BILL ANALYSIS Ó ACA 4 Page 1 Date of Hearing: July 6, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair ACA 4 (Blumenfield) - As Introduced: December 6, 2010 Policy Committee: Local Government Vote: 6-2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill proposes amending the California Constitution to allow a city, county or special district to incur bonded indebtedness in order to fund specified public improvements and facilities, with 55% voter approval (rather than two-thirds). Specifically, this bill: 1)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 for the construction, rehabilitation, or replacement of specified infrastructure. 2)Allows a city, county, or city and county, or special district that has incurred indebtedness in the form of general obligation (GO) bonds for specified infrastructure approved by 55% of the voters within the jurisdiction to increase property taxes above the existing constitutional limit to pay off the principal and interest of the infrastructure GO bonds. 3)Defines the allowable infrastructure purposes to be 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. 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. ACA 4 Page 2 FISCAL EFFECT One-time GF costs of about $220,000 to include an analysis of this measure, and arguments for and against the measure, in the state voter pamphlet. COMMENTS 1)Purpose . The author estimates California needs at least an additional $500 billion by 2025 for maintenance, repair and upkeep of the sewer and storm drain systems, streets and sidewalks, 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, and, that 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. 2)Background . Article XIIIA of the California Constitution allows for bonded indebtedness by local governments. The current threshold to pass general obligation bond measures for cities, counties and special districts is a 2/3 vote. However, a school district, community college district or county office of education may 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. 3)Previous legislation . ACA 9 (Huffman) of 2009 would have created an additional exception to the 1% property tax limit for a rate imposed by a city, county, city and county, or special district to service bond-debt for specified public improvements approved by 55% of the voters of the city, county, city and county, or special district. This bill was held on the Assembly floor. ACA 10 (Feuer), 2008, would have created an additional exception to the 1% ad valorem property tax for transportation general obligation bonds with 55% voter approval. This bill was not heard in policy committee. 4)Support. The California Professional Firefighters contend ACA 4 Page 3 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. 5)Opposition. The California Taxpayers Association contend creating another exception to Proposition 13's 1% limit on ad valorem property taxes sets a bad precedent, thereby eroding taxpayer protections. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081