BILL ANALYSIS Ó
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Norma J. Torres, Chair
BILL NO: SCA 7 HEARING DATE: 6/18/13
AUTHOR: WOLK ANALYSIS BY: Darren Chesin
AMENDED: 2/26/13
FISCAL: NO
SUBJECT
Local government financing: public libraries: voter approval
DESCRIPTION
Taxes
Existing law , pursuant to the California Constitution states
that taxes levied by local governments are either general taxes,
subject to majority approval of its voters, or special taxes,
subject to 2/3 vote (Article XIII C). Proposition 13 of 1978
required a 2/3 vote of each house of the Legislature for state
tax increases, and 2/3 vote of local voters for local special
taxes. Proposition 62 of 1986 prohibited local agencies from
imposing general taxes without majority approval of local
voters, and a 2/3 vote for special taxes. Proposition 218 of
1996 extended those vote thresholds to charter cities, and
limited local agencies' powers to levy new assessments, fees,
and taxes. Local agencies generally propose to increase taxes
by adopting an ordinance or a resolution at a public hearing.
Existing law provides that cities and counties that operate
libraries can fund them out of general tax revenue; library
districts are often funded from a share of the property tax.
Existing law additionally allows cities, counties, or library
districts to levy parcel taxes to fund libraries. The agency
may implement these taxes, for as long as it wants, spend the
proceeds for any purpose, and apply any tax rate it chooses.
Voters must approve the taxes by a 2/3 supermajority.
Additionally, cities and counties may form Community Facilities
Districts, also known as Mello-Roos Districts, to levy special
taxes (parcel taxes). A Mello-Roos Community Facilities
District (CFD) issues bonds against these special taxes to
finance the public works projects. Like all special taxes,
Mello-Roos Act special taxes require 2/3 voter approval. If
there are fewer than 12 registered voters, the affected
land-owners vote.
City and counties can also impose transactions and use taxes to
fund libraries, provided that the combined rate in the county
does not exceed 2 percent, upon 2/3 vote of the local agency's
governing board and 2/3 voter approval.
This constitutional amendment would authorize cities, counties,
or special districts to impose a special tax by a 55% vote of
the voters in the district or county under specified
circumstances, including:
The district governing board approves the proposition by
majority vote.
The ballot proposition contains a specific list of programs
and purposes to be funded, and a requirement that funds be
spent solely for those programs and purposes.
The ballot proposition includes a requirement for annual
independent audit of the amount of tax proceeds collected and
expended and the specified purposes and programs funded.
The ballot proposition requires the governing board to create
a citizens' oversight committee to review all expenditures of
proceeds and financial audits, and report its findings to the
governing board and the public.
Bonds
Existing law , pursuant to the California Constitution requires
counties, cities, and school districts to obtain voter approval
for long-term debt. Counties, cities, school districts,
community college districts, and some special districts can
issue general obligation (GO) bonds, secured by ad valorem
property tax revenues, with 2/3-voter approval. The
Constitution further bars school districts from imposing general
taxes, but allows school districts, community college districts,
and county offices of education to issue bonded indebtedness for
school facilities with 55% percent approval (Proposition 39,
2000).
This constitutional amendment would allow cities, counties, and
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special districts to issue bonded indebtedness to construct,
reconstruct, rehabilitate, or replace public libraries,
including furnishings, equipment, or leasing real property. The
measure requires the following accountability measures be in
place as part of the ballot measure:
A requirement that bond proceeds be used solely to construct,
reconstruct, rehabilitate, or replace public libraries,
including furnishings, equipment, or leasing real property,
and not for any other purpose, including personnel and
operating expenses.
A list of the specific public library facility projects to be
funded.
Certification that the local agency has evaluated the degree
to which existing facilities are inadequate to meet the needs
of the residents of the area, and the degree to which proposed
facilities will meet the needs.
A requirement for an annual independent performance audit
ensuring that bond proceeds have been used solely for the
listed projects.
A requirement for an annual independent financial audit of the
bond proceeds until all have been expended.
This constitutional amendment also makes other clarifying and
conforming changes to the Constitution.
