Weathering The Financial Storm California Contract Cities Association  Fall Seminar Oxnard, California October 15, 2011
Joseph P. Buchman Burke Williams & Sorensen LLP 444 S. Flower Street Suite 2400 Los Angeles, CA 90071 www.bwslaw.com (213)...
City Revenues  <ul><li>Tax Revenues  </li></ul><ul><ul><li>General Property Taxes </li></ul></ul><ul><ul><li>Sales and Use...
City Revenues  <ul><li>Tax Revenues (Cont.) </li></ul><ul><ul><li>Excise Taxes  </li></ul></ul><ul><ul><ul><li>Development...
City Revenues  <ul><li>Tax Revenues (Cont.) </li></ul><ul><ul><li>Special Taxes </li></ul></ul><ul><ul><ul><li>Mello-Roos ...
City Revenues  <ul><li>Tax Revenues (Cont.) </li></ul><ul><ul><li>Special Benefit Assessment Districts </li></ul></ul><ul>...
City Revenues <ul><li>Charges, Rates and Fees </li></ul><ul><ul><ul><li>Development Fees </li></ul></ul></ul><ul><ul><ul><...
City Revenues <ul><li>Charges, Rates and Fees (Cont.) </li></ul><ul><ul><ul><li>Fines and Forfeitures </li></ul></ul></ul>...
City Revenues <ul><li>Intergovernmental Agencies </li></ul><ul><ul><li>State Subventions </li></ul></ul><ul><ul><li>Federa...
City Revenues <ul><li>Other Financing Sources </li></ul><ul><ul><li>Revenues From Use of Money and Property </li></ul></ul...
Summary of City Revenues Source: State Controller’s  Cities Annual Report  for Fiscal Year ending 6/30/2009 (2/3/2011).
City Revenues: Illustration Service Charges (water, sewer, refuse, etc.) 39% Fees 8% State & Fed 10% Not Restricted 36% De...
Revenue Losses: The California Triple Flip -- Local Sales Tax for Property Tax Decrease Local Sales  Tax Rate -0.25% Prope...
Revenue Losses:   Educational Revenue Augmentation Funds <ul><li>ERAF Shifts </li></ul><ul><ul><li>Property Tax Shift from...
City Expenditures <ul><li>General Government </li></ul><ul><ul><li>Legislative </li></ul></ul><ul><ul><li>Management and S...
City Expenditures <ul><li>Transportation </li></ul><ul><ul><li>Streets, Highways and Storm Drains </li></ul></ul><ul><ul><...
City Expenditures <ul><li>Health </li></ul><ul><ul><li>Solid Waste Disposal </li></ul></ul><ul><ul><li>Sewers </li></ul></...
City Expenditures <ul><li>Public Utilities </li></ul><ul><ul><li>Water </li></ul></ul><ul><ul><li>Gas </li></ul></ul><ul><...
Summary of City Expenditures Source: State Controller’s  Cities Annual Report  for Fiscal Year ending 6/30/2009 (2/3/2011).
Redevelopment Agencies <ul><li>Property Tax Increment Funding </li></ul><ul><li>Expenditures for Community Redevelopment <...
Redevelopment Agencies <ul><li>January 10, 2011 </li></ul><ul><ul><li>Governor Brown releases budget proposal, includes el...
Redevelopment Agencies <ul><li>July 18 </li></ul><ul><ul><li>CRA and LOCC file suit in California Supreme Court challengin...
Redevelopment Agencies <ul><li>August 22 </li></ul><ul><ul><li>CRA and LOCC request additional clarification of Stay Order...
ABX1 26 Dissolution Bill <ul><li>Freezes redevelopment agency activities other than as necessary to meet “enforceable obli...
ABx1 27 (“Pay to Play” Bill) <ul><li>“ Alternative Voluntary Redevelopment Program.” </li></ul><ul><li>Department of Finan...
Closing thoughts… <ul><li>“ If I'm on the course and lightning starts, I get inside fast. If God wants to play through, le...
