Bankruptcy

AB 506 (Wieckowski) – Oppose
As Proposed to be Amended

This week, the Senate Governance and Finance Committee heard AB 506, Assembly Member Bob Wieckowski’s bill to require that a local agency engage in a “neutral evaluation” prior to seeking Chapter 9 bankruptcy protection. This bill is strongly opposed by CSAC and our local government partners, along with the California Chamber of Commerce, the Howard Jarvis Taxpayers Association, and many individual counties, cities, and special districts in the state. 

At the request of committee chair Senator Lois Wolk, Assembly Member Wieckowski agreed to delete the contents of the bill and refer the bill to the Senate Rules Committee for additional negotiations. The current content of the bill is simply: “… it is the intent of the Legislature to enact an alternative dispute resolution procedure that cities, counties, and special districts may use before they seek financial relief through the provisions of Chapter 9 of the federal Bankruptcy Code.”

It is unclear as to the timing of discussions as to a new approach on the bankruptcy issue, but the chair of Senate Rules Committee, Senate President pro Tempore Darrell Steinberg, is now in control of the bill. Language can be amended into the bill and moved at any time. 

While we appreciate the opportunity to engage in a dialogue about the appropriate means by which a local entity should prepare for entrance into federal bankruptcy court, it is difficult to envision a process that would allow for a timely and effective outcome for counties. Because the onset of a fiscal crisis may be rapid, deadlines are important, particularly when counties are tasked with providing state and federally-mandated services.

CSAC will be monitoring activities associated with AB 506 and will keep counties apprised of the latest news.

Election Mandate

SB 641 (Calderon) – Oppose
As Amended on May 31, 2011

Senate Bill 641, by Senator Ronald Calderon, would allow voters to conditionally register and provisionally vote during the fourteen days prior to an election. Currently, citizens must register before this time in order to vote in an election.

CSAC sincerely appreciates Senator Calderon’s attention to the people’s access to elections. As the administrators of the state’s elections, counties fully recognize that elections are not just the cornerstone of our democracy, but democracy itself in action. Of course, their importance lies not only in allowing as many eligible citizens as possible to vote, but also in ensuring that the results of the election are accurate and legally sound.

Many counties already struggle to certify their votes by the end of the 28-day canvass period. SB 641 would add significantly to that struggle. Not only would election offices need to meet all of the current certification and audit requirements, they would also need to process large numbers of voter registration forms and provisional ballots. Verifying and counting provisional ballots are by far the most time-consuming processes that county registrars must undertake during the canvass; SB 641 would increase the number of provisional ballots by multiples.

In complying with this requirement, counties would incur costs that are difficult to overstate. The new law would increase election departments’ workloads by, firstly, all the new voters that would not otherwise have registered, but, more importantly, by all of the voters that absent this law would have met the 14-day deadline but with it see no need to do so. In large counties, the elections office building will prove insufficient to handle the surge of registrants and provisional ballots to count and they would have to lease large space elsewhere.

Confusingly, this year’s budget suspends the mandates that require counties to provide mail ballots to everyone who requests them. To pass this bill and suspend that program in the same year would send conflicting messages. For counties that choose to continue providing mail ballots, the cost will be enormous; to overlay this new, expensive requirement at the same time without funding it will force service reductions to the health, public safety, and safety net programs counties provide locally and on the state’s behalf. If this policy is an issue of statewide concern, as passing this mandate would indicate, then the state should be willing to use statewide revenues to pay for its costs.

The Assembly Elections and Redistricting Committee passed SB 641 4-3 on Tuesday, July 5, with Republicans and one Democrat voting against. It now moves to Appropriations.

State Oversight

AB 187 (Lara) – Concerns
As Amended on June 22, 2011

Assembly Bill 187, by Assembly Member Ricardo Lara, would authorize the State Auditor to establish a high-risk local government agency audit program to identify, audit, and issue reports on any local government agency program that the Auditor identifies as being at high risk for the potential of waste, fraud, abuse, or mismanagement or that has major challenges associated with its economy, efficiency, or effectiveness.

CSAC has communicated to the author and Legislature concerns that AB 187 sets up a process that is new and unfamiliar to most local agencies. Counties rarely deal with the Bureau of State Audits and, as a result, the new authority proposed by AB 187 creates significant uncertainty as to how an agency is identified as a high-risk agency and the extent of the audit activities.

Specific criteria for meeting the high-risk category would at least provide local agencies with an understanding of the potential for audit by the State Auditor, especially since the costs of complying with an audit could be substantial. Given that there are several of measures that also provide new authority to the State Controller to audit local agencies (SB 186, for example), the criteria for each type of intervention, whether by the State Auditor or the State Controller, should be clear and distinct. As currently drafted, some of the bills create overlapping and duplicative oversight authority.

