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Home My WebLink AboutAGENDA REPORT 2009 0617 CC SPC ITEM 05BMOORPARK CITY COUNCIL AGENDA REPORT TO: Honorable City Council FROM: John Brand, Senior Management Analyst DATE: June 15, 2009 (Special CC Meeting of 6/17/2009) ITEM 5.13. CITY OF MOORPARK, CALIFORNIA City Council Muting of �- 17 -a0oq ACT1 N: 0 —X912 SUBJECT: Consider Resolution Opposing the State's Proposed Taking of the City's Share of Revenue From the Highway Users Tax Account BACKGROUND The City Council is being asked to approve a resolution opposing the Governor's new proposal to take Highway Users Tax Account (HUTA) revenue from local government. In his final revised May Revision, the Governor proposed the seizure of almost $1 billion in city and county shares of revenues in the HUTA from the motor fuel tax (or gallonage gas tax) to fund past and future highway bond debt service payments out of the general fund. On June 11 the Joint Budget Conference Committee endorsed this recommendation on a party line vote. This is in addition to the Governor's previous budget proposal to take approximately $2 billion in property taxes from local government as a "loan." DISCUSSION It is clear to attorneys employed and retained by the League of California Cities (League) that this recommendation, if enacted into law, would be unconstitutional. In fact, in both 1974 and 1998 voters enacted limitations on the power of the legislature to seize and use HUTA gas tax funds, allowing only loans to the general fund on a limited basis. The attached legal opinion from the Sacramento law firm of Nielsen, Merksamer, Parrinello, Mueller & Naylor, LLP, sets forth the legal analysis and conclusion that the Governor's proposal would violate Article XIX of the California Constitution. The League has developed the attached resolution (Attachment 1) for Council consideration. The resolution directs the City Attorney to cooperate with the League, and other cities and counties in planning litigation challenging the constitutionality of the proposed taking of city and county funds. It does not commit the City to filing litigation, but it directs the City Attorney to cooperate and work with the League and other local governments to advance the litigation. 000006 Honorable City Council June 17, 2009 Page 2 If litigation proves necessary in the next month or so, the League anticipates that there will be some lead cities and counties, along with the League, that will file the case. It may eventually prove desirable to have every interested city named in the litigation. As a result, asking the City Attorney to get engaged and cooperate in the planning of this possible next step is appropriate. FISCAL IMPACT The City would lose about $606,000 in HUTA revenue, or approximately 13% of the proposed City Public Works budget for FY 2009 -2010. Under the Governor's proposal, approved by the Budget Conference committee, Moorpark would lose this entire amount in FY 2009/10. For FY 2010/11, the loss would be about 75% of this amount. The Governor's previous budget proposal includes taking $665,000 in General Property Taxes, also in 2009 -2010, for a total revenue loss of $1,271,000 to the City, or about 8% of the City's projected General Fund revenue of 15,306,000. STAFF RECOMMENDATION Adopt Resolution No. 2009- Attachment 1: Draft Resolution 000007 Attachment 1 RESOLUTION NO. 2009 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, AUTHORIZING THE CITY ATTORNEY FOR THE CITY OF MOORPARK TO COOPERATE WITH THE LEAGUE OF CALIFORNIA CITIES AND OTHER CITIES AND COUNTIES IN LITIGATION CHALLENGING THE CONSTITUTIONALITY OF ANY SEIZURE BY STATE GOVERNMENT OF THE CITY'S STREET MAINTENANCE FUNDS WHEREAS, the current economic crisis has placed cities under incredible financial pressure and caused them to make painful budget cuts, including layoffs and furloughs of city workers, decreasing maintenance and operations of public facilities, and reductions in direct services to keep spending in line with declining revenues; and WHEREAS, since the early 1990s the state government of California has seized over $10 billion of city property tax revenues statewide, now amounting to over $900 million each year, to fund the state budget even after deducting public safety program payments to cities by the state; and WHEREAS, in his proposed FY 2009 -10 budget the Governor has proposed transferring $1 billion of local gas taxes and weight fees to the state general fund to balance the state budget, and over $700 million in local gas taxes permanently in future years, immediately jeopardizing the ability of the City to maintain the City's streets, bridges, traffic signals, streetlights, sidewalks and related traffic safety facilities for the use of the motoring public; and WHEREAS, the loss of almost all of the City's gas tax funds will seriously compromise the City's ability to perform critical traffic safety related street maintenance, including, but not limited to, drastically curtailing patching, resurfacing, street lighting /traffic signal maintenance, payment of electricity costs for street lights and signals, bridge maintenance and repair, sidewalk and curb ramp maintenance and repair, and more; and WHEREAS, some cities report to the League of California Cities that they will be forced to eliminate part or all of their street maintenance operations while others will be forced to cut back in other areas (including public safety staffing levels) to use city general funds for basic street repair and maintenance. Furthermore, cities expect that liability damage awards will mount as basic maintenance is ignored and traffic accidents, injuries and deaths increase; and WHEREAS, in both Proposition 5 in 1974 and Proposition 2 in 1998 the voters of our state overwhelmingly imposed restriction on the state's ability to do what the Governor has proposed, and any effort to permanently divert the local share of the gas tax would violate the state constitution and the will of the voters; and 000005 WHEREAS, cities and counties maintain 81% of the state road network while the state directly maintains just 8 %; and WHEREAS, ongoing street maintenance is a significant public safety concern. A city's failure to maintain its street pavement (potholes filling, sealing, overlays, etc.), traffic signals, signs, and street lights has a direct correlation to traffic accidents, injuries and deaths; and WHEREAS, according to a recent statewide needs assessment' on a scale of zero (failed) to 100 (excellent), the statewide average pavement condition index (PCI) is 68, or "at risk." Local streets and roads will fall to "poor" condition (Score of 48) by 2033 based on existing funding levels available to cities and counties. NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF MOORPARK hereby directs the City Attorney to take all necessary steps to cooperate with the League of California Cities, other cities and counties in supporting litigation against the state of California if the legislature enacts and the governor signs into law legislation that unconstitutionally diverts the City's share of funding from the Highway Users Tax Account (HUTA), also known as the "gas tax," to fund the state general fund; and RESOLVED FURTHER, that the city manager or clerk shall send this local resolution with an accompanying letter from the Mayor to the Governor and each local legislator, informing them in the clearest of terms of the City's adamant resolve to oppose any effort to frustrate the will of the electorate as expressed in Proposition 5 (1974) and Proposition 8 (1998) concerning the proper use and allocation of the gas tax; and RESOLVED FURTHER, that a copy of this Resolution shall be sent by the city manager or clerk to the League of California Cities, the local chamber of commerce, and other community groups whose members are affected by this proposal to create unsafe conditions on the streets of our City for pedestrians, bicyclists and motorists. PASSED AND ADOPTED this day of , 2009. Janice S. Parvin, Mayor ATTEST: Deborah S. Traffenstedt, City Clerk ' California Statewide Local Streets and Roads Needs Assessment, Nichols Consulting Engineers, Chtd. (2008), sponsored by the League of California Cities, California State Association of Counties and County Engineers Association of California. 000009