HomeMy WebLinkAboutRes 09-36 - Property Tax Funds Seized (Fiscal Hardship) CITY OF PALM DESERT
COMMUNITY SERVICES DEPARTMENT
STAFF REPORT
REQUEST: CONSIDERATION OF LEGISLATIVE REVIEW COMMITTEE ACTION
ON RESOLUTION NO. 09-36
DATE: June 11, 2009
CONTENTS: Resolution No.09-36
RECOMMENDATION:
By Minute Motion, waive further reading and adopt Resolution No. 09-36.
BACKGROUND:
On May 5, 2009, the Department of Finance announced that it had proposed to the Governor
that the State "borrow" over$2 billion in local property taxes from cities, counties, and special
districts to balance the state budget causing deeper cuts to local public safety and other vital
services. In order to start that process, the Governor would have to issue a proclamation
declaring the existence of a "severe fiscal hardship." The Legislature would then have to
implement the "borrowing" program by passing urgency legislation, which identifies how the
"loan" would be repaid with interest. The League of California Cities has requested that
municipalities adopt a resolution finding a severe fiscal hardship will exist if this proposed
State property tax rate is added to the pressures of ongoing property tax losses and serious
revenue losses due to the economic recession. The resolution in effect states that the idea of
the State taking property tax funds from already stressed city budgets is ludicrous and
irresponsible. It helps demonstrate that part of the reasons cities are cutting their budgets is
because of past and continuing property tax raids.
At its meeting of May 26, 2009, the Legislative Review Committee voted to recommend that the
City Council adopt such a resolution and forward it to the League of California Cities,
appropriate State Legislators and Committees.
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PATRICIA SCULLY, CFEE J . WOHLMUTH
SENIOR MANAG MENT A ALYST T MANAGER
` CITY COUNCIL A�TIOM
APPROVED "�� DENI'ED
R rV�D OTHER
. SHEILA R. GILLIGAN ��� -
ACM/ MMUNITY S VICES 1VIEETINGDATE
AYES: 5L ,
��,����� _ NOES:
'r ABSENT:
PAUL GIBSON ABSTAIN:
DIRECTOR OF FINANCE/CITY TREASURERVERIFIED BY:
Original on File with City erk'a Office
RESOLUTION NO. 09-36
A RESOLUTION FINDING A SEVERE FISCAL HARDSHIP WILL EXIST
IF ADDITONAL LOCAL PROPERTY TAX FUNDS ARE SEIZED AND
ADDITONAL UNFUNDED MANDATES ARE ADOPTED BY THE STATE
OF CALIFORNIA
WHEREAS, the current economic crisis has placed cities under incredible
financial pressure and caused city officials to reopen already adopted budgets to
make painful cuts, including layoffs and furloughs of city workers, decreasing
maintenance and operations of public facilities, and reductions in direct services
to keep spending in line with declining revenues; and
WHEREAS, since the early 1990s the state government of California has
seized over $8.6 billion of city property tax revenues Statewide to fund the state
budget even after deducting public safety program payments to cities by the
State; and
WHEREAS, in FY 2007-08 alone the State seized $895 million in city
property taxes Statewide to fund the state budget after deducting public safety
program payments and an additional $350 million in local redevelopment funds
were seized in FY 2008-09; and
WHEREAS, the most significant impact of taking local property taxes has
been to reduce the quality of public safety services cities can provide since public
safety comprises the largest part of any city's general fund budget; and
WHEREAS, in 2004 the voters by an 84% vote margin adopted
substantia� constitutional protections for local revenues, but the Legislature can
still "borrow" local property taxes to fund the state budget; and
WHEREAS, on May 5 the Department of Finance announced it had
proposed to the Governor that the State "borrow" over $2 billion in local property
taxes from cities, counties and special districts to balance the state budget,
causing deeper cuts in local public safety and other vital services; and
WHEREAS, in the past the Governor has called such "borrowing"
proposals fiscally irresponsible because the State will find it virtually impossible
to repay and it would only deepen the state's structural deficit, preventing the
State from ba�ancing its budget; and
WHEREAS, the Legislature is currently considering hundreds bills, many
of which would impose new costs on local governments that can neither be
afforded nor sustained in this economic climate; and
WHEREAS, State agencies are imposing, or considering, many
regulations imposing unfunded mandates on local governments without regard to
how local agencies will be able to comply with these mandates while meeting
their other responsibilities; and
WHEREAS, the combined effects of the seizure of the City's property
taxes, increasing unfunded State mandates, and the revenue losses due to the
economic downturn have placed the City's budget under serious fiscal pressure;
and
WHEREAS, our city simply can not sustain the loss of any more property
tax funds or to be saddled with any more state mandates as they will only
deepen the financial challenge facing our city; and
WHEREAS, a number of the City's financial commitments arise from
contracts, including long term capital leases and debt obligations which support
securities in the public capital markets that the City must honor in full unless
modified by mutual agreement of the parties.
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF
THE CITY OF PALM DESERT has determined that the City will experience a
severe fiscal hardship if the recommendation of the Department of Finance to
"borrow" $2 billion of local property taxes is supported by the Governor and the
Legislature; and
RESOLVED FURTHER, that the City Council strongly and unconditionally
opposes the May 5 proposal of the Department of Finance and any other State
government proposals to borrow or seize any additional local funds, including the
property tax, redevelopment tax increments, and the City's share of the Prop. 42
transportation sales tax; and
RESOLVED FURTHER, that the City Council strongly urges the State
Legislature and Governor to suspend the enactment of any new mandates on
local governments until such time as the economy has recovered and urges the
State to provide complete funding for all existing and any new mandates; and
RESOLVED FUTHER, that the City shall send copies of this resolution to
the Governor, our State senator(s), our state assembly member(s) and the
League of California Cities.
PASSED, APPROVED, and ADOPTED by the City Council of the City of
Palm Desert, California, on this 11th day of June, 2009, by the following vote, to
wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
ROBERT A. SPIEGEL, MAYOR
CITY OF PALM DESERT, CALIFORNIA
ATTEST:
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA