joseph buchman - weathering the financial storm
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Los Angeles – Inland Empire – Oakland – Orange County – Palm Desert – Silicon Valley – Ventura County
Weathering The Financial Storm
California Contract Cities Association Fall Seminar
Oxnard, California
October 15, 2011
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Los Angeles – Inland Empire – Oakland – Orange County – Palm Desert – Silicon Valley – Ventura County
Joseph P. Buchman
Burke Williams & Sorensen LLP444 S. Flower StreetSuite 2400Los Angeles, CA 90071www.bwslaw.com
(213) 236-2872 (direct)(213) 236-2700 (fax)[email protected]
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City Revenues
Tax Revenues • General Property Taxes• Sales and Use Tax and Transactions and
Use Tax• Gross Receipts Tax• Business License Fees and Taxes• Utility Users Tax• Transient Occupancy Tax
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City Revenues
Tax Revenues (Cont.)• Excise Taxes
• Development Tax• Admissions Tax• Parcel Tax• Documentary Transfer Tax
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City Revenues
Tax Revenues (Cont.)• Special Taxes
• Mello-Roos• Community Facilities Districts• Police and Fire Protection• Libraries• Transportation
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City Revenues
Tax Revenues (Cont.)• Special Benefit Assessment Districts
• Public Improvements: street, drainage, flood control, etc.
• Landscaping and Lighting• Business Improvement Districts • Infrastructure Financing Districts
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City Revenues
Charges, Rates and Fees• Development Fees• Sewer Service Charges and
Connection Fees• Solid Waste Fees• Water Service Charges and
Connection Fees• Franchise Fees: Cable TV, Electricity,
Telephone, Gas and Oil
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City Revenues
Charges, Rates and Fees (Cont.)• Fines and Forfeitures• Park and Recreation Fees• Airport• Ports and Harbors• Licenses and Permits
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City Revenues
Intergovernmental Agencies• State Subventions• Federal and State Grants• County and Other Local Agencies
Revenue Sharing
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City Revenues
Other Financing Sources• Revenues From Use of Money and
Property• Gifts• Sale of Bonds• Leasing Public Property
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Summary of City Revenues
Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2009 (2/3/2011).
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City Revenues: Illustration
ServiceCharges
(water, sewer, refuse, etc.)
39%
Fees8% State &
Fed 10%
NotRestricted
36%
Debt Service
1%
Taxes 3%
Lic & Permits 2%Assessments 1%
x
Utility UserTax 4%
Sales Tax 10%
Property Tax11%
Other Tax 7%
Other 4%
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Revenue Losses:The California Triple Flip -- Local Sales Tax for Property Tax
Decrease Local Sales Tax Rate -0.25%
Property Taxin Lieu of Sales Tax
State FiscalRecovery Fund
$1.4 Billion
Schools
State General Fund
Increase State SalesTax Rate +0.25%
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Revenue Losses: Educational Revenue Augmentation Funds ERAF Shifts
• Property Tax Shift from Cities, Counties and Special Districts to Schools Since 1992
• FY 2010-11 amount equals $7.5 billion.
• “SERAF” from Redevelopment Agencies
• FY 2010-11 SERAF total is $350 million; FY 2009-10 total was $1.7 billion
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City Expenditures
General Government• Legislative• Management and Support
Public Safety• Police• Fire• Emergency Medical Services• Street Lighting
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City Expenditures
Transportation• Streets, Highways and Storm Drains• Public Transit• Airports• Ports and Harbors
Community Development• Planning• Construction and Engineering Regulation
Enforcement
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City Expenditures
Health• Solid Waste Disposal• Sewers
Culture and Leisure• Parks and Recreation• Libraries
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City Expenditures
Public Utilities• Water• Gas• Electricity
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Summary of City Expenditures
Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2009 (2/3/2011).
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Redevelopment Agencies
Property Tax Increment Funding Expenditures for Community
Redevelopment Current and Future Status
Unsettled
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Redevelopment Agencies
January 10, 2011• Governor Brown releases budget proposal,
includes elimination of redevelopment.
June 15• State Legislature passes ABx1 26 and 27.
June 28• Legislature passes new budget bill, and
forwards ABx1 26 and 27 to Governor for signature. Governor signs, and the bills take effect immediately.
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Redevelopment Agencies
July 18• CRA and LOCC file suit in California Supreme
Court challenging constitutionality of ABx1 26 and 27 and requesting stay.
August 11• Supreme Court announces it will hear lawsuit,
and issues order staying portions of ABx1 26 and all of ABx1 27.
August 18
• Supreme Court modifies Stay Order.
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Redevelopment Agencies
August 22• CRA and LOCC request additional clarification
of Stay Order.
September 14• Supreme Court denies request for further
clarification of Stay Order.
January 15, 2012 • Supreme Court decision expected.
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ABX1 26 Dissolution Bill
Freezes redevelopment agency activities other than as necessary to meet “enforceable obligations.”
Requires preparation of Enforceable Obligation Payment Schedule within 60 days of Effective Date.
Preliminary draft of Recognized Obligation Payment Schedule to Successor Entity by September 30.
Dissolution by October 1, 2011.
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ABx1 27 (“Pay to Play” Bill)
“Alternative Voluntary Redevelopment Program.”
Department of Finance Calculates Remittance Payment Amounts.
August 15 Appeal Deadline.
Adoption of Continuation Ordinance by October 1 (or Resolution of Intent, which extends deadlines until November 1).
First payment January 15, second May 15.
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Closing thoughts…
“If I'm on the course and lightning starts, I get inside fast. If God wants to play through, let him.”
“I've always been in the right place and time. Of course, I steered myself there.”
-- Bob Hope