1997 Significant Legislation


Significant Local Government Legislation in 1997

Published by the Senate Local Government Committee
Senator Bill Craven, Chairman
October 20, 1997

Property Tax Allocation and ERAF
Hospitals and Health Care Districts 

The following list is a summary and status report for 44 bills that were among the more significant pieces of legislation reviewed by the Senate Local Government Committee in 1997.


In 1997, the Legislature reformed the local agency contracting process by limiting local agencies' contract retention amounts, but rejected adding new competitive bidding requirements. In addition, the Legislature provided modest direction for local implementation of Proposition 218 (1996).

  • SB 79 (Kopp) sets a $25,000 force account and competitive bidding limit for harbor improvement, sewer maintenance, and county water districts. Status: Assembly Appropriations Committee.
  • SB 428 (Hurtt) allows general law counties, like charter counties, to contract out for services with specially trained, experienced, and competent persons to provide services, advice, education, and training, except county law enforcement. Status: Senate Floor.
  • SB 874 (Calderon) requires public agencies which use their own work force to calculate construction and labor costs in accordance with uniform cost accounting procedures and sets a $5,000 force account limit for joint powers agreement works and improvements not subject to other limits. Status: Senate Appropriations Committee.
  • SB 919 (Rainey) clarifies and codifies some of the terms, provisions, rules, and procedures of Proposition 218 (November 1996). Status: Chapter 38, Statutes of 1997.
  • SB 994 (Johnson) prohibits a local agency from suspending, debarring or otherwise prohibiting a person from bidding on a public works contract and, instead, reserves those tasks for the Contractors' State License Board. Status: Senate Local Government Committee.
  • AB 940 (Miller) limits contract retention payments withheld by a local or state agency from a contractor to 5%. Status: Vetoed.


The Legislature heard several bills to study city and county boundary laws, eliminate a city council's veto power over city detachments in favor of voter approval, and require additional consensus-building procedures for contested city annexations. In addition, the Legislature took discordant approaches to special district reorganization by approving one measure to make district consolidation easier, and another bill to add new requirements to district reorganization. The Legislature did not approve a measure to initiate approximately two-dozen special district reorganizations in Orange County or to revamp local agency formation commission funding.

  • SB 176 (Lockyer) creates the Special Commission on Los Angeles County Boundaries; prohibits the Los Angeles City Council from vetoing any detachment/ incorporation proposals; and requires "dual majority" voter approval of detachment/ incorporation affecting the City of Los Angeles. Status: Senate Appropriations Committee.
  • SB 228 (Kelley) increases the level of protest needed to trigger an election on LAFCO-initiated district boundary changes from 10% to 25% if the districts have fewer than 300 voters or landowners.Status: Chapter 70, Statutes of 1997.
  • SB 466 (Rainey) requires cities and counties to engage a third-party consultant, a mediator, and an arbitrator to help resolve disputed property tax city annexations. Status: Chapter 692, Statutes of 1997.
  • SB 712 (Haynes) requires an election in each of the cities and districts involved in one of several boundary changes if 25% of the voters or landowners in any affected entity protest; requires an election for most boundary changes involving the Goleta Sanitary District and the Goleta West Sanitary District submitted by the year 2003. Status: Chapter 863, Statutes of 1997.
  • AB 62 (McClintock) creates the Special Commission on City Boundaries; prohibits city councils from vetoing any detachment/ incorporation proposals; and requires "dual majority" voter approval of detachment/ incorporation proposals. Status: Chapter 911, Statutes of 1997.
  • AB 303 (Runner) forms the Los Angeles County Division Commission, upon the receipt of local agency resolutions, to study the fiscal health, service delivery, and potential division of Los Angeles County. Status: Chapter 164, Statutes of 1997.
  • AB 556 (Pringle) requires the Orange County Local Agency Formation Commission to initiate procedures for the reorganization of more than one dozen water districts and sanitary districts and cities.Status: Senate Local Government Committee.
  • AB 1128 (Miller) permits the City of West Covina to sell its water utility without a majority vote of the City's electorate until the year 2001 if it conducts an election of its water customers by mailed ballot. Status: Chapter 521, Statutes of 1997.
  • AB 1414 (Cardenas) creates the Special Commission on City Boundaries; prohibits city councils from vetoing any detachment/ incorporation proposals; and requires a 2/3 vote in the detaching area to approve detachment/ incorporation proposals. Status: Senate Local Government Committee.
  • AB 1484 (Hertzberg) creates the Commission on Local Governance for the 21st Century to study the policies, criteria, procedures, and precedents for local agency boundary changes. Status: Chapter 943, Statutes of 1997.