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Joseph Buchman - Weathering the Financial Storm

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Joseph Buchman - Weathering the Financial Storm

  1. 1. Weathering The Financial Storm California Contract Cities Association Fall Seminar Oxnard, California October 15, 2011
  2. 2. Joseph P. Buchman Burke Williams & Sorensen LLP 444 S. Flower Street Suite 2400 Los Angeles, CA 90071 www.bwslaw.com (213) 236-2872 (direct) (213) 236-2700 (fax) [email_address]
  3. 3. City Revenues <ul><li>Tax Revenues </li></ul><ul><ul><li>General Property Taxes </li></ul></ul><ul><ul><li>Sales and Use Tax and Transactions and Use Tax </li></ul></ul><ul><ul><li>Gross Receipts Tax </li></ul></ul><ul><ul><li>Business License Fees and Taxes </li></ul></ul><ul><ul><li>Utility Users Tax </li></ul></ul><ul><ul><li>Transient Occupancy Tax </li></ul></ul>
  4. 4. City Revenues <ul><li>Tax Revenues (Cont.) </li></ul><ul><ul><li>Excise Taxes </li></ul></ul><ul><ul><ul><li>Development Tax </li></ul></ul></ul><ul><ul><ul><li>Admissions Tax </li></ul></ul></ul><ul><ul><ul><li>Parcel Tax </li></ul></ul></ul><ul><ul><ul><li>Documentary Transfer Tax </li></ul></ul></ul>
  5. 5. City Revenues <ul><li>Tax Revenues (Cont.) </li></ul><ul><ul><li>Special Taxes </li></ul></ul><ul><ul><ul><li>Mello-Roos </li></ul></ul></ul><ul><ul><ul><li>Community Facilities Districts </li></ul></ul></ul><ul><ul><ul><li>Police and Fire Protection </li></ul></ul></ul><ul><ul><ul><li>Libraries </li></ul></ul></ul><ul><ul><ul><li>Transportation </li></ul></ul></ul>
  6. 6. City Revenues <ul><li>Tax Revenues (Cont.) </li></ul><ul><ul><li>Special Benefit Assessment Districts </li></ul></ul><ul><ul><ul><li>Public Improvements: street, drainage, flood control, etc. </li></ul></ul></ul><ul><ul><ul><li>Landscaping and Lighting </li></ul></ul></ul><ul><ul><ul><li>Business Improvement Districts </li></ul></ul></ul><ul><ul><ul><li>Infrastructure Financing Districts </li></ul></ul></ul>
  7. 7. City Revenues <ul><li>Charges, Rates and Fees </li></ul><ul><ul><ul><li>Development Fees </li></ul></ul></ul><ul><ul><ul><li>Sewer Service Charges and Connection Fees </li></ul></ul></ul><ul><ul><ul><li>Solid Waste Fees </li></ul></ul></ul><ul><ul><ul><li>Water Service Charges and Connection Fees </li></ul></ul></ul><ul><ul><ul><li>Franchise Fees: Cable TV, Electricity, Telephone, Gas and Oil </li></ul></ul></ul>
  8. 8. City Revenues <ul><li>Charges, Rates and Fees (Cont.) </li></ul><ul><ul><ul><li>Fines and Forfeitures </li></ul></ul></ul><ul><ul><ul><li>Park and Recreation Fees </li></ul></ul></ul><ul><ul><ul><li>Airport </li></ul></ul></ul><ul><ul><ul><li>Ports and Harbors </li></ul></ul></ul><ul><ul><ul><li>Licenses and Permits </li></ul></ul></ul>
  9. 9. City Revenues <ul><li>Intergovernmental Agencies </li></ul><ul><ul><li>State Subventions </li></ul></ul><ul><ul><li>Federal and State Grants </li></ul></ul><ul><ul><li>County and Other Local Agencies Revenue Sharing </li></ul></ul>
  10. 10. City Revenues <ul><li>Other Financing Sources </li></ul><ul><ul><li>Revenues From Use of Money and Property </li></ul></ul><ul><ul><li>Gifts </li></ul></ul><ul><ul><li>Sale of Bonds </li></ul></ul><ul><ul><li>Leasing Public Property </li></ul></ul>
  11. 11. Summary of City Revenues Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2009 (2/3/2011).
