February 10, 2004
SUBJECT: Positions on State and Local Ballot Measures for March 2nd Election
REPORT IN BRIEF
The March 2nd election will present Sunnyvale voters with four state ballot measures and two local ballot measures. The ballot measures and corresponding staff recommendations are as follows:
State Ballot Measures
1) Proposition 55
Staff Recommendation: Support
2) Proposition 56
Staff Recommendation: Support
3) Proposition 57
Staff Recommendation: Support
4) Proposition 58
Staff Recommendation: Support
Local Ballot Measures
1) Measure 2
Staff Recommendation: Support
2) Measure A
Staff Recommendation: No Position
This report summarizes each ballot measure, provides the City’s adopted policy (if one exists), the position of the League of California Cities [LCC] (if applicable) and a staff recommendation. Generally, staff only recommends a position if there is an existing City policy on the issue or significant impact on the City.
BACKGROUND
Staff is providing this report to afford the City Council an opportunity to take a public stand on the state and local ballot measures prior to the March 2nd election. Staff’s recommendations are generally based on existing City policies from documents such as the General Plan and the Legislative Action Policies. Past positions of the Council also guide staff recommendations. New positions taken by the Council will become official policies of the City and will be added to the Legislative Action Policies.
EXISTING POLICY
Legislative Management Sub-element, Goal 7.3C: Participate in intergovernmental activities, including national, state and regional groups, in order to represent the City's interest, influence policy and regulations, and enhance awareness.
Legislative Management Sub-element, Policy 7.3C.1: Represent adopted City policy in intergovernmental activities.
DISCUSSION
The following section provides a summary of the measures as well as staff analysis and position recommendation on these issues.
State Ballot Measures
1. Proposition 55: Kindergarten-University Public Education Facilities Bond Act of 2004
Summary: This measure would authorize the state to sell $12.3 billion in general obligation bonds for the construction and renovation of public education facilities (kindergarten through college). Funds would also be used to upgrade and build new classrooms in the California Community Colleges, the California State University, and the University of California. For new construction, local school districts would be required to pay for 50% of costs with local resources. For the reconstruction or modernization of existing school facilities, local school districts would be required to pay 40% of project costs from local resources.
Proponents: Proponents argue that this measure will relieve overcrowding and repair older schools.
Opponents: Opponents argue that California faces the worst financial crisis in its history. This measure would exacerbate California’s financial situation. We need new schools, not more debt for taxpayers.
Staff analysis:
Impact on Sunnyvale: While there is the possibility that Sunnyvale schools could receive funding under Proposition 55, any state funding under this measure would require local school district matching funds.
Legislative Action Policies: The City of Sunnyvale’s Legislative Action Policies support funding for local schools as long as it is not in conflict with local government funding.
Staff Recommendation: Since Proposition 55 funding would not conflict with any local government funding, staff recommends that the City Council support this measure.
Fiscal Impact: The measure would not result in a significant fiscal impact.
City Policy:
Fiscal Management 7.1.10: Support funding for local governments and schools that are not in conflict with each other. [1990 LCC Resolution]
LCC Position: At the time this report was written, LCC had not taken a position on Proposition 55. LCC Regional Representative indicated that the LCC Board may take a position on this measure at its February 7th meeting.
Staff Recommendation: Support
2. Proposition 56: State Budget, Related Taxes, Reserve, Voting Requirements, Penalties
Summary: This measure, also known as the “Budget Accountability Act,” would amend both the California Constitution and statutes to change the state budget process. The measure would:
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Permit the Legislature to enact budget and budget-related tax and appropriations bills with 55% vote rather than 2/3 vote currently required.
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Establish minimum requirements for putting money into and taking money out of the State reserve fund. Specifically, the measure requires at least 25% of excess revenues to be put into reserve until the reserve reaches 5% of prior-year General Fund spending. Reserve funds could only be spent in certain circumstances.
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Prohibit the Governor and Legislature from collecting their salaries and expenses when the budget is late, and expenses could not be paid back. In addition, the Legislature must stay in session until the budget is approved.
