Appendix B: A Comparison Chart of Recent Report Proposals (Tension & Ambiguity; March 2001; 1075-S


Appendix B: A Comparison Chart of Recent Report Proposals (Tension & Ambiguity; March 2001; 1075-S
Proposals Problems 1. The Legislative Analyst, 1993. "Making Government Make Sense: A More Rational Structure for State and Local Government" 2. The California Constitution Revision Commission, 1996. "Final Report and Recommendations to the Governor and the Legislature" 3. The Public Policy Institute of California, 1999. "The State-Local Fiscal Relationship in California: A Changing Balance of Power" 4. The State Controller Kathleen Connell's State Municipal Advisory Reform Team, 1999. "SMARTER" 5. The Speaker's Commission on State and Local Government Finance, 2000. "Final Report" 6. The Legislative Analyst, February, 2000. "Rethinking AB 8: Exploring Alternative Ways to Allocate Property Taxes" (For #5, see "Making Government Make Sense") 7. The California State Association of Counties (CSAC), 2000. "A Dollars and Sense Plan for Local Government" 8. The League of California Cities, 2000. "Report of the League Special Task Force on Fiscal Reform"
            #1: Set uniform rates #2: Local control over ERAF #3: Property taxes for municipal services and schools #4: Re-balance the tax burden    
Fiscal Constraints on Local Government Repeal earmarking of VLF and cigarette tax revenues and funds for realignment. Eliminate minimum funding mandate for schools (Proposition 98). Returncontrol of property tax allocation back to local governments (amend Proposition 13). Allocate more property tax to counties for financing municipal services. Cap ERAF property tax shifts to schools at $3.2 billion annually. Constitutionally guarantee 1/2 cent transactions and use taxing authority for counties and VLF funds for local governments. Return ERAF: total of $1 billion to cities, counties, and special districts.   Decrease the overall property tax rate from 1% to .9%. Give cities and counties the choice to increase the rate back to 1% or not, based on local preferences. Allocate half of all property tax revenues to municipal services and half to schools. Provide the remaining funds for counties with Bradley-Burns sales tax. Allow local governments to help allocate property tax. Amend the constitution to allow for an increase or a decrease in property tax rates, but do not allow growth of the rate to be more than 2% per year. Return ERAF: $1.3 billion in property tax from schools to cities and counties. Schools held harmless with state general fund backfill. The state would then stop paying the 1.3 billion backfill to the locals from the existing 25% VLF reduction. Constitutionally Guarantee the local 1/2 cent sales and use tax authority for local governments. Switch vehicle license fee subventions to local governments for a portion of personal income tax. Return ERAF: all diverted funds from cities, counties, and special districts. Change voter requirements for general and special taxes; lower vote requirement for special taxes and increase the requirement for general taxes. Require state to pay for schools' portion of property tax administration. Constitutionally Guarantee existing revenue sources of cities and counties (including property tax, Bradley-Burns sales tax, VLF, VLF backfill, etc.). Return ERAF: $1.8 billion yearly in increased allocation of property taxes to cities, counties and special districts.
Skewed Land Use Incentives (fiscalization of land use) Matchstate goals for economic development with fiscal incentives facing local communities. Swap sales and property tax between state and locals, holding schools harmless.   Swap equal amounts of sales and property tax between local governments and the state. Change local sales tax from point-of-sale to a population-based allocation.       Swap sales and property tax between local governments and the state. Change local sales tax from a situs-based to a population-based formula. Change sales tax into three types: situs (decreasing over time), per capita (increasing over time), equity (increasing over time). Consider swap of sales tax for property taxes.
Lack of Government Accountability Promote intergovernmental coordination by relying on financial incentives and sanctions. Outline and Separate overall duties of state and local governments. Create state-local realignment plan with individual "community charters." Allocate non-school share of property tax by these charters. Either redistribute county responsibilities to state and cities or increase the power of counties by rethinking their role as potential regional governments. Allocate a certain amount of property taxes to schools and determine the rest through a process in each county. Establish bilateral compacts between state and local entities including performance-based budgeting and performance auditing. Establish performance measures and service contracts between state and local governments. Highlight the different expenses between the distinct roles of county governments. Increase taxpayer transparency in service funding with property tax reporting requirements. Link property tax allocation with current service levels. Match local tax levels with local preferences, making local officials responsible for this taxing decision.   Increase taxpayer clarity by splitting the one percent base property tax rate into a series of individual local government rates, so all rates would be shown on property owner's bill. Establish compact/partnership relationship between state and local governments.  
State Mandates       Reformthe state mandates process.           Reform Commission on State Mandates. Reform and simplify the state mandates process.
Other Issues Link property taxes in communities to current levels of service.   Link property tax allocation to current local needs.   Implement equity measures - require government to provide an equity impact assessment of actions.       Assess nonresidential property at current market value to remove barriers to new business and generate approx. $2 billion yearly. Reduce state sales tax by 3/4 cent and local tax by 1/2 cent. Make up for loss with continued VLF subvention. This replaces a federally nondeductible tax with a deductible one. Create a Secretary for Local Government Affairs in the Governor's Cabinet.  

Last Updated on 11/9/01
By Elvia Diaz

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