  12. 12. City Revenues: Illustration Service Charges (water, sewer, refuse, etc.) 39% Fees 8% State & Fed 10% Not Restricted 36% Debt Service 1% Taxes 3% Lic & Permits 2% Assessments 1% x Utility User Tax 4% Sales Tax 10% Property Tax 11% Other Tax 7% Other 4%
  13. 13. Revenue Losses: The California Triple Flip -- Local Sales Tax for Property Tax Decrease Local Sales Tax Rate -0.25% Property Tax in Lieu of Sales Tax State Fiscal Recovery Fund $1.4 Billion Schools State General Fund Increase State Sales Tax Rate +0.25%
  14. 14. Revenue Losses: Educational Revenue Augmentation Funds <ul><li>ERAF Shifts </li></ul><ul><ul><li>Property Tax Shift from Cities, Counties and Special Districts to Schools Since 1992 </li></ul></ul><ul><ul><li>FY 2010-11 amount equals $7.5 billion. </li></ul></ul><ul><ul><li>“ SERAF” from Redevelopment Agencies </li></ul></ul><ul><ul><ul><li>FY 2010-11 SERAF total is $350 million; FY 2009-10 total was $1.7 billion </li></ul></ul></ul>
  15. 15. City Expenditures <ul><li>General Government </li></ul><ul><ul><li>Legislative </li></ul></ul><ul><ul><li>Management and Support </li></ul></ul><ul><li>Public Safety </li></ul><ul><ul><li>Police </li></ul></ul><ul><ul><li>Fire </li></ul></ul><ul><ul><li>Emergency Medical Services </li></ul></ul><ul><ul><li>Street Lighting </li></ul></ul>
  16. 16. City Expenditures <ul><li>Transportation </li></ul><ul><ul><li>Streets, Highways and Storm Drains </li></ul></ul><ul><ul><li>Public Transit </li></ul></ul><ul><ul><li>Airports </li></ul></ul><ul><ul><li>Ports and Harbors </li></ul></ul><ul><li>Community Development </li></ul><ul><ul><li>Planning </li></ul></ul><ul><ul><li>Construction and Engineering Regulation Enforcement </li></ul></ul>
  17. 17. City Expenditures <ul><li>Health </li></ul><ul><ul><li>Solid Waste Disposal </li></ul></ul><ul><ul><li>Sewers </li></ul></ul><ul><li>Culture and Leisure </li></ul><ul><ul><li>Parks and Recreation </li></ul></ul><ul><ul><li>Libraries </li></ul></ul>
  18. 18. City Expenditures <ul><li>Public Utilities </li></ul><ul><ul><li>Water </li></ul></ul><ul><ul><li>Gas </li></ul></ul><ul><ul><li>Electricity </li></ul></ul>
  19. 19. Summary of City Expenditures Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2009 (2/3/2011).
  20. 20. Redevelopment Agencies <ul><li>Property Tax Increment Funding </li></ul><ul><li>Expenditures for Community Redevelopment </li></ul><ul><li>Current and Future Status Unsettled </li></ul>
  21. 21. Redevelopment Agencies <ul><li>January 10, 2011 </li></ul><ul><ul><li>Governor Brown releases budget proposal, includes elimination of redevelopment. </li></ul></ul><ul><li>June 15 </li></ul><ul><ul><li>State Legislature passes ABx1 26 and 27. </li></ul></ul><ul><li>June 28 </li></ul><ul><ul><li>Legislature passes new budget bill, and forwards ABx1 26 and 27 to Governor for signature. Governor signs, and the bills take effect immediately. </li></ul></ul>
  22. 22. Redevelopment Agencies <ul><li>July 18 </li></ul><ul><ul><li>CRA and LOCC file suit in California Supreme Court challenging constitutionality of ABx1 26 and 27 and requesting stay. </li></ul></ul><ul><li>August 11 </li></ul><ul><ul><li>Supreme Court announces it will hear lawsuit, and issues order staying portions of ABx1 26 and all of ABx1 27. </li></ul></ul><ul><li>August 18 </li></ul><ul><ul><li>Supreme Court modifies Stay Order. </li></ul></ul>
  23. 23. Redevelopment Agencies <ul><li>August 22 </li></ul><ul><ul><li>CRA and LOCC request additional clarification of Stay Order. </li></ul></ul><ul><li>September 14 </li></ul><ul><ul><li>Supreme Court denies request for further clarification of Stay Order. </li></ul></ul><ul><li>January 15, 2012 </li></ul><ul><ul><li>Supreme Court decision expected. </li></ul></ul>
  24. 24. ABX1 26 Dissolution Bill <ul><li>Freezes redevelopment agency activities other than as necessary to meet “enforceable obligations.” </li></ul><ul><li>Requires preparation of Enforceable Obligation Payment Schedule within 60 days of Effective Date. </li></ul><ul><li>Preliminary draft of Recognized Obligation Payment Schedule to Successor Entity by September 30. </li></ul><ul><li>Dissolution by October 1, 2011. </li></ul>
  25. 25. ABx1 27 (“Pay to Play” Bill) <ul><li>“ Alternative Voluntary Redevelopment Program.” </li></ul><ul><li>Department of Finance Calculates Remittance Payment Amounts. </li></ul><ul><li>August 15 Appeal Deadline. </li></ul><ul><li>Adoption of Continuation Ordinance by October 1 (or Resolution of Intent, which extends deadlines until November 1). </li></ul><ul><li>First payment January 15, second May 15. </li></ul>
  26. 26. Closing thoughts… <ul><li>“ If I'm on the course and lightning starts, I get inside fast. If God wants to play through, let him.” </li></ul><ul><li>“ I've always been in the right place and time. Of course, I steered myself there.” </li></ul><ul><li>-- Bob Hope </li></ul>
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