City Council Agenda Report
TO: Mayor McCord and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Ken Irwin, City Manager
MEETING DATE: April 5, 2022
ITEM NO: 5.9
SUBJECT: Approve Resolution No. 2022-16, Opposing the Taxpayer Protection and Government Accountability Act, Initiative 21-0042A1.
RECOMMENDATION
Motion to Approve Resolution No. 2022-16, Opposing the Taxpayer Protection and Government Accountability Act, Initiative 21-0042A1.
BACKGROUND
In 2018, the “Tax Fairness, Transparency and Accountability Act” was being circulated to qualify for the November 2018 ballot. This initiative would have drastically limited local revenue authority.
Through the successful work and advocacy of the League of California Cities and its coalition, the measure’s proponents withdrew the initiative from the ballot in June 2018.
On Jan. 4, 2022, the California Business Roundtable filed the Taxpayer Protection and Government Accountability Act or Initiative 21-0042A1. This measure is far more detrimental to cities than the measure filed in 2018, because it would decimate vital local and state services to the benefit of wealthy corporations.
Cal Cities, along with a broad coalition of local governments, labor and public safety leaders, infrastructure advocates, and businesses, strongly oppose this initiative.
ANALYSIS
The Taxpayer Protection and Government Accountability Act limits voters’ authority, adopts new and stricter rules for raising taxes and fees, and makes it more difficult to hold violators of state and local laws accountable.
If the Taxpayer Protection and Government Accountability Act is placed on the ballot and passed, it would have drastic consequences to the fiscal health of the City of Patterson and surrounding communities as it will result in:
§ Billions of local government fee and charge revenues placed at heightened legal peril.
Related public service reductions across virtually every aspect of city, county, special district, and school services especially for transportation, and public facility use. § Hundreds of millions of dollars of annual revenues from dozens of tax and bond measures approved by voters between January 1, 2022 and November 9, 2022 subject to additional voter approval if not in compliance with the initiative. § Indeterminable legal and administrative burdens and costs on local government from new and more empowered legal challenges, and bureaucratic cost tracking requirements. § The delay and deterrence of municipal annexations and associated impacts on housing and commercial development.
§ Service and infrastructure impacts including in fire and emergency response, law enforcement, public health, drinking water, sewer sanitation, parks, libraries, public schools, affordable housing, homelessness prevention and mental health services.
In addition, Cal Cities provides the following specific impacts to help the public understand the full effects of passing the Taxpayer Protection and Government Accountability Act:
§ Limit voter authority and accountability
· Limits voter input. Prohibits local voters from providing direction on how local tax dollars should be spent by prohibiting local advisory measures. · Invalidates the Upland decision that allows a majority of local voters to pass special taxes. Taxes proposed by the Initiative are subject to the same rules as taxes placed on the ballot by a city council. All measures passed between January 2022 and November 2022 would be invalidated unless reenacted within 12 months.
§ Restrict local fee authority to provide local services · Impacts franchise fees. Sets new standard for fees and charges paid for the use of local and state government property. The standard may significantly restrict the amount oil companies, utilities, gas companies, railroads, garbage companies, cable companies, and other corporations pay for the use of local public property. Rental and sale of local government property must be “reasonable” which must be proved by “clear and convincing evidence.” · 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.
§ Restrict authority of state and local governments to issue fines and penalties for violations of law
· 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. § Restrict local tax authority to provide local services · Requires voter approval to expand existing taxes (e.g., UUT, use tax, TOT) to new territory (e.g., annexation) or expanding the base (e.g., new utility service).
· City charters may not be amended to include a tax or fee. · New taxes can be imposed only for a specific time period. · Taxes adopted after Jan. 1, 2022, that do not comply with the new rules, are void unless reenacted.
· All state taxes require majority voter approval.
· Prohibits any surcharge on property tax rate and allocation of property tax to state.
§ Other changes
· No fee or charge or exaction regulating vehicle miles traveled can be imposed as a condition of property development or occupancy
FISCAL IMPACT
There is no fiscal impact fee.