STATE BUDGET IN LIMBO
Governor Schwarzenegger’s exploited
verbal approach to how he was going to plan and negotiate a state budget
departs remarkably from what is actually happening. As reported in The
Bee’s June 30th editorial “A Gray Davis Budget” the
Governor uses almost the same smoke and mirrors to conceal and reflect
the borrow, defer, and back away from hard choices manner to form and
negotiate a budget, the same manner that ultimately resulted in former
Governor Gary Davis being fired.
GOVERNOR HAS PROBLEM PROTECTING LOCAL
The state budget is jammed by Democrat Legislators
who refuse to agree to a deal made by Governor Schwarzenegger with the
California State Association of Counties, the League of California Cities,
and the Special Districts Association to help with California’s
budget crisis. The agreement amounts to a short-term financial impact
on local governments in exchange for a promise of long-term financial
stability. The agreements permit the state to use $1.3 billion of local
government funds in 2004-05 and 2005-06 (total $2.6 billion) for a promise
to make the current car tax cut permanent; to provide revenue stability
for local governments by protecting their property tax income; and to
protect local governments from unfunded state mandates. The Governor is
campaigning to have the Legislature put these protections in place with
a Constitutional amendment in November.
However, a Coalition calling itself “Leave
Our Community Assets Local (LOCAL)” has submitted enough signatures
to qualify Proposition 65 for the November ballot, which provides nearly
the same protections. If the Legislators do not follow the Governor’s
lead, the voters can accomplish the same thing by approving the LOCAL
Initiative 65 on the November ballot.
Two gambling Initiatives will be on November’s
ballot. One, by the Indians of Palm Springs, removes limits on the games
Indian Casinos can offer; removes limits on the number of slot machines
and Casinos on tribal land; and extends the current 20 year contracts
with the state to 99 years. In return they would pay the state 8.84% of
net profit received, matching the present corporate tax rate. Presently
Indian Casinos pay no taxes, and nothing into the state’s General
The second Initiative, by racetrack and card
room owners, would require Indian Casinos to pay 25% of their net profit
to a special state fund. The tribes would have 90 days to agree. If any
tribe refused to pay, there would be 16 non-Indian Casinos authorized,
5 at racetracks and 11 at card rooms with a total of 30,000 slot machines.
The Initiative proposes that 33% of the gambling revenues from non-Indian
Casinos go to a special state fund, allegedly over $1 billion annually,
and would be used primarily for additional fire fighters, police and child
protective services. As the Initiative requires a set percentage of money
to go to police and fire services, Sacramento Sheriff Lou Blanas and Los
Angeles Sheriff Lee Baca have become front men for the Initiative.
Governor Schwarzenegger, on his part, has
renegotiated gambling contracts with five tribes which would provide the
state $1 billion up front in the form of a bond to be paid off by the
tribes over 18 years. The state would also collect fees on new slot machines
of about $150 million a year. In return, the tribes would be free of the
present 2000 machines per tribe limit. In addition the Governor has committed
to oppose the two gambling Initiatives on November’s ballot.
SCORE ONE FOR THE METRO CHAMBER OF COMMERCE
AND THE TAXPAYERS ASSOCIATION
To avoid having to put a Measure on the November
ballot, authorized by law, for voter acceptance or rejection of recommendations
made by an arbitration panel working a dispute on a new contract between
Sacramento County and the Sheriff’s Union, the two sides sat down
and worked out a compromise. The original arbitration decision would have
required the County to pay deputies an additional $4.4 million in salaries
and benefits on top of what had already been agreed to, give them a 2.2
percent cost of living adjustment, and double the County’s 4.5 percent
yearly retirement payment for deputies to 9 percent, relieving deputies
from having to pay anything to the retirement account. That would be another
4.5 percent salary increase on top of the total $12.4 million increase
When binding arbitration was originally approved
for the deputies, the Taxpayers League and the Metropolitan Chamber of
Commerce convinced the Board of Supervisors to place a protective Measure
on the ballot that enables the County to ask for voter approval of any
agreement reached by arbitration involving the Sheriff’s Union and
the County Supervisors.
Avoiding the vote on the arbitration recommendations
will cost the County another $400,000 in exchange for the additional 4.5
percent increase in yearly County payments to the retirement account recommended
by the arbitration panel. The saved money, over $4 million, can reduce
the impact of the state budget cuts aimed at the County.
