BILL ANALYSIS Ó
SB 1298
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SENATE THIRD READING
SB
1298 (Hertzberg)
As Amended August 11, 2016
Majority vote
SENATE VOTE: 39-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Local |5-3 |Eggman, Bonilla, |Waldron, Beth |
|Government | |Chiu, Cooley, Gordon |Gaines, Linder |
| | | | |
| | | | |
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SUMMARY: Makes changes to the Proposition 218 Omnibus
Implementation Act. Specifically, this bill:
1)Adds a definition for "sewer" to the Proposition 218 Omnibus
Implementation Act, to mean "services and systems provided by
all real estate, fixtures, and personal property owned,
controlled, operated, or managed in connection with or to
facilitate sewage collection, treatment, or disposition for
sanitary or drainage purposes, including lateral and
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connecting sewers, interceptors, trunk and outfall lines,
sanitary sewage treatment or disposal plants or works, drains,
conduits, outlets for surface water or storm waters, and any
and all other works, property, or structures necessary or
convenient for the collection or disposal of sewage,
industrial waste, or surface water or storm waters."
Prohibits "sewer system" from including a sewer system that
merely collects sewage on the property of a single owner.
2)Makes findings and declarations pertaining to Proposition 218
and storm water and drainage runoff.
FISCAL EFFECT: None
COMMENTS:
1)Financing Water Infrastructure. Local governments in
California provide most water related services in the state
which include water service, sewer service, flood control, and
stormwater management. A Public Policy Institute of
California (PPIC) report, Paying for Water in California,
outlines four sources of funding currently used for water in
California: a) Fees, which include water and waste water
bills, property assessments or fees, developer or connection
fees, and permitting fees; b) Taxes, which include both
general and special taxes, including parcel taxes; c) Fines
and penalties, which include excessive pumping on groundwater
or directly to customers in violation of rationing
restrictions during drought emergencies; and, d) Bonds, which
include general obligation and revenue bonds. Local agencies
frequently point to the series of constitutional reforms,
Proposition 13 (1978), Proposition 218 (1996), and Proposition
26 (2010), that have made it increasingly more difficult to
generate the necessary revenue to fund the costs of providing
water and other essential services.
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On January 17, 2014, the Governor declared a state of
emergency in California due to severe drought conditions. In
addition to challenges presented by the drought, local
governments face several barriers to funding for stormwater
and dry weather runoff projects due to the constitutional
requirements for special taxes, benefit assessments, and
property-related fees. Many of the local governments that
operate MS4 (Municipal Separate Storm System) systems differ
from water and wastewater utilities that existed prior to the
passage of Proposition 218, which have in place service fees.
On the other hand, many stormwater programs in cities and
counties are funded by the general fund, primarily through
property and local sales taxes. As regulatory burdens
continue to increase, financially strapped local governments
are forced to examine alternative funding mechanisms and
regional strategies to address MS4 costs, which some cities in
Los Angeles County are citing to be in the millions of
dollars.
2)Proposition 218. Proposition 218 distinguishes among taxes,
assessments and fees for property-related revenues, and
requires certain actions before such revenues may be
collected. Counties and other local agencies with police
powers may impose any one of these options on property owners,
after completing the Proposition 218 process. Special
districts created by statute, however, must have specific
authority for each of these revenue sources.
The Constitution defines a fee (or charge) as any levy other
than an ad valorem tax, special tax, or assessment that is
imposed by a local government on a parcel or on a person as an
incident of property ownership, including a user fee for a
property-related service. The fee imposed on any parcel or
person cannot exceed the proportional cost of the service that
is attributable to the parcel. Prior to imposing or
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increasing a property-related fee, the local government is
required to identify the parcels, mail a written notice to all
the property owners subject to the fee detailing the amount of
the fee, the reason for the fee, and the date, time, and
location of a public hearing on the proposed fee. No sooner
than 45 days after mailing the notice to property owners, the
agency must conduct a public hearing on the proposed fee. If
a majority of owners of the identified parcels provide written
protests against the fee, it cannot be imposed or increased by
the agency.