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Require the State Controller to prepare a budget summary to be included in the ballot pamphlet provided to voters.
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Prohibit a legislator from punishing or threatening to punish another legislator for a budget-related vote.
Proponents: Proponents argue that Proposition 56 is a necessary reform measure to address the yearly stalemates and partisan wrangling that occur in the State Legislature that lead to passage of irresponsible budgets.
Opponents: Opponents argue that passage of Proposition 56 will only make it easier for the Legislature to enact higher taxes. The lower threshold (55% vote instead of a 2/3 vote) could be an open invitation to increase vehicle license fees (VLF), gas taxes, income and sales taxes, and to impose new parcel taxes on homeowners and new taxes on small business.
Staff analysis: City Council has already publicly supported this proposition. On January 6, 2004, City Council unanimously adopted Resolution No. 101-04, “A Resolution of the City Council of the City of Sunnyvale Supporting Proposition 56, The Budget Accountability Act, on the March 2004 Statewide Ballot.”
Fiscal Impact: Any fiscal impact to Sunnyvale as a result of passage of Proposition 56 is unknown at this time and will depend on a number of factors such as the State’s financial circumstances, the composition of the Legislature, and its future actions.
City Policy:
Legislative Management 7.3, Miscellaneous:
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7.3.1 Support efforts to revise the California Constitution to enhance accountability, efficiency, and responsiveness for state and local government.
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7.3.2: Support long-term strategic planning by the state and balanced, multiple year budgets with a prudent reserve and outcome-based performance measures.
LCC Position: At the time this report was written, LCC had not taken a position on Proposition 56. LCC Regional Representative indicated that the LCC Board may take a position on this measure at its February 7th meeting.
Staff Recommendation: Support
3. Proposition 57: The Economic Recovery Bond Act
Propositions 57 and 58 are companion measures, each contingent on the other’s approval.
Summary: Proposition 57 authorizes the State of California to borrow 15 billion dollars ($15,000,000,000) through the sale of bonds to provide financing for California's budget deficit. The bonds will be secured by existing tax revenues and by other revenues that could be deposited in a special fund. Note: The bonds will only be issued if Proposition 58 (the California Balanced Budget Act) is also approved by the voters.
Proponents: Proponents argue that Proposition 57 will consolidate the state deficit and allow California to get its finances in order – without raising taxes. Proposition 57 will keep the state from running out of money and prevent drastic cuts in education and health care.
Opponents: Opponents argue that Proposition 57 will not end California’s deficit. The measure only pushes California deeper into debt. The state should stop borrowing and overspending.
Staff analysis:
Impact on Sunnyvale: There is no major fiscal impact to the City of Sunnyvale if Proposition 57 is approved. The repayment of the bonds would be based in part on the diversion of a one-quarter cent portion of the sales tax from local governments (approximately $450,000 per month). The state would replenish this loss to local governments by diverting property taxes from school districts. Although Sunnyvale’s sales tax loss would be replenished, the City would lose its ability to invest the one-quarter cent portion of the sales tax in an interest-bearing account. The loss of interest income per year could range from $6,000 to $60,000 depending on the interest rate.
However, if Proposition 57 fails, and the state has difficulty repaying or refinancing its substantial short-term debt obligations, then local governments could receive significantly diminished payments from the state, including the loss of the VLF backfill. For Sunnyvale, this could represent a loss of $5,000,000 annually.
Legislative Action Policies: The City’s Legislative Action Policies oppose state borrowing to finance budgetary deficits.
Staff Recommendation: Although City policy opposes state borrowing to finance a deficit, due to the extraordinary circumstances of the state’s fiscal crisis, staff recommends supporting Proposition 57 to stabilize this crisis. If Proposition 57 is not approved, the State and our City may see a further erosion of its fiscal stability. In order to approve Proposition 57, Proposition 58 will also need to be approved. City policy clearly supports the balanced budget requirement that Proposition 58 provides.
Fiscal Impact: There is no major fiscal impact to the City of Sunnyvale if Proposition 57 is approved. The repayment of the bonds would be based on the diversion of a one-quarter cent portion of the sales tax from local governments. The state would replenish this loss to local governments by diverting property taxes from school districts. Although Sunnyvale’s sales tax loss would be replenished, the City would lose its ability to invest the one-quarter cent portion of the sales tax in an interest-bearing account. The loss of interest income per year could range from $6,000 to $60,000 depending on the interest rate.
City Policy:
Planning and Management, 7.1 Fiscal Management:
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7.1.16: Support legislation requiring voter approval before state government may take local tax funds.
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7.1.ii.1: Protect the authority of charter cities to control local revenues. Oppose the reconfiguration of revenue distribution formulas to take revenues away from local government to fund state programs.
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7.1.ii.1: Prohibit the state from borrowing to finance budgetary deficits.
LCC Position: At the time this report was written, LCC had not taken a position on Proposition 57. LCC Regional Representative indicated that the LCC Board may take a position on this measure at its February 7th meeting.
Staff Recommendation: Support
4. Proposition 58: The California Balanced Budget Act
Summary: Proposition 58 requires that the state adopt a balanced budget and provides for mid-year adjustments in the event that the budget falls out of balance. Under current law, the Governor must propose a balanced budget. However, the state legislature is not required to adopt a balanced budget. Proposition 58 would require that the state legislature adopt a balanced budget.
Proposition 58 also:
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Allows the Governor to proclaim a fiscal emergency in specified circumstances, and submit proposed legislation to address the fiscal emergency.
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Requires the Legislature to stop other action and act on legislation proposed to address the emergency.
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Establishes a budget reserve in the state General Fund.
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Prohibits any future deficit bonds.
Proponents: Proponents argue that Proposition 58 will prevent the state legislature from enacting budgets where spending exceeds revenues. This proposition, along with Proposition 57, will give California the tools needed to resolve the state’s budget crisis.
Opponents: Opponents argue that Proposition 58 does not limit state spending. It merely provides for a balanced budget. Proposition 58 allows for short-term borrowing to balance the budget, leaves the budget reserve largely unprotected, and leaves the door wide open for massive spending increases and higher taxes.
Staff analysis:
Impact on Sunnyvale: There is no direct fiscal impact to the City of Sunnyvale if Proposition 58 is approved.
Legislative Action Policies: The City’s Legislative Action Policies support state efforts for a balanced budget and revisions to the California Constitution to enhance accountability.
Staff Recommendation: Since the City’s policies support state efforts for a balanced budget, staff recommends that City Council support Proposition 58.
Fiscal Impact: There is no direct fiscal impact to the City of Sunnyvale if Proposition 58 is approved.
City Policy:
Legislative Management 7.3, Miscellaneous:
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7.3.1 Support efforts to revise the California Constitution to enhance accountability, efficiency, and responsiveness for state and local government.
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7.3.2: Support long-term strategic planning by the state and balanced, multiple year budgets with a prudent reserve and outcome-based performance measures.
LCC Position: At the time this report was written, LCC had not taken a position on Proposition 58. LCC Regional Representative indicated that the LCC Board may take a position on this measure at its February 7th meeting.
Staff Recommendation: Support
Local Ballot Measures
1. Measure 2: Regional Traffic Relief Plan
Summary: Measure 2 is designed to improve the quality of the Bay Area‘s transit systems and relieve traffic congestion for those who will still need to drive across bridges. The plan would be funded through a $1 toll increase on the Bay Area’s seven state-owned toll bridges (excluding the Golden Gate Bridge), and is expected to raise approximately $125 million annually to address congestion relief and enhance the convenience and reliability of the region’s public transit system in the vicinity of bridge corridors. The measure would direct revenues for the following:
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Expanding and extending BART
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New transbay commuter rail crossing south of the San Francisco-Oakland Bay Bridge
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Comprehensive Regional Express bus network
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New expanded ferry service
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Better connections between BART, buses, ferries, and rail.