BACKGROUND
Majorities and Super Majorities . Majority rule is a two-edged
sword: democratically elected governments are supposed to enact
policies that the voters want, but both federal and state
systems of government restrict the majority's ability to oppress
minority interests. For the great majority of public issues,
fifty-percent plus one of a legislative body or an electorate
rule. But for some issues, the United States and California
Constitutions provide that a majority is not enough and a higher
threshold is necessary, such as amending the U.S. Constitution,
removing a president from office, ratifying a treaty, or
overriding a veto.
States largely import the 2/3 vote from the U.S. Constitution
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into their own for those same purposes, but also require 2/3
vote on taxes or other measures. In a series of voter
initiatives, Californians have elevated local special tax
increases and legislatively enacted state tax increases to this
level, while almost every other change to the law can be enacted
by majority vote; local agencies can enact general taxes, and
voters can approve tax initiatives increasing state taxes by
majority vote, as they did with Proposition 30 of 2012. As
such, local agencies need a majority vote to assess taxes and
spend the proceeds on whatever purposes they want to, but 2/3 if
they restrict the use of the tax proceeds. Supermajorities of
the Legislature are necessary to increase taxes, but only
majorities of voters can.
Parcel Taxes . California allows cities, counties, and library
districts to levy parcel taxes, which are different in many ways
from property taxes and general obligation bonds. First, parcel
taxes are not ad valorem, or assessed based on the value of a
property; instead they are a flat rate assessed per parcel or
per square foot, regardless of its size. Essentially, parcel
taxes are a flat tax on property ownership. Secondly, the
proceeds of general obligation bonds must be spent on the
acquisition and improvement of property, or on school
construction. Parcel taxes give the imposing authority
considerably more flexibility to spend as they see fit.
Proceeds are not limited to certain uses; revenues may be used
for ongoing expenses, programs, or buildings at the local
agency's discretion
Parcel taxes are flexible ways of raising revenues at the local
level, but are subject to certain requirements. Parcel tax
elections must be held on "established election dates", which
means in March, April, or November of an even-numbered year, or
March, June, or November in an odd-numbered year. Parcel taxes
do not have a cap; parcel tax proposals voted on in the last ten
years varied from $26 per parcel to $765 per parcel, with terms
as short as two years, and others enacted permanently.
COMMENTS
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1.According to the Author : SCA 7 would give local communities
the opportunity to decide if they would like to levy a tax for
the support of library services. Libraries provide vital
services to the state's educational system and communities
across the state. More than 21 million people use
California's public libraries each year. As public schools
are increasingly cutting library services and even closing all
together, citizens rely on public libraries more than ever
before. Children, students, families, and seniors all depend
on public libraries for a variety of services from literacy
programs to resources for students. In addition public
libraries play a critical role in bridging the digital divide
and connecting people with technology who would otherwise not
have access to it.
While demand for library services is growing, many libraries are
struggling to meet the needs of their users, especially in the
current economic climate. In 2007, the California State
Library conducted a thorough "Needs Assessment," and
determined that there were 662 library projects pending in the
state, totaling $8 billion. Many libraries' facilities are
old and their technology is inadequate. According to a
special report issued by the California State Library,
entitled, "Thirty Years of California Library Ballot Measures
- 1980-2009," they note, "Those library-related measures in
California which only required a simple majority were approved
77% of the time, which is very close to the overall national
average of 80%. However, library measures which required a
supermajority were approved only 45% of the time. Lowering
the voter threshold to 55 percent to raise revenue for
libraries would give local governments the ability to keep
libraries open and support their communities with the
resources they need.
2.Who pays ? SCA 7 lowers the threshold on parcel taxes, which
are taxes on landowners. Therefore, resident non-landowners,
like renters, are able to vote in the election, but do not pay
any of the taxes except as passed through in rents. In the
reverse, non-resident landowners are not able to vote in the
election, but must pay the tax if the voters approve the
measure. In addition, districts may exempt taxpayers 65 years
or older, thereby creating another class of voters who do not
bear the incidence of the tax. Is it equitable to lower the
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vote threshold for new parcel taxes when many voters do not
bear the cost, and those who may bear the cost cannot vote?