Additionally, the California Constitution Article XIII D,
Section 6, subdivision (c) provides election requirements,
"Except for fees or charges for sewer, water, and refuse
collection services, no property-related fee or charge shall
be imposed or increased unless and until that fee or charge is
submitted and approved by a majority vote of the property
owners of the property subject to the fee or charge or, at the
option of the agency, by a two-thirds vote of the electorate
residing in the affected area." The election for the fee is
required to be conducted no less than 45 days following the
public hearing.
The definition of "water" and "sewer" under the Proposition
218 Omnibus Implementation Act are significant because the
election requirements are on fees for services other than
water, sewer, and trash services.
3)Bill Summary. This bill adds a definition for "sewer" to the
Proposition 218 Omnibus Implementation Act. The definition of
"water" and "sewer" under the Proposition 218 Omnibus
Implementation Act is significant because the election
requirements are on fees for services other than water, sewer,
and trash services. This bill provides a definition of
"sewer" in the Act using the definition of sewer from the
Public Utilities Code. This bill is sponsored by the Water
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Foundation.
4)Author's Statement. According to the author, "Proposition
218, approved in 1996, was meant to improve transparency and
accountability of local government fees. Some court
interpretations of the law have constrained important tools we
need to manage water supplies and address water pollution...
These tools are needed now more than ever because California
remains in an historic five-year drought.
"Stormwater is a key source of local water supply, and careful
management is necessary to reduce pollution. Currently,
stormwater and flood control programs must meet a higher
standard than other services to raise capital, thus preventing
many important projects from being built. SB 1298 addresses
these issues by adding missing definitions and direction on
the interpretation of Proposition 218 while maintaining
transparency and accountability. SB 1298 defines "sewer
service" to include stormwater so local governments can build
and finance those projects."
5)Prior Legislation and Ballot Measures. AB 1362 (Gordon) of
2015, would have provided a definition for "stormwater" to
mean "any system of public improvements, or service intended
to provide for the quality, conservation, control, or
conveyance of waters that land on or drain across the natural
or man-made landscape" in the Proposition 218 Omnibus
Implementation Act. AB 1362 would have only become operative
if a constitutional amendment was approved by the voters. The
introduced version of AB 1362 was subsequently amended into a
different issue area to address mosquito and vector control
districts.
AB 2403 (Rendon), Chapter 78, Statutes of 2014, expanded the
definition of "water" in the Proposition 218 of 1996 Omnibus
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Implementation Act.
The League of California Cities, California Association of
Counties and Association of California Water Agencies filed a
ballot initiative, California Water Conservation, Flood
Control and Stormwater Management Act of 2016. The proposed
constitutional amendment addressed the same three issues and
this bill seeks to address with a majority vote bill. The
proponents of the initiative declined to move forward after
doing polling research.
6)Arguments in Support. The Water Foundation argues, "While
hundreds of California's cities, counties, and stormwater
districts face federal mandates to reduce stromwatr pollution
and are under pressure to seek new sources of local water
supply, only a handful of them have been able to collect funds
to meet these needs. Drinking water and sanitary sewer
services, however, have not suffered such problems. SB 1298
simply clarifies that stormwater is an integral part of both
sewer and water systems and that its management should be held
to the same high standards of transparency and
accountability."
7)Arguments in Opposition. The Howard Jarvis Taxpayers
Association argues, "SB 1298 will only lead to unnecessary
litigation against municipalities. Should SB 1298 be signed
into law and adopted by local agencies, a precedent setting
victory invalidating this clearly unconstitutional bill would
be followed by copycat lawsuits that impose retroactive
refunds and attorney fees on public treasuries all across
California."
Analysis Prepared by:
SB 1298
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Misa Lennox / L. GOV. / (916) 319-3958 FN:
0004200