BILL ANALYSIS
SB 632
Page 1
SENATE THIRD READING
SB 632 (Correa)
As Amended August 31, 2010
Majority vote
SENATE VOTE :Vote not relevant
TRANSPORTATION APPROPRIATIONS
(vote not relevant on 6/22/2009) (vote not relevant on
7/8/2009)
RULES 7-1
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|Ayes:|Skinner, Gaines, Adams, | | |
| |Caballero, Gatto, Lieu, | | |
| |Saldana | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Silva | | |
| | | | |
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SUMMARY : Prohibits a city from adopting a redevelopment plan
for a new project area or amending an existing redevelopment
plan if that city is found by the State Controller (Controller)
to be an excess compensation city, and provides that such
restrictions will be lifted once the city brings itself into
compliance. Specifically, this bill :
1)Defines "excess compensation city" as any city, including a
charter city, that compensates any member of that city council
in excess of the amounts established in existing law for
general law cities.
2)Provides that the definition of an "excess compensation city"
does not include a charter city that has a population of over
285,000 persons.
3)Provides that if the office of mayor is independently elected,
the city may demonstrate that additional compensation paid to
the mayor, other than compensation for the mayor's position as
a council member, has been provided by ordinance or in the
city's charter.
4)States that if the State Controller (Controller), based on a
review of public records or salary information reported to the
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Controller, reasonably determines that a city meets the
definition of an "excess compensation city," the Controller
shall notify the city and the Attorney General (AG) of that
determination in writing.
5)Provides that within 10 days of receiving the written notice
from the Controller, the city may request a hearing before the
Controller to determine if the city is in compliance with the
compensation provisions established in existing law for
general law cities.
6)Requires the Controller, upon receipt of the written notice,
to conduct a hearing with at least 10 days' notice for the
purpose of determining if the city is an excess compensation
city.
7)Authorizes the city, at the hearing, to demonstrate that the
city is not an excess compensation city by showing any of the
following:
a) Evidence of the approval by the city council of an
ordinance or an amendment to an ordinance that increases
the council members' salaries, pursuant to the compensation
provisions established in existing law for general law
cities;
b) Evidence of the approval by the city's electors of a
question that increases the council members' salaries,
pursuant to the compensation provisions established in
existing law for general law cities; or,
c) Any other evidence of compliance with the compensation
provisions established in existing law for general law
cities.
8)Provides that if after the hearing the Controller determines
that a city is an excess compensation city the Controller
shall notify the AG of that determination and provide the AG
with any evidence submitted at the hearing.
9)Requires the AG to be responsible for reviewing the record of
the hearing and to concur or not concur with the Controller's
determination in writing within 60 days of receiving the
Controller's determination.
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10)States that if the AG concurs with the Controller's
determination that a city is an excess compensation city, the
Controller shall proceed with the required notifications.
11)States that if the city does not request a hearing or if the
Controller determines, at the hearing, with the concurrence of
the Attorney General that the city is an "excess compensation
city," the Controller shall notify, in writing, the city and
the community redevelopment agency (RDA) in that city of the
city's status as an excess compensation city.
12)Allows an excess compensation city to bring itself into
compliance with the compensation provisions established in
existing law for general law cities.
13)Provides that once the city is in compliance, the city may
submit a written request to the Controller to be relieved of
the status as an excess compensation city.
14)States that if the Controller determines that the city is in
compliance with the compensation provisions established in
existing law for general law cities, the Controller shall
immediately notify, in writing, the city and the RDA in that
city of the change in status.
15)Provides that upon written notification by the Controller
that the city in which the RDA is established is an excess
compensation city all of the following shall apply:
a) RDA shall not adopt redevelopment plans for a new
project area or amend an existing redevelopment plan for
existing project areas;
b) RDA shall not issue new bonds, notes, interim
certificates, debentures, or other obligations, whether
funded, refunded, assumed, or otherwise;
c) RDA shall not encumber any funds or expend any moneys
derived from any source, except that the agency may
encumber funds and expend funds to pay, if any, all of the
following:
i) Bonds, notes, interim certificates, debentures, or
other obligations issued by an agency before the
imposition of the prohibition above, whether funded,
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refunded, assumed, or otherwise;
ii) Loans or moneys previously advanced to RDA,
including, but not limited to, loans from federal, state,
or local agencies, or a private entity;
iii) Contractual obligations that, if breached, could
subject RDA to damages or other liabilities or remedies;
iv) Obligations incurred for the purpose of building a
publicly owned facility;
v) Indebtedness incurred for the purposes of creating
low- and moderate-income housing;
vi) Obligations incurred for tax exempt property; and,
vii) Payments required to the Supplemental Educational
Revenue Augmentation Fund.
