistributed to astate-created fund. Consulting Team. Assisting the campaign are: Winner and Mandabach Campaigns (political consultants); Nielsen, Merksamer (legal); and Fairbanks, Maslin, Maullin & Associates (survey research). For More Information. Contact Chris McKenzie, Executive Director (916-658-8275); Mike Madrid, Public Affairs Director (916-658-8272); or Dwight Stenbakken, Legislative/Policy Director (916-658-8232). How to Make A Contribution. The League has established a political action committee (CITIPAC-ID # 1254399) for contributions to this initiative. For more information, contact 916-658-8273, email info(a~citipac.orq or go to www.citipac.org C I T I P A C www.citipac.org