HomeMy WebLinkAbout14 - Infrastructure FundingDecember 13, 1999
CITY COUNCIL AGENDA
ITEM NO. 14
TO: Mayor and Members of the City Council
FROM: Public Works Department
SUBJECT: SUMMARY OF PROPOSED LEGISLATION REGARDING
INFRASTRUCTURE FUNDING
RECOMMENDATION:
Receive and file.
DISCUSSION:
At the Council meeting of November 22, 1999, Council Member Tod W. Ridgeway
requested further information regarding the Assembly Constitutional Amendment No.
24 (ACA 24), also known as the 20/20 Vision Plan endorsed by Assembly Republican
Leader, Scott R. Baugh. Staff has reviewed ACA 24, Senate Constitutional
Amendment No. 3 (SCA 3), endorsed by Senate Democratic President pro Tern, John
Burton, and Assembly Bill 521 (AB 521), endorsed by Assembly Republican
representative, Tom McClintock. A summary of each is provided.
ACA 24 — 20/20 Vision Plan
This measure would create an Infrastructure Fund and transfer a specified percentage
of revenues from the General Fund to the Infrastructure Fund from FY2000 -01 through
FY2019 -20. The percentage of funds transferred is initially 1% and slowly ramps up to
a maximum of 5% over 20 years.
The measure provides for local control of the funds. Three - fourths of the revenue will
be available to cities and counties for their highest priority capital outlay concerns
related to corrections, education, parks, transportation, water, or other natural
resources.
Establishing the Infrastructure Fund and slowly increasing the amount of the General
Fund committed to capital outlays could be expected to raise over $75 billion during the
next 20 years. The annual growth of the Infrastructure Fund will be limited to no more
than 25% percent of the annual General Fund growth, protecting education, childcare,
and other services during times of economic recession.
A county by county comparison published by Scoff Baugh's office indicates that based
on population and assuming average budget growth, Orange County would receive
SUBJECT: SUMMARY OF PROPOSED LEGISLATION REGARDING INFRASTRUCTURE FUNDING
December 13, 1999
Page 2
$10.2 billion dollars over the 20 -year period. ACA 24 provides funds for all •
infrastructure.
SCA 3
This measure would impose or authorize an extension of a 0.5% sales tax dedicated for
the funding of transportation purposes within the county for a period of 20 years.
Eighteen counties in California, including Orange County, have passed local
transportation sales tax measures for highway and public transit needs that are
expiring.
SCA 3 contains a requirement that local governments "opt in" by adopting and
submitting to county voters, for their approval, an expenditure plan for how SCA 3
revenues will be spent. The 0.5% sales tax will not be imposed in a county that does
not adopt and receive voter approval for its expenditure plan on or before SCA 3
appears on the state -wide ballot. This measure proposes flexibility in the use of the
revenues for transportation purposes and is not limited to capital outlay expenditures.
SCA 3 is a state -wide measure and will require a majority vote for approval. A local
sales tax measure would require a two - thirds vote for approval. It is estimated that
SCA 3 will generate between $40 to $60 billion throughout California. Revenues will be
generated at the local level and will be returned to meet local transportation needs.
This measure will have no impact on California's General Fund. SCA 3 provides funds
for transportation infrastructure.
AB 521
This Bill would divert revenue from sales and use taxes that are currently imposed on
gasoline from the General Fund and dedicates that revenue for the maintenance and
construction of highways.
Cities and counties would receive an increase in revenues apportioned from the excise
tax on fuel above 9¢ per gallon. This would increase from the current rate of 11.5% to
23% of that amount above 90. The current excise tax is 18¢ per gallon. The author of
this measure indicates that the purpose of this bill is to guarantee that "highway taxes
are used strictly and solely for highways'.
It is estimated that AB 521 would divert $784 million per year from the State's General
Fund and direct those revenues to transportation needs.
Conclusion
During the 1960's, the state routinely committed 7 to 10 times more of the General
Fund to capital outlays than today. Although these pieces of legislation contain major
differences and methodologies, their common goal is to provide funding for
infrastructure improvements. There is bipartisan agreement that current funding is
SUBJECT: SUMMARY OF PROPOSED LEGISLATION REGARDING INFRASTRUCTURE FUNDING
December 13. 1999
Page 3
inadequate to meet the present needs, much less the increased needs being created
by California's growth. There is also agreement that adequate transportation
infrastructure and services are critical to sustaining California's prosperity and quality of
life.
Attached are talking papers that have been prepared by the supporters of ACA 24 and
SCA 3.
