DATE:
April 19, 2022
TO:
Christine Daniel, City Manager
FROM:
Sheri Hartz, City Clerk
SUBJECT:
Consideration Of Resolution Of The City Council Of The City Of Emeryville Opposing Initiative No. 21-0042A1, The Taxpayer Protection And Government Accountability Act Recommendation
This report offers the City Council the opportunity to discuss whether to adopt a resolution opposing Initiative No. 21-0042A1, the Taxpayer Protection and Government Accountability Act. A sample draft resolution is attached for Council’s consideration.
Background
At the February 15, 2022, regular City Council meeting, Mayor Bauters requested and received majority support that an item be added to a future agenda to discuss whether to oppose Initiative No. 21-0042A1, the Taxpayer Protection and Government Accountability Act. Staff offered to schedule Sam Caygill, East Bay Division representative of the League of California Cities, to make a presentation to the Council at an upcoming meeting.
Discussion
The Taxpayer Protection and Government Accountability Act would amend the California Constitution with provisions to limit voters’ authority and input, adopt new and stricter rules for raising taxes and fees, and make it more difficult to impose fines and penalties for violation of state and local laws. The measure could have significant negative impacts on City of Emeryville operations and core service delivery. The proposed Constitutional initiative is sponsored by the California Business Roundtable.
The full text of the proposed initiative is attached to this staff report as Exhibit A. A summary of the major provisions is shown below.
MAJOR PROVISIONS
Fees and Charges:
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 initiative changes the burden to prove the fee or charge does not exceed “actual cost” to “clear and convincing” evidence.
The initiative sets a new standard for fees and charges paid for the use of local and state government property. These fees and charges are currently market-based. Under this initiative, amounts for rental and sale of local government property must be “reasonable”, introducing a new legal standard which must be proved by “clear and convincing evidence.” The standard may affect the amount companies (e.g., oil, utilities, gas, railroads, garbage/refuse, cable, and other corporations) will pay for the use of local public property.
Taxes:
Taxes adopted after Jan. 1, 2022, that do not comply with the new rules, are void unless reenacted.
The initiative purports to invalidate the 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.
Local advisory measures which allow local voters to provide direction on how local tax dollars should be spent are expressly prohibited.
Voter approval would be required to expand existing taxes (e.g., Utility, Transient Occupancy) to new territory (e.g., annexations) or expanding the 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.
Prohibits any surcharge on property tax rate and allocation of property tax to the state.
Fines and Penalties:
The initiative requires voter approval of fines, penalties, and levies for corporations and property owners that violate state and local laws unless a new, undefined adjudicatory process is used to impose the fines and penalties.
No fee or charge or exaction regulating vehicle miles traveled can be imposed as a condition of property development or occupancy.
ADDITIONAL BACKGROUND
In 2018, the “Tax Fairness, Transparency and Accountability Act” or (AG# 17-0050 Amdt. #1), was circulated to qualify for the November 2018 ballot. Ultimately, the measure’s proponents withdrew the initiative in June 2018.
On Jan. 4, 2022, the California Business Roundtable filed the Taxpayer Protection and Government Accountability Act or AG# 21-0042A1.
Local government revenue-raising authority is currently substantially 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 Taxpayer Protection and Government Accountability Act adds and expands restrictions on voters and local government tax and fee authority.
Fees and Charges
Local governments levy a variety of fees and other charges to provide core public services. Some examples of such fees and charges are:
Nuisance abatement charges, such as for weed, rubbish, and general nuisance abatement.
Commercial franchise fees.
Emergency response fees.
Advanced Life Support (ALS) transport charges.
Document processing and duplication fees.
Transit fees, tolls, parking fees, public airport and harbor use fees.
Facility use charges, fees for parks and recreation services, refuse disposal tipping fees.
Virtually every city, county, and special district regularly (e.g., annually) consider increases to fee rates and charges and revise rate schedules to accommodate cost increases, new users and activities. Most of these would be subject to the new standards set forth in the initiative. Based on the current volume of fees and charges imposed by local agencies and increases in those fees to accommodate inflation, Cal Cities estimates the amount of local government fee and charge revenue likely impacted by the measure is about $1 billion per year, including those adopted since January 1, 2022.
The City of Emeryville’s affected fees and charges would include those found on its Master Fee Schedule, which is reviewed and updated annually.
Reductions of 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 Penalties
Under existing law, cities are required to provide due process before imposing a penalty or fine for violation of its municipal code:
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 [Gov't Code 53069.4].
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 [Merco Construction Engineers v. Los Angeles Unified School District (1969) 274 CA 2d 154, 166].
The fine may not be "excessive" [U.S. Constitution amendments VIII and XIV].
The initiative converts administratively imposed fines and penalties into taxes unless a new, undefined “adjudicatory due process” is followed. This provision puts at risk the authority to impose fines and penalties for violations of state and local law.
Fiscal Impact
The Taxpayer Protection and Government Accountability Act would impact local government tax and fee revenues statewide and in the City of Emeryville.
Staff Communication with the Public
Staff has had no communication with members of the public on this matter. This item was requested by Mayor Bauters at the February 15, 2022, City Council meeting.
Conflict of Interest
Not applicable
Conclusion
Whether to discuss the matter and provide staff direction is at the Council’s discretion.
PREPARED BY: Sheri Hartz, City Clerk
Approved and Forwarded to the
City Council of the City of Emeryville:
Christine Daniel, City Manager
Attachments
Exhibit A – Full Text of Initiative
Attachment: Draft Sample Resolution
Opposing Initiative No. 21-0042A1
City Council Meeting | April 19, 2022
City of Emeryville
CALIFORNIA
MEMORANDUM