Proponents: Proponents argue that Measure 2 will help to jumpstart major transportation projects that have been on hold for a long time. It will help to relieve traffic congestion in Santa Clara County.
Opponents: Opponents argue that any bridge toll increase should be spent directly on bridge upkeep and the Bay Area’s worst traffic bottlenecks. Also, for daily bridge commuters, this measure represents an increase of $200 or more annually.
Staff analysis:
Impact on Sunnyvale: If Measure 2 is approved, the City of Sunnyvale may realize improved regional bus and rail transit service.
Legislative Action Policies: Sunnyvale’s Legislative Action Policies support the concept of a proposed water transit system that should only be funded through new revenue sources.
Staff Recommendation: Since Measure 2 would provide a new revenue source for funding a regional water transit system, Staff recommends that Council support this measure.
Fiscal Impact: The measure would not result in a significant fiscal impact to the City.
City Policy:
Land Use and Transportation (9): Support the concept of a proposed water transit system. However, Sunnyvale believes that any water transit system should be funded through new revenue sources only, that local officials should be directly involved in governing any water transit system, and the interests of its residents should be protected.
Staff Recommendation: Support
2. Measure A: Juvenile Hall and Probation Department Charter Amendments
Summary: The proposed measure would allow the County Executive to appoint, supervise, direct, suspend, or remove the Chief Adult and Juvenile Probation Officer, and oversee the operations of Juvenile Hall. Presently, responsibility for the Probation Department is shared between Superior Court Judges and the County Board of Supervisors. The Judge hires the Chief Probation Officer who is head of the department. The Board of Supervisors approves the Probation Department’s budget and is responsible for its employees and defends against any legal actions against the department. Measure A would transfer the authority to hire the Chief Probation Officer to the Board of Supervisors and its top officer, the County Executive, so that the County can be responsible for all aspects of the department.
The measure also establishes a Juvenile Hall Advisory Board to assist the Board of Supervisors to effectively direct and supervise the operations at Juvenile Hall and to implement proposed changes. The Board would be comprised of knowledgeable representatives including a Juvenile Court Judge, the District Attorney, Public Defender, and Sheriff, health professionals, Probation employee organization members, previous Hall residents, and parents of persons incarcerated at Juvenile Hall.
Proponents: Proponents argue that Measure A would enable the County’s Board of Supervisors to effectively enact recommendations to improve the welfare and security of the youth who reside in and the employees who work at Juvenile Hall.
Opponents: Opponents argue that there is no need to transfer authority over the Probation Department to the County because the Courts have been providing adequate oversight and support for the department since its inception. Opponents of Measure A also believe that the independence of the Courts and their ability to effect its order is threatened by the passage of Measure A.
Staff Analysis:
Impact on Sunnyvale: No major impact on Sunnyvale.
Legislative Action Policies: No relevant City policy.
Staff Recommendation: In the absence of relevant City policy, staff recommends that City Council not take a position on this measure.
Fiscal Impact: The measure would not result in a significant fiscal impact.
City Policy: No relevant City policy.
Staff Recommendation: No Position.
FISCAL IMPACT
There is no fiscal impact to this report. To the extent possible, fiscal impact of the ballot measures has been included in the discussion.
PUBLIC CONTACT
Public contact was made through posting of the Council agenda on the City's official notice bulletin board, posting of the agenda and report on the City's web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the Library and the City Clerk's Office.
ALTERNATIVES
1. Council adopts staff recommendations as follows:
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Support Proposition 55
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Support Proposition 56
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Support Proposition 57
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Support Proposition 58
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Support Measure 2
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No position on Measure A
2. Council adopts alternative positions on the ballot measures.
3. Council takes no action at this time.
RECOMMENDATION
Staff recommends Alternative 1.
Prepared by:
Peter Bassett
Legislative Analyst
Reviewed by:
Coryn Campbell
Neighborhood and Community Services Manager
Reviewed by:
Amy Chan
Acting City Manager