TO: Honorable Mayor and Members of the City Council
ATTENTION: Jeffrey L. Stewart, City Manager
FROM: Travis Sais, Assistant to the City Manager
SUBJECT: Consideration and possible action to consider adopting Resolution No. 23-09 – A Resolution opposing Ballot Initiative No. 21-0042A1, the Taxpayer Protection and Government Accountability Act.
DATE: March 13, 2023
EXECUTIVE SUMMARY
The Taxpayer Protection and Government Accountability Act would amend the California Constitution with provisions that limit voters’ authority and input, adopt new and stricter rules for raising taxes and fees, and may make it more difficult to impose fines and penalti es for violations of state and local laws. The League of California Cities estimates the measure puts billions of local government tax and fee revenues at risk statewide with related core public service impacts. The proposed constitutional initiative has qualified for the November 2024 ballot and is sponsored by the California Business Roundtable. The League of California Cities, along with a broad coalition of local governments, labor and public safety leaders, infrastructure advocates, and businesses, strongly oppose this initiative.
RECOMMENDATION TO CITY COUNCIL
1) Consider adopting Resolution No. 23-09; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
If the Taxpayer Protection and Government Accountability Act is placed on the November 2024 ballot and passes, City of Bellflower fee and tax revenue would be put at risk, and legal defense costs would likely increase. In particular, any tax or fee (including adjustments) adopted after January 1, 2022 (e.g., Development Impact Fees) could be subject to legal challenge. The League of California Cities estimates the Taxpayer Protection and Government Accountability Act could take billions of dollars away from local government services statewide.
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Staff Report – Resolution No. 23-09 – Ballot Initiative No. 21-0042A1 March 13, 2023
DISCUSSION
On January 4, 2022, the California Business Roundtable filed the “Taxpayer Protection and Government Accountability Act” or AG# 21-0042A1. On February 1, 2023, the measure qualified for the November 2024 ballot. The League of California Cities (“Cal Cities”), along with a broad coalition of local governments, labor and public safety leaders, infrastructure advocates, and businesses, strongly oppose this initiative. The Taxpayer Protection and Government Accountability Act adds and expands restrictions on voters and local government tax and fee authority. Major provisions of The Taxpayer Protection and Government Accountability Act are listed below:
Fees and Charges1
• Except for licensing and other regulatory fees, fees and charges may not exceed the “actual cost” of providing the product or service for which the fee is charged. “Actual cost” is the “minimum amount necessary.” The burden to prove th e fee or charge does not exceed “actual cost” is changed to “clear and convincing” evidence. • Requires fees and charges paid for the use of local and state government property and the amount paid to purchase or rent government property to be “reasonable.” T hese fees and charges are currently allowed to be market -based. Whether the amount is “reasonable” (introducing a new legal standard aiming to force below market fee and charge amounts) must be proved by “clear and convincing evidence.”2 The standard may significantly reduce the amount large companies (e.g., oil, utilities, gas, railroads, garbage/refuse, cable, and other corporations) will pay for the use of local public property.
• Prohibits fees on new development based on vehicle miles traveled .
Examples of affected fees and charges are:
• Commercial franchise fees
• Facility use charges, fees for parks and recreation services, garbage disposal tipping fees
• Development Impact Fees (DIFs)
• Cannabis Business Permit (CBP) fees
• Parking permit fees
Virtually every city, county, and special district must regularly adopt increases to fee rates and charges and revise rate schedules to accommodate new users and activities. Most of these would be subject to new standards and limitations under threat of legal challenge.
1 Initiative No. 21-0042A1 (pgs.4-6; Section 1 (a)-(j)
2 Initiative No. 21-0042A1 (pg.5; (3))
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Staff Report – Resolution No. 23-09 – Ballot Initiative No. 21-0042A1 March 13, 2023
DISCUSSION – Continued
Based on the current volume of fees and charges imposed by local agencies, including council-adopted increases to simply accommodate inflation, Cal Cities estimates the amount of local government fee and charge revenue at risk is approximately $2 billion per year incl uding those adopted since January 1, 2022. Over ten years, Cal Cities estimates $20 billion of local government fee and charge revenues will be at heightened legal peril.
Taxes3
• Taxes and fees adopted after January 1, 2022, that do not comply with the new rules, are void unless reenacted.4
• Invalidates Upland decision that allows a majority of local voters to pass special taxes.
The measure specifies that taxes proposed by the initiative are subject to the same rules as taxes placed on the ballot by a city council.
• Expressly prohibits local advisory measures which allow local voters to express a preference for how local general tax dollars should be spent.5 • Requires voter approval to expand existing taxes (e.g., Utility, Transient Occupancy) to new territory (e.g., annexations) or to expand the tax base (e.g., new utility service) • New taxes can only be imposed for a specific time period. • City charters may not be amended to include a tax or fee. • All state taxes require majority voter approval.
Hundreds of local tax measures were approved in 2022 that likely do not comply with the provisions of the initiative. Nearly $2 billion of annual revenues from these voter -approved measures could cease a year after the effective date of the measure, reducing the local public services funded by these measures, unless the tax is re-submitted for voter approval.
Reductions on local government tax revenues have impacts on core services and infrastructure including fire and emergency response, law enforcement, streets and roads, drinking water, sewer sanitation, parks, libraries, public schools, affordable housing, homelessness prevention, and mental health services.
Fines and Penalties6
• May require voter approval of fines, penalties, and levies for corporations and pr operty owners that violate state and local laws unless a new, undefined adjudicatory process is used to impose the fines and penalties.
3 Initiative No. 21-0042A1 (pgs.4-6; Section 1 (a)-(j)) 4 Initiative No. 21-0042A1 (pg.7; Section 6 (Sec. 2)(g)) 5 Initiative No. 21-0042A1 (pg.6 (3))
6 Initiative No. 21-0042A1 (pg. 5 (4))
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Staff Report – Resolution No. 23-09 – Ballot Initiative No. 21-0042A1 March 13, 2023
DISCUSSION – Continued
Under existing law, cities are required to provide due process before imposing a penalty or fine for violation of its municipal code:
1. A local agency must adopt administrative procedures that govern imposing fines and penalties, including providing a reasonable period of time for a person responsible for a continuing violation to correct or remedy the violation.
2. Notice must be given to the violating party before imposing the penalty; and give the party an opportunity to be heard and present any facts or arguments.
3. The fine may not be "excessive.”
The initiative converts administratively-imposed fines and penalties into taxes unless a new, undefined, and ambiguous “adjudicatory due process” is followed. This pr ovision may put at risk authority to impose fines and penalties for violations of state and local law.
ATTACHMENT
Resolution No. 23-09………………………………..………………………………………….……. 5
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CITY OF BELLFLOWER
RESOLUTION NO. 23-09
A RESOLUTION OPPOSING BALLOT INITIATIVE NO. 21-0042A1, THE
TAXPAYER PROTECTION AND GOVERNMENT ACCOUNTABILITY
ACT
THE CITY COUNCIL RESOLVES AS FOLLOWS:
SECTION 1. The City Council finds and declares as follows:
A. An association representing California’s wealthiest corporations and developers is spending millions to push a deceptive proposition aimed for the November 2024 statewide ballot;
B. The measure includes undemocratic provisions that would make it more difficult for local voters to pass measures needed to fund local services and infrastructure, and would limit voter input by prohibiting local advisory measures where voters provide direction on how they want their local tax dollars spent;
C. The measure creates new constitutional loopholes that allow corporations to pay far less than their fair share for the impacts they have on our communities, including local infrastructure and our environment;
D. The measure may make it much more difficult for state and local regulators to issue fines and levies on corporations that violate laws intended to protect our environment, public health and safety, and our neighborhoods; and
E. The measure puts billions of dollars currently dedicated to local services at risk and could force cuts to fire and emergency response, law enforcement, public health, parks, libraries, affordable housing, services to support homeless residents, mental health services, an d more.
SECTION 2. The City of Bellflower opposes Initiative 21 -0042A1 and will join the “No” on Initative 21-0042A1 coalition, a growing coalition of public safety, education, labor, local government, and infrastructure groups throughout the state.
SECTION 3. Preservation. Repeal or amendment of any previous resolutions does not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before this Resolution’s effective date. Any such repealed part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Resolution.
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City of Bellflower
Resolution No. 23-09
SECTION 4. Severability. If any part of this Resolution or its application is deemed invalid by a court of competent jurisdiction, the City Council intends that such invalidity will not affect the effectiveness of the remaining provision or application and, to this end, the provisions of this Resolution are severable.
SECTION 5. Electronic Signatures. This Resolution may be executed with electronic signatures in accordance with Government Code §16.5. Such electronic signatures will be treated in all respects as having the same effect a s an original signature.
SECTION 6. Recordation. The Mayor, or presiding officer, is authorized to sign this Resolution signifying its adoption by the City Council of the City of Bellflower and the City Clerk, or her duly appointed deputy, may attest thereto.
SECTION 7. Effective Date. This Resolution will become effective immediately upon adoption and will remain effective unless repealed or suspended.
PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER ON THIS 13th DAY OF MARCH 2023.
___________________________________
Sonny R. Santa Ines, Mayor
ATTEST:
_______________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
_______________________________
Karl H. Berger, City Attorney
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