3.Special vote thresholds for libraries ? If SCA 7 is enacted,
local agencies would be able to enact special taxes for
library purposes by a 55% vote, paralleling Proposition 39's
similar threshold for school bonds. However, the measure
doesn't affect thresholds for taxes dedicated to other
purposes. This begs the question of what should be the voting
threshold for local special taxes? The Legislative Analyst's
Office says there's no right answer, as requirements vary
across states, but adds that the process should be easy enough
for voters to understand and reflect overarching objectives
for voter participation in tax decisions. Furthermore, should
the thresholds be different based on the use of the tax
proceeds, like libraries?
4.The ties that bind . SCA 7 not only lowers the vote threshold
for parcel taxes used for library purposes, but also extends
to libraries the lower voter threshold of 55% for debt
issuance the voters granted to school districts and community
college districts in Proposition 39 (2000). Taxes and bonds
are fundamentally different: a district's voters can repeal a
tax by referendum, but once an agency issues a bond, it's
irreversibly committed to pay principal and interest according
to schedule until the bond is redeemed. While Proposition 39
led to more school facilities in a state with a large student
population, it also led to savvy financial advisers coaxing
districts into borrowing too much or using unwise debt
structures: some districts issued bonds with 30 years of
deferred principle and interest payments, but triggered twelve
to one debt to principal ratios when repayments started
becoming due in year 30.
Additionally, school districts are filing lawsuits against
potentially unsavory financial advisors: the Willits Unified
School District is suing Caldwell Flores Winters, Inc.,
stating it had been "duped" into overpaying the firm hundreds
of thousands of dollars. While school districts and libraries
are very different, is there cause for concern that by
lowering the vote threshold, SCA 7 could give rise to similar
problems in libraries? The Assembly recently approved AB 182
(Buchanan), which substantially reforms school bond issuance
in response to the above problems.
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5.Related Legislation . SCA 3 (Leno) which is also on today's
agenda allows school districts, community college districts,
and county offices of education to levy parcel taxes by a 55%
vote. SCA 4 (Liu), which is pending in the Senate Committee
on Transportation and Housing, allows local agencies to levy,
extend, or increase special taxes by a 55% vote for local
transportation projects. SCA 8 (Corbett), which is also
pending in the Senate Committee on Transportation and Housing,
allows local agencies to levy, extend, or increase special
taxes by a 55% vote for local transportation projects. SCA 9
(Corbett) which is also on today's agenda allows local
agencies to levy, extend, or increase special taxes by a 55%
vote for community and economic development projects. SCA 11
(Hancock), which is also on today's agenda allows local
agencies to levy, extend, or increase special taxes by a 55%
vote for any purpose.
PRIOR ACTION
Senate Governance and Finance Committee:5-2
POSITIONS
Sponsor: California Library Association
Support: Alameda County Library; Alpine County; California
Library Services Board, Anne R. Bernardo, President;
Benicia Library Board of Trustees; Berkeley City
Council; Board of Library Trustees of the Altadena
Library District;
Burbank Board of Library Trustees; Burbank Public
Library; Burbank Public Library, Burbank Library
Services Director, Sharon Cohen;
California County Librarians Association, Teresa
Landers; California Labor Federation; California
Library Association; California Library Association's
Advocacy and Legislation Committee; California Park
and Recreation Society; California State Association
of Counties; Castro Valley Friends of the Library;
City of Burbank, Dave Golonski, Mayor; City of
Concord; City of Cotati; City of Huntington Beach,
Stephanie Beverage, Director of Library Services; City
of Lafayette; City of Oakland's Library Advisory
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Commission; City of Pacific Grove; City of Pasadena;
City of Petaluma, Teresa Barrett, Councilmember; City
of Petaluma, David Glass, Mayor ; City of Pleasanton
Library Commission; City of Rancho Cordova; City of
Riverside; City of San Diego Board of Library
Commissioners; City of San Jose; City of Torrance,
Frank Scotto, Mayor; Constance Tse, Retired Teacher;
Contra Costa County Board of Supervisors; Contra Costa
County Library Commission; County of Alpine Board of
Supervisors; Daly City Public Library Associates,
Paula Stillman, President; Danielle Maddox, President,
Friends of the Sunnyvale Library; David Rabbitt,
Sonoma County Board of Supervisors, Chair and Second
District Supervisor; Defense Language Institute, Mary
Kathleen Hanselmann, Chief Librarian; El Cerrito
Commissioner, Steven M. Poulos; El Cerrito New Library
Community Campaign; Escondido Public Library Board of
Trustees, Gary Knight, President; Escondido Public
Library, Cynthia Smith, Interim City Librarian;
Friends of the Amador County Library, Susan Staggs,
Board Member; Friends of the Castro Valley Library,
Edward Lyke; President; Friends of the Fortuna
Library; Friends of the Hemet Public Library; Friends
of the Oakdale Library, Sharon Arpoika, President;
Friends of the Oakland Public Library; Friends of the
Riverside Public Library; Friends of the Sacramento
Public Library; Friends of the Salinas Public Library;
Friends of the San Benito County Free Library; Friends
of the San Diego Public Library; Friends of the San
Francisco Public Library, Deborah Doyle, Chair;
Friends of the Santa Barbara Public Library Board,
Elizabeth Bowman, Member; Friends of the Santa Cruz
Public Libraries Board Member; Friends of the St.
Helena Public Library; Friends of the Sunnyvale
Library, Danielle Maddox, President; Friends of the
Turlock Library, Joan Ahlstrand, Member; Glendale City
Employees Association; Half Moon Bay Coastside Chamber
of Commerce & Visitors' Bureau; Hercules Community
Library Foundation; Huntington Beach Public Library,
Stephanie Beverage, Director of Library Services; Jean
Quan, Mayor, City of Oakland; JoAnn Levy, Award
winning Author, Board member, California State Library
Foundation; Kern County Library; League of California
Cities; Library Advisory Board; Mendocino County
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Librarian, Mindy Kittay; Michael J. Beck, City
Manager, Pasadena; Morgan Hill Library Foundation;
Mrs. Joan Putz, co-president Pacifica Friends of the
Library; Ojai Valley Library Friends and Foundation;
Organization of SMUD Employees; Pacific Grove, Bill
Kampe, Mayor; Pacific Library Partnership, Teresa
Landers; Pacifica Friends of the Library, Fran Larson,
Treasurer; Pacifica Friends of the Library, Mrs.
Caroline Barba, Co-president; Pacifica Library
Foundation; Palos Verdes Library District; Pamona
Public Library Foundation; Pasadena Public Library
Commission; Patty Wong, Library Director Yolo County;
Pomona Library Foundation; Redwood City Public Library
Board; Retired Children's Librarian & Board Member;
San Bernardino Public Employees Association; San
Francisco Friends of the Library; San Luis Obispo
County Employees Association; San Pablo City Council;
San Rafael CA Library Board, Arlene Sukolsky, Trustee;
San Rafael Library Foundation, Gary T. Ragghianti,
Board member; San Rafael Public Library, Volunteer;
Valerie Lambertson, Member; San Rafael Public Library
Foundation, Jeffrey Schoppert, President; San Rafael
Public Library Foundation;, Ann Rivo, Board Member;
San Rafael Public Library, Sarah Houghton, Director;
Santa Clara County Board of Supervisors; Santa Clara
County Library District Joint Powers Authority Board;
Santa Cruz City/County Library System, Teresa Landers;
Santa Cruz Public Libraries Joint Powers Authority
Board; Santa Cruz Public Libraries; Santa Maria Public
Library; Santa Rosa City Employees Association; Sonoma
County Board of Supervisors; Sonoma County Library
Commission; Stanislaus County Library Advisory Board,
Sheridan Beuving, Chairman; Stanislaus County, Library
Director, Vanessa Czopek; Stanislaus Literacy Center,
Karen Williams, Executive Director; Terry Woodrow,
Chair, County of Alpine Board of Supervisors; The
Humboldt Library Foundation; Torrance Library
Commission; Town of Colma; Tulare County Public Law
Library, Anne R. Bernardo, Director; Wendy Rianldi,
Board of Friends of the San Francisco Public Library;
Yolo County Board of Supervisors; Yolo County Library
Advisory Board;
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Oppose: Apartment Association California Southern Cities;
Apartment Association of Orange County; California
Association of Realtors; California Chamber of
Commerce; California Farm Bureau Federation; California
Taxpayers; East Bay Rental Housing Association; George
Runner, Member Board of Equalization, District 2
(Ret.); Howard Jarvis Taxpayers Association;
Nor Cal Rental Property Association
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