FOR THE COUNCIL MEETING OF MAY 7, 2024
COUNCIL AGENDA REPORT
TO: City Council
FROM: Interim City Manager Alex Posada
SUBJECT: The Taxpayer Protection and Government Accountability Act
Description:
The City Council will consider adopting a Resolution opposing Initiative No. 21 -0042A1, the “Taxpayer Protection and Government Accountability Act”.
RECOMMENDATION:
Adopt a Resolution opposing Ballot Initiative No 21 -0042A1, the “Taxpayer Protection and Government Accountability Act”.
BACKGROUND:
In February 2023, the “Taxpayer Protection and Government Accountability Act,” or Initiative No. 21 -0042A1, sponsored by the California Business Roundtable, the Commercial Real Estate Development Association , and others, qualified for the November 5, 2024, General Election ballot. This measure 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 penalties for violation of State and local laws.
DISCUSSION:
This initiative would affect any new or increased tax or fee adopted by the Legislature, a city council, or the local voters after January 1, 2022. It would require that any tax or fee adopted after that date must comply with the measure’s new rules or be void unless readopted in compliance. Failure to readopt a tax measure in compliance with the initiative would result in voiding of the original tax measure, one year after the effective date of the initiative.
If passed, the initiative would impact the hundreds of fees charged by the City, from rentals, licenses, permits, user fees , and the Utility Department’s water and wastewater rates – all of which recover operational costs. The City already does not recover the full cost of services per the City Council's direction to raise user fees incrementally.
Fortunately, the City’s Measure U sales tax is exempt from this initiative because Santa Maria voters passed that the local measure in November 2018. 2 Reductions in local government tax and fee revenues have impacts on core services and infrastructure including fire and emergency response, law enforcement, streets and roads, drinking water, sewer sanitation, parks, and libraries.
Additionally, the initiative would amend the State Constitution to expand and define all State and local levies, charges, and fees as tax or exempt charges; increase the requirement for voter approval of new or increased state and local taxes; include a sunset date for new or increased taxes adopted after January 1, 2022; expressly prohibit local advisory measures (no measure may appear on the ballot allowing local voters to express a preference for how local general tax dollars should be spent); and require voter approval to expand existing taxes to new territory (e.g., annexations) or to expand the tax base (e.g. new utility service).
The changes to the State Constitution would include defining how a charge could be calculated for providing a service. An “Actual Co st” of providing a service or product means the minimum amount necessary to reimburse the government for the cost of providing the service or product to the payor. In computing the “actual cost” the maximum amount that may be imposed is the actual cost less all other sources of revenue including, but not limited to taxes, other exempt charges, grants, and state or federal funds received to provide such service or product.
The City Council will receive a presentation by the League of California Cities’ Regi onal Public Affairs Manager, Dave Mullinax, about the negative financial impact on Santa Maria and other cities.
Fiscal Considerations
If approved by the voters, the initiative would significantly limit the City’s ability to recover costs incurred to provide necessary and in -demand public services and to maintain current levels of service. City fees are necessary to cover operational costs and outstanding funding obligations such as core services and infrastructure including fire and emergency response, law enforcement, streets and roads, drinking water, sewer sanitation, parks and libraries. The City, like many other governments, is struggling to maintain services as rising expenses exceed revenues. The City projects a $20 million gap in its 2024 -26 budget.
ATTACHMENTS
A. Initiative No. 21-0042A1