SUBJECT: League of California Cities Proposed Bylaws Amendment to increase dues to implement League Grassroots Network

 

RECOMMENDATION

That the City Council approve of League bylaws amendment, which will implement a statewide Grassroots Network to protect local control and reduce the likelihood of city revenues being taken by the State, and direct the City Clerk to record your approval on the attached ballot and forward it to the League of California Cities.

 

BACKGROUND

The past two decades have seen a phenomenal level of growth in state government. A recent report by The California Budget Project (CBP) found that between the state budget years of 1977-78 and 2000-01 state general fund spending grew 574 percent (from $11.7 billion to $78.8 billion). This is an average of 25 percent per year, unadjusted for inflation. It includes all state general fund spending, including the backfill to local governments from the recent cut in the Vehicle License Fee (VLF). Today state revenues as a percent of personal income earn California a 14th place ranking among all states, while California local tax revenues as a percentage of personal income rank 33rd among all states.

While the state budget has grown phenomenally, increasingly it has come at the expense of local revenues and local authority. Let me remind you of how the legislature and Governor have intruded on your ability to lead this community:

· In 1991-1992 the state began taking local property tax to fund schools without increasing overall funding to schools. In 2001 this revenue shift cost cities statewide over $1.6 billion, amounting to 7% of total property tax collections statewide ($22 billion).

· On a statewide basis, property tax revenues have dropped from 15% (1976) to 7% (2001) of all cities’ revenue.

· Vehicle license fees were slashed 25% in 1999 and 35% in 2000, with only a conditional legislative commitment to fund the difference from the state general fund.

· Last year, over the strong objections of California cities, the legislature passed and the Governor signed SB 402, which imposes a mandatory system of binding arbitration on local governments involved in salary and benefit disputes with public safety employees. It effectively puts important financial decisions in the hands of an outside private party and lays the groundwork for further legislative intrusion in employee management in the future.

· The legislature continues to pass bills that impose unfunded mandates and preempt local authority, limiting your ability to respond to the challenges and opportunities of this community.

· In 2000, with a $15 billion dollar surplus and a $100 billion state budget, the legislature and Governor were still unwilling to restore property taxes taken from cities.

Even as they are facing a serious energy crisis, the legislature is devoting valuable time this year to bills that would penalize with fines and lost transportation funds those cities who do not have a state approved housing element (SB 910); or limit local utility users taxes (SB 62X). I am convinced that this pattern of heavy state micromanagement of city affairs is not going to change in the foreseeable future unless we try new strategies.

Cities are consistently outspent and out-lobbied by groups that are able to commit substantially more resources to influencing legislative decisions, and can bolster these lobbying efforts with campaign contributions. As you know, cities and the League may not make campaign contributions to state officials. What we do have, however, our potential "ace in the hole", is a network of local elected and appointed officials with their own extensive community contacts, including personal and professional acquaintances among legislators and with the Governor. Mobilizing these resources represents our best option for changing the current imbalance of power between the state and local government.

 

Proposal

The League’s strategic planning process initiated nearly 18 months ago has re-energized both the League of California Cities and the membership by focusing on our primary mission to restore and protect local control for cities through education and advocacy to enhance the quality of life for all Californians.

The Grassroots Network proposal grew out of that process and has been refined by a special League task force. It would provide 14 new and reallocate 3 existing staff in 10 field offices to support the League’s 16 regional divisions and 476 cities in advancing legislation that benefits all cities. These staff would be available to assist city officials and the League’s regional divisions to work more closely with legislators, legislative district staff, news media, and community groups to form coalitions that will help protect city revenues and local control.

In approving the Grassroots Network, the League board included a number of important accountability measures, including:

· The board will establish long-range goals (e.g., constitutional protection of local revenues) and annual objectives (e.g., specific legislation) for the program, and provide regular reports to the membership;

· The board will retain a qualified firm to conduct periodic unbiased, professional evaluations of member attitudes about the program and its effectiveness; and

· After five full years of operation, the League membership will be asked to vote on whether to continue operation of the program and the dues to fund it.

Through the Grassroots Network activities will be organized among city officials to support the common legislative agenda of the cities of the state; e.g., protecting local revenues, securing additional state funding for transportation; protecting local control, etc. We can no longer just lobby in Sacramento. This proposal adds a new dimension to such lobbying efforts by carrying out activities to influence legislative outcomes in each legislator’s district – involving their constituents and to your constituents.

 

Financial Implications

The additional cost to the city, if the League membership adopts the Bylaws amendment, will be $1,791, bringing our total League dues to $5,201. Frankly, this is a modest increase when compared to our existing revenue losses and the potential loss of our sales tax or Vehicle License Fee (VLF) revenue. The attached chart (see last page) illustrates the cost of the Grassroots Network in comparison to local sales tax (1/40 of 1% statewide) and VLF payments to cities (1/10 of 1% statewide). These are the existing revenues that are "at risk" if state government begins facing an economic downturn. The state permanently "borrowed" our property tax in the early 1990’s; no one doubts that they can grab VLF, sales tax and other local revenue sources if they choose to do so again.

The Grassroots Network program is an investment in "restoring and protecting local control." It is an investment we need to make.

 

Process

If approved by 2/3 of the cities voting, the effective date of the dues increase is July 1, 2001. At this time, the League will also begin recruitment of the field coordinators.

As indicated previously, there is a "sunset" provision" at which time the full Grassroots Network program will be evaluated. Based on that assessment, cities will be asked whether they wish to continue the program.

 

Conclusion

Twenty years of state interference in city government affairs has taken its toll on this and every other California city. We can’t expect to turn back the clock and recover all the revenues and authority that have been removed by the state, but we can strengthen our capacity to prevent further erosion in the future. The Grassroots Network will support that goal. I recommend your support of it.

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