1 STAFF REPORT
DATE: March 28, 2023
TO: Justin Hess, City Manager
FROM: Judie Wilke, Assistant City Manager
By: Viviana Garzon, MPA, Administrative Analyst II
SUBJECT: Adoption of a Resolution Opposing the California Business Roundtable Measure
RECOMMENDATION
Adopt A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK OPPOSING THE CALIFORNIA BUSINESS ROUNDTABLE MEASURE (Attachment 1).
BACKGROUND
On January 4, 2022, the California Business Roundtable filed the “Taxpayer Protection and Government Accountability Act” or AG# 21- 0042A1 (Attachment 2). On February 1, 2023, the measure qualified for the November 2024 ballot. Throughout this report, the measure will be referred to as the California Business Roundtable Measure (measure).
This measure aims to amend the California Constitution and is the most consequential proposal to limit the ability of state and local governments to enact, modify, or expand taxes, assessments, fees, and property-related charges since the passage of Proposition 218 (1996) and Proposition 26 (2010)
1. The City of Burbank is a member of CalCities , an association of California city officials who advocate for the common interests of local jurisdictions in California and seek to influence State and Federal policy decisions that impact municipal governments.
CalCities, along with a broad coalition of local governments, labor and public safety leaders, infrastructure advocates, and businesses, strongly opposes the measure. In addition, the Council-approved 2023 Legislative Platform outlines the City’s opposition to laws that remove local control and decision-making authority.
1 https://www.csda.net/advocate/take-action/voterlimitations CITY MANAGER’S
OFFICE
2 DISCUSSION
Taxes
Local government revenue- raising authority is currently restricted by state statute and constitutional provisions, including the voter approved provisions of Proposition 13 of 1978, Proposition 218 of 1996, and Proposition 26 of 2010. The California Business Roundtable Measure adds and expands restrictions on voters and local government tax and fee authority. The measure proposes new and stricter rules for raising taxes and fees.
All new or increased state taxes will require majority voter approval. In the local arena, voter approval will be required when an existing tax is applied to a new service or product.
For example, when a utility user tax is applied to a new service. In addition, all new or increased taxes adopted after January 1, 2022, must include a sunset date.
Fees
Almost 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.
Based on the current volume of fees and charges imposed by local agencies, including council-adopted increases to simply accommodate inflation, CalCities estimates the amount of local government fee and charge revenue at risk is approximately $2 billion per year including those adopted since January 1, 2022. Reductions on local government tax revenues will have detrimental impacts on core services and infrastructure, including emergency response, streets, roads, drinking water, sewer sanitation, parks, libraries, public schools, affordable housing, homelessness prevention, and mental health services.
Fines and Penalties
Under existing law, cities are required to provide due process before imposing a penalty or fine for violation of its municipal code. The measure converts administratively imposed fines and penalties into taxes unless a new, undefined, and ambiguous “adjudicatory due process” is followed. This provision may put at risk the City’s authority to impose fines and penalties for violations of state and local law.
Charges
Under the measure, 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 the fee or charge does not exceed “actual cost” is changed to “clear and convincing” evidence.
The measure also 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.” These fees and charges are currently allowed to be market-based. Whether the amount is “reasonable” (introducing a new legal standard aiming to force below 3 market fee and charge amounts) must be proven by “clear and convincing evidence.” 2 The standard may significantly reduce the amount large companies (for example , oil, utilities, gas, railroads, refuse, cable, and other corporations) will pay for the use of local public property.
ENVIRONMENTAL REVIEW
This activity has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and as such, is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) 14 Cal. Code Regs § 15378.
FISCAL IMPACT
There is no fiscal impact associated with this report. However, if passed, the California Business Roundtable Measure will take billions of dollars away from local government services.
CONCLUSION
The California Business Roundtable Measure could result in the loss of billions of dollars annually in vital state and local funding, restricting the ability of cities and the State to fund services and infrastructure. This anti-local control measure would negatively impact the City of Burbank and force cuts to essential community services, such as fire, police, parks, libraries, housing, homeless services, mental health services, infrastructure, and more.
ATTACHMENT
Attachment 1 – Resolution
Attachment 2 – Initiative No. 21-0042A1 “The Taxpayer Protection and Government Accountability Act”
2 Initiative No. 21-0042A1 (pg.5; (3))