The Legislature provided local agencies with additional revenues in the form of loans for property tax administration upgrades, but rejected an attempt by low-income areas to divert state sales tax revenues for local economic development. State lawmakers enhanced local fiscal flexibility for special tax impositions and property tax abatements to manufacturers, but refused to broaden local agencies' ability to sell and assign their debts to outside parties. Finally, the Legislature limited the use of Mark-Roos and Mello-Roos financing, but broadened the list of eligible investments for Mello-Roos proceeds.

  • SB 11 (Brulte) changes the Citizen's Option for Public Safety (COPS) program by reducing the number of required reports, requiring annual audits from local agencies, requiring the creation of a uniform statewide procedure for reviewing expenditures, and requiring the State Controller to investigate and penalize local agencies for non-compliant expenditures. Status: Senate Appropriations Committee.
  • SB 120 (Craven) broadens local agencies' ability to sell or assign their accounts receivable, but not their unique collection powers, to private parties as a mechanism of handling their cash flow. Status: Senate Local Government Committee.
  • SB 147 (Ayala/Kopp), as introduced, required local agencies to get voter approval prior to issuing certificates of participation (COPs) or related financing instruments. As currently drafted, the measure deletes all references to COPs and places new procedural requirements and restrictions on joint powers authority use of Mello-Roos and Marks-Roos financing. Status: Assembly desk.
  • SB 248 (Watson) permits a county board of supervisors to increase the $10 county fictitious business name filing fee by up to an additional $10 for county consumer or business protection programs.Status: Assembly Floor.
  • SB 566 (Thompson) allows cities and counties to provide a property tax rebate for up to 15 years for real and personal property tax investments in qualified manufacturing facilities that exceed $150 million. Status: Chapter 616, Statutes of 1997.
  • SB 847 (Thompson) submits a $200 million State general obligation bond to the voters to finance the California Infrastructure and Economic Development Bank for local economic development projects. Status: Senate Appropriations Committee.
  • SB 908 (Lee) allows the Alameda-Contra Costa Transit District to impose a special tax, within the boundaries of a city or contiguous cities in the district, with 2/3 voter approval. Status: Chapter 433, Statutes of 1997.
  • SB 1287 (Calderon) repeals the specified list of investments for Mello-Roos deposits, and instead, allows Mello-Roos revenues to be invested in one or more of the instruments, securities, or obligations that are authorized for the local agency that created the Mello-Roos district. Status: Chapter 204, Statutes of 1997.
  • SB 1345 (Hughes) creates several economic project sites in Los Angeles County and allocates state sales tax revenues to those sites for economic development. Status: Senate Appropriations Committee.
  • AB 270 (Torlakson) requires local agency formation commissions (LAFCO) to maximize their user fees, and requires cities and special districts to help fund any LAFCO costs. Status: Senate Local Government Committee.
  • AB 334 (Wildman) modifies the allocation of Proposition 172's ½¢ sales tax revenues for the Los Angeles County and its cities, and requires the County to make retroactive increases in City allocations. Status: Chapter 217, Statutes of 1997.
  • AB 339 (Takasugi) modifies the allocation of Proposition 172's ½¢ sales tax revenues to counties and cities, and requires counties to make retroactive increases in city allocations. Status: Chapter 166, Statutes of 1997.
  • AB 719 (Torlakson) extends the State-County Partnership for Property Tax Administration through 2000-2001, making available an additional $60 million in loans to counties each year for three years to improve local property tax administration. Status: Chapter 420, Statutes of 1997.
  • AB 1224 (Thomson) expedites foreclosure proceedings and provides local agencies with various options, such as creation of a special tax penalties amnesty program, to satisfy payment of delinquent Mello-Roos debt. Status: Chapter 946, Statutes of 1997.
  • AB 1226 (Granlund) provides cities that incorporated after January 1, 1987 with an additional two years of enhanced vehicle license fee revenues, unless the city restricts housing production or does not have a valid housing element. Status: Chapter 583, Statutes or 1997.
  • AB 1362 (Mazzoni) prohibits the 1995 California Supreme Court's Guardino decision from being applied retroactively to local taxes. Status: Vetoed.