Respectfully Nbmitt ,
PUBLIC WORKS DEPARTMENT
Don Webb, Director
By: ,41y j/W>-,-)
Lois Thompson
Public Works Administrative Coordinator
F-1
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Attachments
f:\ userslpbMsharedlcounci11fy99 -001december- 13%aca 24.doc
SACRAMENTO OFFICE
STATE CAPITOL
P.O. BOX 942849
SACRAMENTO. CA 94249 -0067
(976) 319 -2067
FAX (916) 3192167
November 15. 1999
(�ssembly
Uifuruiu �!PgisluturP
fur
SCOTT R. BAUGH
ASSEMBLY REPUBLICAN LEADER
"IYre Honorable Dennis D. O'Neil
Newport Beach City Council Member
PO Box 1768
Newport Beach CA 92658 -8915
Dear Mr. O'Neil
DISTRICT OFFICE
16052 BEACH BLVD., SUITE 160
HUNTINGTON BEACH, CA 92647
(714) 843 -4966
FAX (714) 843 -6375 •
Date
Copies Sent To:
Mayor
�Puncit Member
manager
❑ Attorney
El
❑ —
Next year. the California Legislature will consider a proposal to dedicate needed infrastructureuBing for
your city. Our proposal. ACA 24 also known as the 20/20 Vision Plan, addresses the state's infrastructure
needs until the year 2020, without raising state or local taxes and ensuring that your city has the ability to
use this money to meet its local needs.
For your information, here are some of the highlights of the proposal:
The 20/20 Vision Plan:
• Invests out of the rowth in the state budget on an ongoing basis through the year 2020. Based on the
average economic growth of the past 20 years, the plan will produce $125 billion.
♦ Establishes the "California 21st Century Infrastructure Fund." to pay for priority capital outlay
projects related to corrections, education, parks, transportation, water, or other natural resources.
♦ Ensures local control. Three- fourths of the revenue will be controlled by local government agencies on
their highest priority capital outlay concerns.
• Increases our investment in education. Protects all Proposition 98 education funding and adds funding
for new schools.
♦ Protects other state programs during an economic slowdown or recession. Limits annual growth in the
infrastructure fund to no more than 1/4 of the annual growth in the General Fund. Freezes the level of
infrastructure investment during recessions.
♦ Does not increase taxes or fees.
Enclosed, please find the details of the 20/20 Vision, including a county by county comparison that illustrates
the amount of funding each county would receive under the plan. I look forward to your comments and
endorsement. If you have any questions or would like further information, please call Joel Szabat at
(916) 319 -3900 or email your comments to repo @assemblv.ca.gov.
Sincerely, *�6
SCOTT BAUGH
Assembly Republican Leader
151
o
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1i
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SERVING THE COMMUNITIES OF HUNTINGTON BEACH, CYPRESS, SEAL BEACH, LOS ALAMITOS, LA PALMA, ROSSMOOn, FOUNTAIN VALLEY
7
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•
20/20 VISION PLAN
"A Plan for Alain Street, not Wall Street "
Summary
Background
♦ By the year 2020, California will require well over $100 billion for infrastructure needs. Specifically,
California's communities will need to repair roads, decongest freeways, construct schools, and protect
the water supply.
♦ The Infrastructure Commission (Governor's Office) proposes $5 billion in bonds and two tax
increases.
♦ Current legislation (SCA 1 and SCA 3) eliminates the 2/3 vote threshold for tax increases.
The 20/20 Vision
Pave Main Street, not Wall Street
♦ By earmarking a small percentage of expected economic growth from the General Fund, the 20/20
Vision produces more money in the long run — between $75 and 125 billion.
♦ Because bonds are the most expensive way to fund projects, 20/20 Vision is more fiscally responsible
than SCA 1 and SCA 3.
♦ The money that would be used to pay the interest on the bonds could be used for more infrastructure,
paving main street, not Wall Street.
asier Voter Approval
♦ Unlike tax proposals such as SCA I and SCA 3, 20/20 Vision does not raise taxes and is more likely
to be approved by the voters.
♦ The 20/20 Vision will raise more money for your infrastructure needs than SCA I and SCA 3
combined.
Protection of Proposition 13
♦ On numerous occasions, voters have expressed their overwhelming support for the 2/3 vote required
to raise their taxes. (Propositions 13, 62, 218)
♦ Any attempt to lower the 2/3 threshold is an attempt to undermine the will of the voters and
compromise their protection against over taxation.
Protect Education
♦ 20/20 Vision adjusts to economic conditions so other programs are not sacrificed.
♦ Since the repayment of bonds is the first priority of the state budget, during an economic downturn,
money could be taken from other programs such as education in order to pay off the debt.
Flexibility for Local Communities
♦ The 20/20 Vision gives local governments the flexibility to use funds to best fulfill their individual
needs.
♦ Local government agencies will control 75 percent of funds, while the state will only spend 25
percent. This distribution allows local communities to fix the streets, schools, and parks that are most
• important to them.
California State Legislature
ACA 24 (Baugh)
20/20 Vision for California's Future
6P� OF i
5 ivasr� •hF
C �A
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r
C'a II FOFtt4'
Since the mid -1970s the state government of California has neglected its basic
infrastructure — schools, roads, parks, water and sewer systems are all overloaded,
underfunded, and crumbling.
Our most important priority must be to reverse the decades of neglect, and to rebuild a
California that our children can be proud to live in. Just as it has taken decades of neglect
to cause this problem, we must have a long -term vision to correct the problem.
ACA 24 will re- invest in our future. The "20/20 Vision" ramps up investment out of the
growth in the state budget until the year 2020. Eventually, 5% of our budget will be
earmarked for school facilities, roads, parks and resource infrastructure, without raising
taxes.
The "20/20 Vision" Infrastructure Investment Plan Summary
Average Annual
Total 20 -Year
State Budget
Infrastructure
Growth Rate
Investment
3% (Slow growth) $75 billion
7% (20 -year average) $125 billion
The "20/20 Vision" is the best approach to meeting California's infrastructure
needs. Based on reports by the California Business Roundtable, the Department of
Finance, and the Legislative Analyst, California certainly requires well over $100 billion
of necessary infrastructure investments during the next 20 years. Making our future
generations' needs a state budget priority is the only practical way to reach this target.
11/01/99
2020Vision
page 1 oft
Hi1=_hliehts of the "20/20 Vision"
♦ Establishes the "California 21" Century Infrastructure Fund," to pay for capital outlay
expenses related to corrections, education, parks, transportation, water, or other
natural resources.
♦ Unlike proposals such as SCA 1 and SCA 3, 20/20 Vision does not raise taxes and is
more likely to be approved by the voters.
♦ Local control: three - fourths of the revenue will be spent by cities and counties on their
highest priority capital outlay concerns.
♦ Slowly ramps up to 5% the percentage of each year's General Fund appropriated to
the Infrastructure Fund.
♦ Increases our investment in education. Protects all Proposition 98 education funding;
provides new funding for education infrastructure.
♦ Includes "Highway Taxes for Highways ": Shifts the state's sales tax revenues on
gasoline to the State Highway Account. Increases the share of gas tax revenues going
to cities and counties for local road repairs.
♦ Protects other state programs during an economic slowdown or recession. Limits
annual growth in the Infrastructure Fund to no more than 1/4 of the annual growth in
the General Fund. Freezes the level of infrastructure investment during recessions.
♦ By eliminating the cost of repaying bonds, more money is put to work in schools and
on roads.
20/20 Vision is better than the alternatives: The Governor's Infrastructure Commission
recommended only $5 billion in new bonds, and reducing the vote threshold from 2 /3rds
to majority vote to raise local property and sales taxes.
Pave Main Street. not Wall Street: Bonds are the most expensive way to pay for
infrastructure improvements. For every dollar we raise to pave our streets, we pay Wall
Street an extra 50 cents. During economic slowdowns, bond repayments squeeze out
funding for education and other programs.
Listen to the voters: While the state government walked away from our infrastructure
responsibilities in the 1970s, local governments had to pick up the slack. But we should
not, and need not, force local governments to continue to impose taxes to pay for the
state's responsibility. The voters of California have consistently opposed efforts to reduce
the 2 /3rds vote level. We have the responsibility to identify the means to pay to rebuild
California, while respecting the wishes of the voters.
