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<br />63 <br />Proposition 1A <br />Senate Constitutional Amendment No. 4 was enacted by the Legislature and <br />subsequently approved by the voters as Proposition 1A at the November 2004 election. Among <br />other things, Proposition 1A amended the State Constitution to reduce the Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to <br />local governments’ property, sales and vehicle–license fee revenues as of November 3, 2004, and by providing that the State may not reduce any local sales–tax rate, limit existing local government authority to levy a sales–tax rate or change the allocation of local sales–tax <br />revenues, subject to certain exceptions. Proposition 1A provides, however, that beginning in fiscal year 2008–09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three <br />years. This shift of local government property tax can be accomplished if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved <br />by two–thirds of both houses and certain other conditions are met. <br />Proposition 22 <br />Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation <br />Protection Act,” was approved by the voters of the State in November 2010. Proposition 22 <br />eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local <br />governments for State–mandated costs (the State will have to use other revenues to reimburse <br />local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State <br />transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues. Unitary Property <br />AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with <br />the 1988–89 fiscal year, are allocated as follows: (i) each jurisdiction will receive up to 102% of <br />its prior year State–assessed revenue; and (ii) if county–wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s <br />revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess <br />revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas. <br /> <br />The provisions of AB 454 do not constitute an elimination of the assessment of any State–assessed properties nor a revision of the methods of assessing utilities by the State <br />Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county. <br />Future Initiatives <br />Article XIIIA, Article XIIIB and Propositions 62, 218, and Proposition 1A were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From <br />time to time, other initiative measures could be adopted, further affecting the City’s revenues or its ability to expend revenues.