Instead of providing long-term property tax relief to all local agencies through reductions to the educational revenue augmentation fund (ERAF), the Legislature provided more targeted relief to several individual agencies.

  • SB 303 (Burton) limits the allocation of "excess ERAF" in basic aid counties to $4 million and requires any remaining "excess" funds be allocated to the county superintendent of schools, the county government, and to the cities and special districts within the county in proportion to the amount that each agency shifts to ERAF. Status: Vetoed.
  • SB 431 (Lee) recodifies AB 1589 (Pringle, see below), but exempts Contra Costa, Sacramento, and Sonoma County Free library systems from ERAF shifts, prospectively and retroactively. Status: Chapter 786, Statutes of 1997.


  • SB 854 (O'Connell) exempts single-county transit districts from shifting property tax revenues to ERAF under the 1992-93 formula. Status: Senate Appropriations Committee.
  • SB 880 (Craven) states the Legislature's intent to cap local agencies' property tax shifts to ERAF at their 1996-97 level and reduce local agencies' ERAF shifts by 10% a year until ERAF is eliminated.Status: Assembly Floor.
  • SB 1266 (Knight) allows redevelopment agencies to "pass-through" property tax increment revenues --- beyond those currently permitted in state statutes --- to state water contractors. Status: Senate Floor.
  • AB 95 (Sweeney) states the Legislature's intent to cap local agencies' property tax shifts to ERAF at their 1996-97 level and reduce local agencies' ERAF shifts by 10% a year until ERAF is eliminated. Status: Senate Appropriations Committee.
  • AB 922 (Battin) allows the City of Rancho Mirage to create a special district to provide library services with redevelopment agency property tax increment pass-through revenues without increasing Riverside County's tax equity payments; prohibits counties from reducing tax equity payments if a city's tax is reduced as a result of a court decision or a voter-approved ballot measure. Status: Chapter 835, Statutes of 1997.
  • AB 1589 (Pringle) clarifies that library districts and county free libraries are required to shift property tax revenues to ERAF under the 1992-93 and 1993-94 formulas; makes two technical amendments to fire districts' ERAF shift requirements. Status: Chapter 290, Statutes of 1997.
  • ACA 4 (Aguiar) caps local agencies' property tax shifts to ERAF at their 1996-97 level and reduce local agencies' ERAF shifts by 10% a year until ERAF is eliminated. Status: Senate Local Government Committee.


The Legislature attempted to standardize the voter approval requirements for disposing of public hospital assets and allowed for innovative new hospital agencies and partnerships.

  • SB 473 (Karnette) requires majority voter approval for the dissolution of a county hospital or the transfer or lease of 50% or more of a county hospital's assets. Status: Assembly Health Committee.
  • SB 850 (Kelley) allows non-profit hospitals in Tulare and Kings counties may to enter into a joint powers agreement (JPA) with any public agency (health care district). SB 850 also allows a non-profit hospital in San Diego County to enter a JPA with any public agency. Status: Chapter 432, Statutes of 1997.
  • AB 1150 (Prenter) authorizes the Kern County Board of Supervisors to create an independent public hospital authority to take over management, operation, and control of the county hospital in Kern County, including administration of state funds for Medi-Cal recipients. Status: Senate Health & Human Services Committee.

Committee Address