Court Orders Changes to Prop. 22 Fiscal Impact Summary

Court calls LAO Fiscal Impact Statement “misleading and inconsistent with
requirements of the Election Code”

However, court-ordered changes still do not adequately inform voters of
Prop 22’s fiscal impact on local governments

For Immediate Release: August 9, 2010

Contact: Kathy Fairbanks (916) 443-0872

SACRAMENTO – On Friday, Sacramento Superior Court Judge Michael Kenny ordered changes to the Proposition 22 fiscal impact summary which appears in the official Title & Summary and Ballot Label. Despite the fact that Prop 22 is the most significant measure impacting local government revenues in recent memory, the official fiscal impact summary prepared by the Legislative Analyst failed to include the phrase ”local government” even once. Prop. 22, the Local Taxpayer, Public Safety and Transportation Protection Act is on the November 2010 statewide ballot.

Judge Kenny agreed with the underlying argument made by the plaintiffs, the League of California Cities, saying that the fiscal impact statement was “misleading and inconsistent with the requirements of the Election Code” and that “the condensed Fiscal Impact portion of the Ballot Label should contain some express reference to ‘local’ governments.”

Even with this strong opinion, the court-ordered changes still do not include any explicit mention of the phrase “local government,” and the summary still fails to summarize the fiscal impact on cities, counties and special districts.

“We’re pleased that Judge Kenny recognized the fundamental right of the voters to be informed of the impacts of Prop. 22 on local government revenues,” said League of California Cities Executive Director Chris McKenzie. “However, despite some minor changes, the fiscal impact statement still does not adequately inform voters that Prop. 22 will significantly protect revenues for cities, counties and special districts. For example, the LAO’s own analysis pointed out that last year alone the state borrowed $2 billion of city, county and special district property taxes that pay for 911, police, fire, park and other vital local services. Yet the LAO’s fiscal summary fails to inform the voters of this important fact.”

Judge Kenny ordered the second bullet of the Fiscal Impact statement be changed to read:

•    Comparable increases in funding for state and local transportation programs and local redevelopment.

The previous second bullet of the Fiscal Impact statement simply read:

•    Comparable increases in transportation and redevelopment resources.

The League of Cities argued that Prop. 22’s impact on cities, counties and other local governments should be expressly identified in the LAO’s fiscal impact summary, since Prop. 22 protects billions of dollars in local property taxes, sales taxes, vehicle license fees, and other locally imposed taxes from state raids and borrowing.

Even the Legislative Analyst calls out these provisions in his full analysis, saying Prop. 22 “would result in more stable revenues being available for local governments.”

Inexplicably, however, the Legislative Analyst refused to call out this core provision of Prop. 22 in the fiscal impact summary.

Continued McKenzie: “Prop. 22 is the most significant measure protecting local government services in recent memory, and voters have a fundamental right to know that. Our coalition will actively educate voters that Prop. 22 will stop state raids of local government funds, and protect vital local services like emergency 911 response, police, fire, parks, libraries and more.”

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, transit occupancy taxes 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.
•  Prop. 22 also protects gas tax funds which should be used at the local level for road repair, congestion relief, and public transit services like buses and commuter rail.

 
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, environmental groups and many others have joined the coalition to support Prop. 22.