16)Requires the prohibitions identified in #15 to be lifted
after the Controller determines that the city is no longer an
excess compensation city.
17)Requires, under the Ralph M. Brown Act (Brown Act), that any
individual contract of employment or amendment to a contract
of employment with an employee who is or will be employed by,
and report directly to, the legislative body of the local
agency be ratified in an open session of the legislative body.
18)Provides that prior to ratifying the contract or amending the
contract, the legislative body shall disclose information
regarding the contract or amendment to the contract,
including, but not limited to, the employee's name, the
position title, and the total amount of salary, benefits,
retirement, and any other forms of compensation, in a
conspicuous location on the local agency's Internet Web site,
if it maintains one, and in a location that is freely
accessible to members of the public, no later than five days
prior to the meeting to ratify the contract or amend the
contract.
19)Makes legislative findings and declarations that the fiscal
integrity and stability of local government agencies in this
state, including charter cities, has a direct impact on the
long-term well-being of all the residents of this state and
therefore declares that the disclosure of compensation to
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officers and designated employees is an issue of statewide
concern and not a municipal affair and therefore shall apply
to charter cities.
EXISTING LAW :
1)Authorizes a city council to enact an ordinance providing that
each member of the city council shall receive a salary.
2)Prescribes population-based limits on salaries that general
law cities are authorized to pay city council members. These
limits range from a maximum of $300 per month for cities with
a population of 35,000 or less to a maximum of $1,000 per
month for cities with over 250,000 residents.
3)Authorizes the salary of council members to be increased,
beyond the statutorily provided amount, by an ordinance or by
an amendment to an ordinance, but the amount of the increase
shall not exceed an amount equal to 5% for each calendar year
from the operative date of the last adjustment of the salary
in effect when the ordinance or amendment is enacted.
4)Prohibits an ordinance from being enacted or amended to
provide automatic future increases in salary.
5)Provides that at any municipal election, the question of
whether city council members shall receive a salary for
services, and the amount of that salary, may be submitted to
the electors.
6)States that if a majority of the electors voting at the
election favor it, all of the council members shall receive
the salary specified in the election call.
7)Allows city council members to be reimbursed for actual and
necessary expenses incurred in the performance of official
duties.
8)Specifies that a city council may not authorize compensation
to any of its members for any purpose in an amount exceeding
the salary city council members currently receive unless that
additional compensation is authorized by statute.
9)States that unless otherwise specified by statute, an elected
member of a city council who serves on a commission,
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committee, board, authority, or similar body that is created
by, or is under the jurisdiction of, a city council shall not
receive compensation for that service in excess of $150 per
month for each commission, committee, board, authority, or
similar body upon which the member serves.
10)States that any amounts paid by a city for retirement, health
and welfare, and federal social security benefits shall not be
included for purposes of determining salary, provided that the
same benefits are available and paid by the city for its
employees.
11)Requires, under the Constitution of California, that properly
adopted city charters supersede any existing charter, and with
respect to municipal affairs shall supersede all laws
inconsistent therewith.
12)States, in the Constitution of California, that it shall be
competent in all city charters to provide, in addition to
those provisions allowable by the Constitution, and by the
laws of the state for:
a) The constitution, regulation, and government of the city
police force;
b) Subgovernment in all or part of a city;
c) Conduct of city elections; and,
d) Plenary authority is hereby granted, subject only to the
restrictions of Article XI, to provide therein or by
amendment thereto, the manner in which, the method by
which, the times at which, and the terms for which the
several municipal officers and employees whose compensation
is paid by the city shall be elected or appointed, and for
their removal, and for their compensation.
13)Requires, under the Brown Act, that all meetings of a
legislative body of a local agency be open and public and all
persons be permitted to attend unless a closed session is
authorized.
14)Requires, at least 72 hours before a regular meeting, the
legislative body of the local agency, or its designee, to post
an agenda containing a brief general description of each item
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of business to be transacted or discussed at the meeting,
including items to be discussed in closed session.
15)Authorizes a legislative body of a local agency to hold
closed sessions with the local agency's designated
representatives regarding the salaries, salary schedules, or
compensation paid in the form of fringe benefits of its
represented and unrepresented employees, and, for represented
employees, any other matter within the statutorily provided
scope of representation.
16)Prohibits closed sessions from including final action on the
proposed compensation of one or more unrepresented employees.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)SCO would incur costs of between $175,000 and $325,000 in both
FYs 2011-12 and 2012-13 to: a) perform analyses of city
official compensation; b) notify cities found to have excess
compensation; and, c) conduct hearings related to these
findings.
