League of California Cities Files Lawsuit to Modify Fiscal Impact in Prop. 22 Title & Summary and Ballot Label

Fiscal Impact Summary Fails to Reference How Prop. 22 Impacts Local Government Finances Even Though Prop. 22 is the Most Significant Ballot Measure Impacting Local Government Finances in Recent Memory

For Immediate Release: August 2, 2010

Contact: Kathy Fairbanks (916) 443-0872

Fiscal Impact Summary Fails to Reference How Prop. 22 Impacts Local Government Finances Even Though Prop. 22 is the Most Significant Ballot Measure Impacting Local Government Finances in Recent Memory

SACRAMENTO – Today the League of California Cities filed a lawsuit in Sacramento Superior Court seeking changes to the Proposition 22 fiscal impact summary prepared by the Legislative Analyst’s Office (LAO) and which appears in the official Title & Summary and Ballot Label.

The lawsuit contends that the LAO’s fiscal impact summary fails to meet the statutory obligation to specifically call out Prop. 22’s impact on local government finances. Despite the fact that Prop. 22 is the most significant ballot measure in recent memory protecting and stabilizing local government revenues, the fiscal impact statement fails to even include the phrase “local government” once. In fact, of the 58 words summarizing Proposition 22’s fiscal impact, 51 words detail the impacts to the state. Only 7 words contain even an obtuse reference to local government revenues and, again, the phrase “local government” is completely excluded.

According to the lawsuit, “The omission leaves the impression that Proposition 22 has no fiscal impact on local government, when, in fact, the LAO’s full analysis included in the Ballot Pamphlet shows that Proposition 22 has a significant and favorable impact on local government by stabilizing local governments’ revenue resources. The Analyst’s failure to summarize that information for inclusion in the Ballot Title and Summary and Ballot Label is inexplicable and prejudicial.”

“The Legislative Analyst has a legal obligation to inform voters of the local government impact of a ballot measure,” said Chris McKenzie, executive director of the League of California Cities and petitioner in the lawsuit. “Prop. 22 is the most significant measure in recent memory that would stabilize and protect city, county and other local government revenues. To completely exclude or ignore the impact of Prop. 22 on local government in the fiscal summary is a disservice to voters and a failure of the LAO’s obligation under the law.”

Prop. 22 is co-sponsored by the League of California Cities. Among other provisions, the measure would stop the state from taking, borrowing or diverting local government revenues, including:

• Revoking the state’s ability to borrow local government property tax funds.
•  Preventing the State from redirecting or diverting locally levied taxes, including parcel taxes, sales taxes, utility user taxes, TOT’s and other locally imposed taxes that are currently passed by local governments and/or their voters and dedicated to cities, counties and special districts.
•  Preventing the state from redirecting or diverting redevelopment tax increment funds.

The League’s lawsuit asserts that by omitting local government impacts in the fiscal impact summary, the LAO has violated California Elections Code sections 9051 and 9087. Section 9051(a)(2) states the title and summary for the ballot must include “a summary of the Legislative Analyst’s estimate of the net state and local government fiscal impact prepared pursuant to section 9087.” (emphasis added)

Section 9087 states, “The Legislative Analyst shall prepare an impartial analysis of the measure describing the measure and including a fiscal analysis of the measure showing the amount of any increase or decrease in revenue or cost to state or local government.” (emphasis added)

Below is the official Fiscal Impact Statement from the title and summary. The Fiscal Impact Statement specifically calls out redevelopment and transportation funding, but these are only a portion of the overall local government funds impacted by this measure. Failure to include mention of the phrase local government is both misleading to voters and a violation of the LAO’s statutory obligation.

Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact:
Due to the restrictions on state authority over fuel and property taxes, the state would have to take alternative actions-probably in the range of $1 billion to several billion dollars annually. This would result in both:
•    Reductions in General Fund program spending and/or increases in state revenues of those amounts.
•    Comparable increases in transportation and redevelopment resources.

The defendants in the suit are the LAO and California Secretary of State Debra Bowen. The Attorney General’s office is not named because the Fiscal Analysis and the summary of the Fiscal Analysis is the sole responsibility of the LAO. Additionally, the AG’s office accurately references “local government” in its description of the measure.

The lawsuit will be litigated quickly. The statutory deadline to make changes to the ballot pamphlet is August 9, 2010.

In addition to the League of California Cities, Prop. 22 is also co-sponsored by the California Alliance for Jobs and the California Transit Association. Already, more than 500 groups and local governments including public safety, business, labor, taxpayer and many others have joined the coalition to support Prop. 22 because they want to protect local revenues so they can remain at the local level and used for vital local services.