BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  ACA 4
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          Date of Hearing:  June 15, 2011

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                                Cameron Smyth, Chair
                ACA 4 (Blumenfield) - As Introduced:  December 6, 2010
           
          SUBJECT  :  Local government financing: voter approval.

           SUMMARY :  Amends the California Constitution to allow a city, 
          county, or special district, as defined, to incur bonded 
          indebtedness in order to fund specified public improvements and 
          facilities, with 55% voter approval of that city, county or 
          special district.  Specifically,  this bill  :  

          1)Allows a city, county, or city and county, or a special 
            district, as applicable, to incur indebtedness in the form of 
            general obligation (GO) bonds to be adopted by 55% of the 
            voters of the city, county, or city and county, or special 
            district, where the GO bonds fund the construction, 
            reconstruction, rehabilitation, or replacement of any of the 
            following:

             a)   Public improvements, including, but not limited to, 
               improvements to transportation infrastructures, streets, 
               highways, sewer systems, water systems, wastewater systems, 
               and park and recreation facilities; and,

             b)   Facilities or buildings used primarily to provide 
               sheriff, police, or fire protection services to the public, 
               including the furnishing and equipping of those facilities 
               or buildings.

          2)Lowers to 55% the voter-approval threshold for a city, county, 
            or city and county to incur bonded indebtedness, in the form 
            of GO bonds, that exceeds in one year the income and revenue 
            provided in that year, for the construction, reconstruction, 
            rehabilitation, or replacement of any of the following:

             a)   Public improvements, including, but not limited to, 
               improvements to transportation infrastructures, streets, 
               highways, sewer systems, water systems, wastewater systems, 
               and park and recreation facilities; and,

             b)   Facilities or buildings used primarily to provide 
               sheriff, police, or fire protection services to the public, 








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               including the furnishing and equipping of those facilities 
               or buildings.

          3)Defines "special district," for purposes of this bill, as the 
            same meaning as that term is used in the California 
            Constitution for the section related to voter approval for 
            local tax levies, but does not include a school district or a 
            redevelopment agency.

           EXISTING LAW  : 

          1)Authorizes cities, counties, and special districts to impose a 
            general tax for general governmental purposes with the 
            approval of a majority of the voters.

          2)Authorizes cities, counties, and special districts to impose a 
            special tax for specified purposes with the approval of 
            two-thirds of the voters.

          3)Authorizes school districts, community college districts, or 
            county offices of education to incur school bonded 
            indebtedness with the approval of 55% of the voters voting on 
            the bond measure, requires that bond proceeds only be used for 
            purposes specified in the Constitution, and requires an audit 
            to ensure that the funds have been expended only on the 
            specific projects listed.

          4)Prohibits specified local government agencies from incurring 
            any indebtedness exceeding in one year the income and revenue 
            provided in that year, without the assent of two-thirds of the 
            voters.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :   

          1)Article XIII of the California Constitution allows for bonded 
            indebtedness for a school district, community college 
            district, or county office of education to fund the 
            construction, reconstruction, rehabilitation, or replacement 
            of school facilities, including the furnishing and equipping 
            of school facilities, among other provisions, if approved by 
            55% of the voters.  This section of the Constitution also 
            requires that the bond proceeds be used only for the purposes 
            listed, and requires annual independent auditing to ensure 








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            that funds have been expended on the specific projects listed. 
             

            This bill mirrors these requirements in the Constitution in 
            place for school districts by providing that a city, county, 
            or specified special district can incur bonded indebtedness 
            for construction, reconstruction, rehabilitation, or 
            replacement of public improvements and public safety 
            facilities or buildings, if 55% of the voters approve.  The 
            current threshold to pass general obligation bond measures for 
            cities, counties and special districts is a 2/3 vote.

          2)The author notes that it is estimated that California needs at 
            least an additional $500 billion between now and 2025 for 
            maintenance, repair, and upkeep of the crumbling sewer and 
            storm drain systems, streets and sidewalks, overcrowded and 
            out-dated police stations, jails, fire stations and libraries. 
             The author argues that because the state is not meeting the 
            infrastructure needs of our growing population, there is great 
            need for additional financial tools to make these necessary 
            investments.  These infrastructure investments will enhance 
            public safety, increase the value of real estate, and improve 
            the quality of life in communities as vital facilities will be 
            better maintained to safely serve today's population.

          3)Lowering the constitutional vote threshold for special taxes 
            and bond indebtedness has been tried several times in past 
            years.  ACA 7 (Nation) from the 2005-06 legislative session 
            would have lowered the constitutional vote requirement from 
            two-thirds to 55% for any special tax.  ACA 10 (Feuer), 2008, 
            would have created an additional exception to the 1% ad 
            valorem property tax for transportation projects with 55% 
            voter approval. There were several measures introduced in the 
            2009-10 session that would have revised constitutional voting 
            thresholds for different purposes, including ACA 10 
            (Torlakson), ACA 15 (Arambula), 
          SCA 12 (Kehoe), ACA 9 (Huffman) and SCA 6 (Simitian), none of 
            which were enacted.

            There are currently several bills in the 2011-12 session that 
            would amend the California Constitution to lower the vote 
            threshold, including ACA 18 (Swanson), and SCA 5 (Simitian).

          4)This bill requires a two-thirds vote of the Legislature.









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          5)Support arguments:  The California Professional Firefighters, 
            in support, write that money invested in infrastructure 
            creates an increase in tax revenue that can be used to help 
            local governments fund police, fire, schools, and other core 
            services.

            Opposition arguments: The California Taxpayers Association, in 
            opposition, writes that creating another exception to 
            Proposition 13's 1% limit on ad valorem property taxes sets a 
            bad precedent, thereby eroding taxpayer protections.

          6)This bill is double-referred to the Committee on 
            Appropriations.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Association for Los Angeles Deputy Sheriffs
          California Association of Recreation and Park Districts
          California Library Association
          California Narcotic Officers Association
          California Park & Recreation Society
          California Police Chiefs Association
          California Professional Firefighters
          California Special Districts Association
          California State Association of Counties
          Central Basin Municipal Water District
          Cities of San Jose and Thousand Oaks
          East Bay Municipal Utility District
          East Bay Regional Park District
          Fire Districts Association of California
          Los Angeles County Probation Officers Union
          Midpeninsula Regional Open Space District
          Mosquito and Vector Control Association of California
          Peace Officers Research Association of California
          Riverside Sheriffs Association
          Santa Clara Valley Water District
          State Building and Construction Trades Council 

           Opposition 
           
          California Association of Realtors
          CalTax
          Howard Jarvis Taxpayers Association








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          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916) 
          319-3958