BILL ANALYSIS Ó ACA 4 Page 1 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, ACA 4 Page 2 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 ACA 4 Page 3 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. ACA 4 Page 4 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 ACA 4 Page 5 Analysis Prepared by : Debbie Michel / L. 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