11/01/99 page 2 of 2
2020V ision
CountyNew202O
Joel Szabat
Benefits
of ACA 24 (Baugh)
the '20/20 Vision" by County
20 -year period at average budget growth
all figures in
$ millions
Population
20/20 Vision
SCA3
per 1999
Local
Local Share
County
County
DoFinance
DoF
Share for
of State
Local
Benefit
Tax
COUNTY
in 000
POP %
Infrast're
Portion
Total
(-Interest)
Increase
Alameda
1433
4.2%
$3,979
$1,326
$5,305
$1,984
$3,036
Alpine
1
0.0%
$3
$1
$4
$3
$5
Amador
34
0.1%
$94
$31
$126
$29
$45
Butte
202
0.6%
$561
$187
$748
$173
$264
Calaveras
38
0.1%
$106
$35
$141
$20
$31
Colusa
19
0.1%
$53
$18
$70
$19
$29
Contra Costa
916
2.7%
$2,543
$848
$3,391
$999
$1,528
Del Norte
28
0.1%
$78
$26
$104
$16
$24
El Dorado
151
0.4%
$419
$140
$559
$107
$163
Fresno
794
2.4%
$2,204
$735
$2,939
$720
$1,102
Glenn
27
0.1%
$75
$25
$100
$20
$30
Humboldt
128
0.4%
$355
$118
$474
$115
$176
Imperial
143
0.4%
$397
$132
$529
$114
$175
Inyo
18
0.1%
$50
$17
$67
$23
$35
Kern
648
1.9%
$1,799
$600
$2,399
$592
$906
Kings
128
0.4%
$355
$118
$474
$75
$114
Lake
55
0.2%
$153
$51
$204
$34
$52
Lassen
34
0.1%
$94
$31
$126
$20
$30
Los Angeles
9758
28.9%
$27,092
$9,031
$36,123
$0
$0
Madera
116
0.3%
$322
$107
$429
$77
$118
Marin
248
0.7%
$689
$230
$918
$335
$512
Mariposa
16
0.0%
$44
$15
$59
$12
$19
Mendocino
87
0.3%
$242
$81
$322
$84
$128
Merced
207
0.6%
$575
$192
$766
$143
$219
Modoc
10
0.0%
$28
$9
$37
$6
$9
Mono
11
0.0%
$31
$10
$41
$16
$24
Monterey
391
1.2%
$1,086
$362
$1,447
$388
$594
Napa
125
0.4%
$347
$116
$463
$144
$220
Nevada
90
0.3%
$250
$83
$333
$80
$122
Orange
2776
8.2%
$7,707
$2,569
$10,276
$3,759
$5,751
Placer
226
0.7%
$627
$209
$837
$336
$514
Plumas
20
0.1%
$56
$19
$74
$16
$25
Riverside
1473
4.4%
$4,090
$1,363
$5,453
$1,303
$1,993
Sacramento
1178
3.5%
$3,271
$1,090
$4,361
$1,343
$2,055
San Benito
48
0.1%
$133
$44
$178
$39
$59
San Bernardino
1654
4.9%
$4,592
$1;531
$6,123
$1,497
$2,291
San Diego
2853
8.4%
$7,921
$2,640
$10,561
$2,975
$4,552
San Francisco
791
2.3%
$2,196
$732
$2,928
$1,151
$1,761
San Joaquin
554
1.6%
$1,538
$513
$2,051
$512
$783
San Luis Obispo
242
0.7%
$672
$224
$896
$231
$354
Page 1 of 2
11/2/99
CountyNew202O Joel Szabat
Benefits of ACA 24 (Baugh) the "20/20 Vision" by County
20 -year period at average budget growth
all figures in $ millions
COUNTY
Population
per 1999
DoFinance
in 000
DoF
POP %
Local
Share for
Infrast're
20/20 Vision
Local Share
of State
Portion
Local
Total
SCA3
County
Benefit
- interest
County
Tax
Increast
San Mateo
723
2.1%
$2,007
$669
$2,676
$1,153
$1,764
Santa Barbara
403
1.2%
$1,119
$373
$1,492
$409
$626
Santa Clara
1715
5.1%
$4,761
$1,587
$6,349
$2,871
$4,393
Santa Cruz
253
0.7%
$702
$234
$937
$239
$366
Shasta
165
0.5%
$458
$153
$611
$167
$256
Sierra
3
0.0%
$8
$3
$11
$1
$2
Siskiyou
44
0.1%
$122
$41
$163
$34
$52
Solano
390
1.2%
$1,083
$361
$1,444
;346
$529
Sonoma
444
1.3%
$1,233
$411
$1,644
$539
$825
Stanislaus
433
1.3%
$1,202
$401
$1,603
$425
$651
Sutter
77
0.2%
$214
$71
$285
$77
$118
Tenama
56
0.2%
$155
$52
$207
$41
$62
Trinity
13
0.0%
$36
$12
$48
$6
$9
Tulare
363
1.1%
$1,008
$336
$1,344
$282
$431
Tuolumne
53
0.2%
$147
$49
$196
$41
$63
entura
742
2.2%
$2,060
$687
$2,747
$756
$1,156
olo
159
0.5%
$441
$147
$589
$190
$291
Yuba
60
0.2%
$167
$56
$222
$33
$51
TOTAL
33767
100.0%
$93,750
$31,250
$125,000
$27,120
$41,49:
Local share for Infrastructure is determined by the per capita distribution formula of ACA 24 (Baugh). These revenues
can be used for capital outlays such as school facilities, new roads, transit equipment, and parklands.
Local Share of State Portion: allocates the State's controlled share (25 %) on a per capita basis to each county.
County and City Total is the total amount of revenue generated over 20 years for each county.
Annual Infrastructure Revenues show the annual revenues generated for each county in 2009 (the first year 5 %< of the
General Fund is earmarked for infrastructure) and 2020, when annual investment reaches its peak.
1
Page 2 of 2 11/2/99
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