CITY OF SACRAMENTO RAISES SOLID WASTE
The City of Sacramento raised monthly rates
on Garbage and Recycling Collection Service. During the Council meeting
Director Carl Burton voiced the League’s objection to the rate increase,
and the hidden 11% utility tax built into the increase. Single and two
family residents get a 3% increase for cost of operations and maintenance
(O&M), and debt payments. Rates for Lawn and Garden Refuse Collection
and Street Sweeping Service for single and two family residents get two
different rates, one for the collection charge, and the other for street
sweeping. The collection charge increased 17.51%. The sweeping charge
is not increased. The overall increase is 15.22% for O&M and debt
payments. Street Sweeping for Multifamily and Nonresidential Parcels increased
Carl and others complaints about the hidden
11% Enterprise Fund Tax (EFT), not disclosed on the City’s utility
service bill, had some effect as the Council directed that the tax appear
on the bill when the billing system is upgraded. It will be interesting
to see whether the federal and state governments react when they discover
they are paying taxes to the City.
MAYOR FARGO’S DOWNTOWN ARENA, CHAPTER
The Mayor and the City Council are back with
Chapter 2 of the downtown arena saga. Chapter one aimed at locating the
arena at the Union Pacific railway yard, and was abandoned last October.
Now, to stagger the imagination, the Mayor
wants to tear down about half of the of the downtown east end of the K
Street Mall, and plunk the Arena in the shopping area. The Mayor’s
arena task force made its presentation at a City Council meeting on June
22nd. Other than presenting an interesting visual of what the arena and
its appended commercial enterprises could look like, the effort was woefully
short of financial detail. It did not presented related costs of tearing
up the K Street Mall, reimbursing displaced businesses income and relocation
costs, construction costs, nor where the money would come from. All these
issues were raised by questions asked by Council members and public speakers
during the meeting. And the crowning glory was the “survey”
results presented. The findings came unglued by the questions asked. It
was described by David Holwerk’s Editorial notebook in the Bee on
June 14th, titled “Arena poll: Pushing to uncertainty” as
a “Push poll”, aimed at determining what pushes for or against
the downtown arena, rather than asking for a direct yes or no answer as
to whether the arena should be built.
During the meeting a number of speakers,
Council members, and general public attendees insisted that the question
of a downtown arena be put to a vote of City residents in November. A
June 22nd Sacramento Bee editorial, titled: “On the Ballot? Whoa!”
covered the proposal that was made, and opposed putting the vote on the
November ballot. The editorial ended with: “It’s understandable
that council members are tired of wasting their time on this issue. But
that’s no reason to waste voters’ time on it come November.”
Notwithstanding the lack of financial information, on the 29th the Council
asked City Manager Thomas to create a financial comparison for two new
arenas, one downtown and one in Natomas before July 23rd. The information
will be reviewed by the Council, and if considered sufficient will be
used to put Measures on the November ballot.
From the League’s standpoint, if the
Measures propose use of public financing, the League will join, or form
a Coalition in opposition, and will help explain to the public precisely
why the proposals should be defeated.
A VOTE ON A STATEWIDE TAX ON 911 EMERGENCY
For-profit hospitals and emergency doctors
in California, having trouble funding their emergency rooms, want to subsidize
emergency room costs by increasing the 911 tax on land-line telephone
service. The original 911 tax was created to cover the cost of establishing
and operating 911 communications services throughout the State. The hospitals
want to raise the State’s 911 tax for communications by 3%, which
would bring in about $540 million each year. However, it would leave less
than one-percent of the increase in the 911 services account. The Proposition
has qualified as the “911 Emergency Care Initiative” for the
November ballot. Of interest is that the major supporters of the Initiative,
i.e., the California Healthcare Association, that formed the Coalition
to Preserve Emergency Care, which launched the Initiative, has withdrawn
The Associationtook a position in opposition
to the Initiative at the June 17th Board meeting, reasoning that the Initiative
funding hospital services is unrelated to a tax created to provide for
an emergency communication system.
CITY AND COUNTY PROPOSING LOCAL FEE ON
911 EMERGENCY TELEPHONE SERVICE
In an attempt to raise revenue to improve
the 911 local emergency telephone system, the City and County of Sacramento
are preparing Ordinances that propose to set fees on the 911 charge on
land-line telephone bills. The charges will provide about $16.5 million
and $25.8 million to the City and County respectively to pay for personnel,
training, software, and upgrades to the telephone system only. In the
County businesses could be charged $20 and local land-line telephones
about $2.70 per month. In the City businesses could be charged about $27,
and land-line telephones $3.60 per month. The proposed fees would not
apply to hospital phones , non-profit organizations, schools, and state
and federal agencies, among others, which make up 22 percent of County
phones and 45% of City phones. Mobile phones are also exempt, as they
are answered by the California Highway Patrol, and routed to local fire,
police, and sheriff agencies.