AB 187 is but one of many bills attempting to provide greater state oversight and transparency for local government agencies in light of the scandal in the City of Bell. CSAC shares the Legislature’s interest in rebuilding public trust in government, which has unfortunately been tainted by the egregious actions of a few dishonorable officials. However, the Legislature must ensure that the measures that move forward in response are narrowly tailored, reasonable to implement, and internally consistent so as to not create unnecessary administrative burdens for local jurisdictions that could interfere with those jurisdictions’ ability to deliver vital services — especially those in difficult financial circumstances.

The Senate Appropriations Committee will consider AB 187 at its hearing next Monday, July 11.

Ballot Measures

ACA 4 (Blumenfield) – Support
As Introduced on December 6, 2010

ACA 4, by Assembly Member Bob Blumenfield, would allow counties and other local agencies to raise taxes to pay for public infrastructure and public safety facilities. Under the bill, local voters could increase the tax rate they pay on their real property to pay for public improvements such as roads, sewers, and parks, and to provide public safety facilities for sheriffs, police, and firefighters.

Counties have little useful revenue authority under current law, and study after study shows the need for significant investment in state and local infrastructure. The property tax is the revenue source that makes the most sense for paying off infrastructure bonds because it is stable and gives investors confidence. That is why counties’ current revenue authority, which rests with limited sales and use taxes, utilities, and hotel taxes are insufficient.

Likewise, property values are directly connected to, among other things, transportation infrastructure, local parks, and sewer and water services. Such improvements also lay the foundation necessary for commerce, an increase in which can itself further raise property values. In the end, all of these decisions are up to voters, a supermajority of whom must agree to a higher rate. The bill does not obligate voters in areas who think their taxes high enough and their infrastructure sufficient to utilize its provisions.

The Assembly Appropriations Committee passed ACA 4 at its hearing on Wednesday, July 6. The measure now moves to the Assembly Floor, where it will require two-thirds approval to move to the Senate.

AB 732 (Buchanan) – Support
As Amended on May 10, 2011

AB 732, by Assembly Member Joan Buchanan, would require the fiscal summary for statewide bond measures to include a table, and for that table to appear in the circulating title and summary and in the ballot pamphlet analysis.

The California Constitution requires voter approval for large amounts of state debt. Current law requires the Attorney General and the Legislative Analyst to prepare summaries that help voters decide whether to place items on the ballot and whether to pass them when they appear on the ballot. These summaries include fiscal effects.

AB 732 would require these summaries to include a table of the fiscal effects, which would provide an easy-to-understand source of information about the bond’s fiscal effects. It is important for voters to understand both benefits and the fiscal effects of bonds when considering them.

The Senate Appropriations Committee will consider AB 732 next week.

AB 1021 (Gordon) – Support
As Amended May 19, 2011

AB 1021, by Assembly Member Rich Gordon, would require voter notification when proposed ballot measures would significantly increase net costs.

Voters love to decide policy using California’s expansive and inflexible initiative system. Current law requires the Attorney General and the Legislative Analyst to prepare summaries that help voters decide whether to place items on the ballot and whether to pass them when they are on the ballot. These summaries include fiscal effects.

AB 1021 would require these summaries to notify voters when a ballot measure would establish or expand a program costing more than $1 million without providing for new revenue or offsetting savings. Many ballot measures impose costs on counties, and many others that cost the state money put pressure on state funding for programs counties provide on the state’s behalf. Voters should be notified clearly of the effects of their decisions.

The Senate Appropriations Committee will consider AB 1021 next week.

Local Tax Authority

SB 223 (Leno) – Support
As Introduced February 9, 2011

SB 223, by Senator Mark Leno, would authorize a county to place a measure before voters to impose an assessment on vehicles owned by that county’s residents. SB 223 would allow communities that are willing to pay more money for local services to do so, without requiring the same of residents in other areas. SB 223 goes beyond the current constitutional vote requirements for local taxes by requiring a 2/3 vote of the Board of Supervisors to place such a measure before voters.

The Assembly Revenue and Taxation Committee passed SB 223 at its hearing on Wednesday, July 6, after Senator Leno agreed to amend the bill. Those amendments will be available soon.

Telecommunications

SB 3 (Padilla) – Support
As Amended on June 20, 2011

SB 3, by Senator Alex Padilla, would extend to 2015 authority for the CPUC to use the California High-Cost Funds A and B to support telephone and broadband services in high-cost service areas, primarily rural, and to support small independent providers. It would also explicitly require contributions to the fund from Voice over Internet Protocol (VoIP) revenues.

The high-cost funds, A and B, subsidize the cost of providing telecommunication services to rural and hard-to-reach parts of the state. They are funded with surcharges on all telephone bills and help ensure that access to phone and broadband services are universal, to everyone’s benefit. This ensures that residents of rural counties and the hard-to-reach places in all counties have affordable access to the telecommunications system that is so important to our economy, our safety, and our daily lives.

The Assembly Appropriations Committee will consider SB 3 at its hearing on Wednesday, July 13.