March 26, 2013

Officials try new way to restore city funds

BY JIM MILLER | The Press-Enterprise

Inland lawmakers and local officials have taken a new tack to try to restore lost revenue for four Riverside County cities disproportionately hurt by a state budget shift two years ago.

Yet it remains to be seen whether the latest approach -- which would tap property tax revenue instead of the vehicle license fee to help the cities – will make it through the Legislature and survive the governor’s veto pen.

The state’s June 2011 budget took a share of cities’ vehicle-license fee revenue to pay for local law enforcement grants. The cut landed hardest on cities that had incorporated since 2004, all of which are in Riverside County: Jurupa Valley, Eastvale, Wildomar and Eastvale.

Lawmakers approved an eleventh-hour bill last summer to restore money to the new cities and also help older cities, such as Fontana, that had recently annexed populated territory.

Gov. Jerry Brown vetoed the measure, saying the state could not afford the expense, estimated to cost $18 million annually.

Now that approach is off the table.

Voters’ approval of Prop. 30 in November, which raised the sales tax and income taxes for wealthy filers, devotes license-fee revenue to paying for shifting some public-safety programs from the state to counties.

And just in case there was any question about whether license-fee revenue still could go to the Riverside County cities, a Sacramento County judge last week ruled for the state in a lawsuit challenging the 2011 license-fee shift.

So supporters hope to get the money from property taxes.

Recent amendments to Senate Bill 56 by state Sens. Richard Roth, D-Riverside, and Bill Emmerson, R-Hemet, would take a share of the local property-tax money that now goes to schools and give it to the cities hurt by the by 2011 budget shift.

The measure already has the support of an influential opponent of last year’s bill, the California State Association of Counties. It is scheduled to have its first hearing April 17.

Jason Gonsalves, a lobbyist for the four cities and Fontana, said the approach resembles what was on the books before voters approved a swap of local government property tax and license-fee revenue in 2004.

Under California’s school-funding guarantee, SB 56 would obligate the state to make up the difference for the diverted property tax revenue.

“It’s a better fix to the extent the Legislature and the governor’s office go along with it,” Gonsalves said.

Evan Westrup, a spokesman for Brown, said the administration has taken no position on the bill.

There are few other options for the four cities, said Jean Hurst, a lobbyist for the counties association.

“We’ve done a very good job in locking up a lot of revenues,” she said of the state.

Of the four Riverside County cities, Jurupa Valley is in the most dire straits. Officials have said the city, which opened its doors July 1, 2011, just as the budget cut took effect, may have to disincorporate unless Sacramento fixes the situation.

Roth and Emmerson introduced their bill in February. Within weeks, the Legislative Counsel Bureau issued an opinion that November’s Prop. 30 makes it clear that the cities’ supporters would have to find a new source of money.

Another bill resembling last year’s AB 1098, the counsel’s office wrote, would “contravene the plain meaning of this constitutional language.”

And in last week’s court ruling, retired Sacramento Superior Court Judge Lloyd G. Connelly seemed to agree with the state’s position that it had the power to take cities’ license-fee revenue both before -- and after -- voters’ approval of Prop. 30

“The league was disappointed,” League of California Cities executive director Chris McKenzie said after the ruling. “We’ve asked our attorneys to look at it very carefully and advise our board of directors on the options going forward.”


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