Notwithstanding the need for the system upgrades,
there are major questions that must be answered. Among those are whether
the “fees” are actually taxes, being imposed without a vote
of the public. The “fee” approach is being attempted by a
number of Cities and Counties, and is being challenged in court. The challenge
is that the 911 fee is an illegally imposed tax as Proposition 218 requires
voter approval for application of a surcharge on customers who do not
derive any direct benefit or use from the 911 system. In simple terms,
the 911 communication system is simply a link alerting a “provider”
that a “client” needs service. And the “provider’s
service is funded in the traditional ways that police and fire fighters
are funded now, i.e., by the General Fund of the municipality “owning”
the service. Further, it is obvious that services other than “emergency”
would benefit from the “fee” income. This was graphically
demonstrated in a July 2nd article, “Cops may lose some horsepower”
in The Sacramento Bee wherein it related that the City may lose its mounted
police force due to a budget shortfall. The City’s budget manager
related that the mounted unit could be saved if the proposed 911 telephone
tax takes effect by stating: “It frees up other money in the police
budget to allow permanent restoration of those positions.” The City
Manager, and the County Sheriff, have asked to meet with the Taxpayer
Association's’ Board, before the Board makes a decision on the position
to be taken on the fee/tax issue. The Associationagreed to do so, if possible.
Our Members constitute the League’s
strength, and traditionally new Members are recruited by our present Members
to enlarge our Membership base.
Taxpayers are to be assaulted as never before
for additional money from every level of government in the form of fees,
assessments, rates, and taxes. Locally, the Taxpayers League is the only
recognized and organized defender of the County and its Cities’
taxpayers capable of putting up a viable defense. Over our 43 years, we
have successfully defeated many attempts to raise taxes, rates, fees,
and assessments in the County of Sacramento. Such battles are expensive.
And those we are engaged in now, and new attacks to be faced, are frightful.
Members must remember that the League is composed of dedicated volunteers
who battle not only on Member’s behalf, but also on behalf of people
who virtually cannot help themselves forestall the onslaught. To be successful
we need more Members working to strengthen the League by recruiting friends
and associates as League Members.
LETTERS TO THE ASSOCIATION
We seek “Letters to the League”
from Members concerning projects and issues on which we are working, along
with recommendations on those we should look at. Letters may be edited
and republished in any format, primarily in the interest of available
space. Send letters, faxes, or e-mail to the Sacramento Taxpayers Association. Our e-mail is firstname.lastname@example.org;
our telephone number is (916) 921-5991. Our fax number is (916) 567-1279.
And our address is:
Sacramento Taxpayers Association
1804 Tribute Road, Suite 207
Sacramento, CA 95815.
CONTINUATION OF ONE-HALF PERCENT SALES TAX FOR TRANSPORTATION
On June 10 the Sacramento Transportation
Authority approved an Ordinance providing for the continuation of the
current one-half of one percent of retail transactions, and a new user
tax for local transportation purposes (Measure A) that is due to expire
at the end of 2008. During the next few weeks, the County and cities will
act on the Expenditure Plan component of the Ordinance and may place it
on the November 2 ballot for voter approval.
In 1988 the Sacramento Taxpayers Association
was the chief sponsor of Measure A. We asked the voters in the June primary
to pass Measure A and it went down to defeat because of lack of support
from elected officials. But in November of that year our elected officials
put it back on the ballot, and with our support, Measure A passed.
The major differences between this-years
Measure A and the one in 1988 are:
- The new Measure A continues for 30 years
from 2009 upon approval by the voters vs. 20 years in the one voters
approved in 1988.
- The new Measure A requires a fee of $1,000.00
per new single family unit; $750.00 for a multi-family unit; $2.50 per
square foot for new retail building space; $2.00 per square foot for
office building space; and $.50 per square foot for industrial or warehousing
- 3. Bonding Authority is now given to the
Sacramento Transportation Authority to sell or issue bonds, or other
evidence of indebtedness before the collection of taxes.
- The way the tax money is divided between
interests wanting a share of the money, with some money going to preserve
open space in the County, and less money going to roads.
- For the first time an independent taxpayer
oversight committee is appointed by the Authority in order to make sure
the money is spent appropriately.
This draft Ordinance is now under consideration
by the County and Cities and they have an opportunity to make changes.
Sacramento County and its Cities by early August must approve the ordinance
to have it appear on the November 2004 ballot.
The Sacramento County Taxpayer’s League
will wait until we see the final version of the new Measure A to make
our recommendation to support or not to support the ballot Measure.
To view or print a copy of the Ordinance
go to: http://sta.sacramento.ca.us
Carl Burton, Director