2)Provisions requiring certain employment contracts and
amendments to be noticed and ratified in an open session of
all local agencies' legislative bodies may result in a
reimbursable mandate. As an illustration, if the bill imposed
costs in excess of $1,000 on 10% of the state's 6,000 local
agencies, the annual reimbursement costs would be $600,000.
COMMENTS : On July 15, 2010, the Los Angeles Times (Times) broke
the story that the City Manager in the City of Bell was being
paid nearly $1 million annually for his services. This was just
two weeks after the Times reported that the Los Angeles County
District Attorney's Office was investigating why Council Members
in the City of Bell were making nearly $100,000 per year for a
part-time office. These stories and many more in this series
have caused a ripple effect across California of local
governments coming under scrutiny for what they are paying
officers and high-level employees.
The California Constitution gives cities the power to become
charter cities. The benefit of becoming a charter city is that
charter cities have supreme authority over "municipal affairs."
In other words, a charter city's law concerning a municipal
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affair will trump a state law governing the same topic. Cities
that have not adopted a charter are general law cities. General
law cities are bound by the state's general law, even with
respect to municipal affairs. Of California's 481 cities, 119 of
them are charter cities. Charter cities are authorized to set
compensation for their city council members via their charter.
Some charter cities, like San Jose and Sacramento, utilize a
salary setting commission made up of appointed, non-elected,
members to establish compensation amounts for city council
members. Charter cities, such as Anaheim, specifically tie their
compensation to that which is statutorily prescribed for general
law cities. Up and down the state there are different models of
how compensation is determined for city council members of
charter cities.
For both general law and charter cities, compensation is not
just the base salary a council member receives for their
services on the council. It is often times an additional
stipend or salary that they receive for serving on a commission
or board. Under existing law a city council of a general law
city may not receive compensation in excess of $150 per month
for each commission, committee, board, authority, or similar
body upon which the member serves. The same cap does not hold
true for charter cities.
During its investigation, the Times found that the council
members in the City of Bell received an annual base salary of
$1,800 for sitting on the council, $18,895 for serving on the
Public Finance Authority, $18,895 for serving on the Surplus
Property Authority, $18,895 for serving on the Bell City Housing
Authority, $18,895 for serving on the Planning Commission, and
$720 for serving on the Community Redevelopment Agency; for a
total of $78,100 annually.
This bill is one of a number of bills that address the
controversy surrounding compensation paid to officials in the
City of Bell, a small city with 38,867 residents, after voters
approved a city charter in 2005. This bill does not interfere
with a charter city's constitutional authority to set
compensation for its officials under the municipal affairs
doctrine. The bill is designed to provide an incentive for a
city to pay its council members a salary that is aligned with
statutory requirements for compensation paid in general law
cities by imposing punitive measures on cities that pay council
members what is deemed to be excess compensation. These
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punitive measures include halting all new redevelopment
activities in the city until the city brings itself into
compliance. To avoid an "excess compensation city" designation
under this bill, a charter city with higher salaries will need
to produce a paper trail showing how its compensation fits
within the adjustments that state law already permits for
general law cities. Given the full time nature of many of
California's larger cities, this bill gives a charter city that
has a population of more than 285,000 an exemption to the excess
compensation provisions of this measure.
In addition to the city council compensation provisions, this
bill also attempts to add more transparency to the process of
ratifying or amending contracts of those executive level
employees who report directly to a legislative body. As in the
case of the City of Bell, the city manager was receiving an
annual salary of over $800,000 year, an amount that came to the
shock and dismay of many of the constituents of the City of
Bell. This bill requires that prior to ratifying or amending a
contract of an individual who reports or will report directly to
the legislative body, the provisions of that contract, including
the employee's name, position, total salary amount, benefits,
retirement, and any other forms of compensation, shall be posted
on the local agency's website and in a public place five days
prior to the open meeting where the contract will be ratified or
amended.
Support arguments: Supporters believe that this bill will help
eliminate public corruption and restore public confidence in our
elected officials. Supporters could argue that the additional
time to review pending employment contracts of specified
individuals will provide greater transparency to help prevent
egregious acts like those discovered in the City of Bell.
Supporters state that while the Legislature cannot stop charter
cities from making unwise compensation decisions, this bill
creates consequences that may deter them.
Opposition arguments: Opposition argues that this bill goes far
beyond addressing the legitimate issues currently under
investigation in the City of Bell and attempts to infringe upon
the "Home Rule" authority of cities in the constitution that
gives charter cities "plenary" authority over compensation
matters. Opposition also argues that RDAs are separate entities
from city councils and sanctioning an RDA's activities is an
inappropriate response to the bad actions of a city council.
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The subject matter of this bill has not been heard in any
Assembly policy committee this legislative session.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
FN: 0006914