June 19, 2013

Measure that would help new cities advances

BY JIM MILLER | The Press-Enterprise

A state Senate committee gave quick approval Wednesday to a measure meant to hitch Riverside County’s newest cities to a funding stream for California’s other cities.

The measure, Senate Bill 56, is the latest legislative attempt to ease the Inland cities’ pain from the June 2011 state budget. The package swept up vehicle license fee revenue that had helped the new cities get started and shifted the money to local law-enforcement grants.

Jurupa Valley, Wildomar, Menifee and Eastvale, the only new California cities since 2004, were hit hard by the shift and have battled insolvency ever since.

The bill passed Wednesday would add those cities, as well as any future ones, to the list of cities that get a share of property tax revenue in place of vehicle license fee money they previously received. That “swap” money totaled $294 million in Riverside County in 2012-13.

State Sen. Richard Roth, D-Riverside, the measure’s author, said he was pleased with the vote. Among the committee members supporting it Wednesday was state Sen. Bill Emmerson, R-Redlands, a co-author of the bill. His district includes Menifee.

The measure now goes to the Senate Appropriations Committee, which evaluates bills’ fiscal implications.

The panel won’t have to look hard in the case of SB 56: Any increase in property-tax revenue diverted to freshly minted cities would end up costing the state because the general fund would have to make up for any drop in property-tax money that goes to local schools. The state is obligated to make up the difference to meet the school-funding constitutional guarantee.

“SB 56’s allocations of…property tax revenues make winners out of newly incorporated cities and other cities that have annexed territory since 2004,” an analysis by the Senate Governance and Finance Committee concludes. It refers to the state general fund as “the fiscal loser” under the proposal.

The bill’s exact fiscal impact on the state is unclear -- the four cities lost an estimated $14 million in annual license-fee revenue from the June 2011 shift.

Senate and Assembly leaders have not taken a position on the bill. City leaders recently met with aides to Gov. Jerry Brown, who vetoed a bill last year that would have helped the local cities.

“They certainly understand the issues and the critical part that cities play in implementing our overall objectives in the state of California,” Roth said Wednesday.

The vehicle-license fee was a major funding source for cities, including new ones, until the late 1990s. Then lawmakers reduced the fee, but reimbursed local governments for the lost revenue.

That reimbursement ceased in late 2003, replaced by the VLF/property tax swap several months later. That swap, though, applies only to cities in place before 2004.

There have been several unsuccessful attempts to help the cities hurt by the 2011 budget cut. Some of the measures failed to advance. And last September, Brown vetoed AB 1098 after it shot through the Legislature during the final days of the 2012 session.


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