HomeMy WebLinkAboutCity Council position on legislation pending as recommended (24) Council/Agency Meeting Held:_
Deferred/Continued to:
AAppr.oveq ❑ Conditionally Approved ❑ Denied City Cfferk'i S' nature
Council Meeting Date: April 19, 2010 Department ID Number: AD 10-014
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Mayor Pro Tern Jill Hardy, Chair on behalf of the Intergovernmental
Relations Committee Members, Council Members Joe Carchio and
Devin Dwyer
PREPARED BY: Mayor Pro Tern Jill Hardy, Chair on behalf of the. Intergovernmental
Relations Committee Members, Council Members Joe Carchio and
Devin Dwyer
SUBJECT: Approval of a City Council position on legislation, a regulation, or
budget issue pending before a Federal, State or Regional Government
as recommended by the City Council Intergovernmental Relations
Committee (IRC)
Statement of Issue: Approval of a City Council position on legislation, a regulation, or budget
issue pending before a federal, state, or regional government as recommended by the City Council
Intergovernmental Relations Committee (IRC).
Fundinq Source: N/A
Recommended Action: Motion to:
1. OPPOSE AB 1594 (Huber)— Sacramento Delta-Peripheral Canal
2. SUPPORT AB 2663 (Lowenthal) — Federal Fiscal Year Cities
Alternative Action(s):
Do not take the recommended action on one or all of the above and provide direction to staff on a
possible city position.
Item 18. a Page 1
REQUEST FOR COUNCIL ACTION
MEETING DATE: 4/19/2010 DEPARTMENT ID NUMBER: AD 10-014
Analysis:
1. OPPOSE AB 1594 (Huber) — Sacramento Delta-Peripheral Canal
The Bay Delta Conservation Plan (BDCP) was part of the Delta package passed by the California
Legislature in late 2009 and included the future water conveyance system. The BDCP will
automatically become part of the future Delta Plan provided the plan analyzes a variety of
conveyance options and meets certain environmental goals and other requirements. The BDCP
represents a collaborative effort by two state and four federal wildlife/water agencies (California
Natural Resources Agency, California Environmental Protection Agency, the National Oceanic and
Atmospheric Administration, the U.S. Environmental Protection Agency, the Wildlife Service, and the
U.S. Bureau of Reclamation). All six agencies must approve this plan before it can be implemented.
If approved, AB 1594 would prohibit the construction of a peripheral canal, as defined, that conveys
water from a diversion point in the Sacramento River to a location south of the Sacramento-San
Joaquin Delta, unless expressly authorized by the Legislature. The bill would require the Legislative
Analyst's Office to complete an economic feasibility analysis prior to the enactment of a statute
authorizing the construction of a peripheral canal. It would also require that the construction and
operation of a peripheral canal not diminish or negatively affect the water supplies, water rights, or
quality of water for water users within the Sacramento-San Joaquin Delta watershed.
The Orange County Water District is recommending opposition to AB 1594 because they believe
interjecting of the Legislative Analyst's Office into the BDCP is redundant and misguided. Several
layers of analysis are already required. For example, before the BDCP settles on the details of the
new conveyance system, alternatives will be subject to a detailed risk analysis as well as an
independent cost analysis. Additionally, before the BDCP can be implemented, there will be an
extensive environmental review including an analysis of the proposal's local economic impacts.
The Intergovernmental Relations Committee has reviewed this legislation and is recommending that
the City Council oppose AB 1594.
2. SUPPORT AB 2663 (Lowenthal) — Federal Fiscal Year Cities
Of the State's 480 cities, only the cities of Long Beach, Huntington Beach, Inglewood, El Segundo,
and South Lake Tahoe operate on the federal fiscal year. The federal fiscal year (October 1 —
September 30) begins three months after the beginning of the State fiscal year (July 1 — June 30).
For many years, the State has borrowed funds from local government to increase cash flows to the
State's cash-strapped budget. This borrowing creates an undue hardship on five cities that observe
the federal fiscal year as the borrowing hits those cities at the end of their previous fiscal year rather
than the beginning of the new fiscal year. This means that, unlike those cities that observe the
State's fiscal year, we do not have the ability to anticipate this unexpected loss of revenue.
These cities are most concerned about borrowing of funds from Proposition 1A, Proposition 42, and
Highway User Tax, as well as reductions in Redevelopment funds. Significant reductions in these
revenues during the last three months of a city's budget cycle cause undue stress on the our financial
resources, and compromise our ability to provide services to the community.
AB 2663 as sponsored by the City of Long Beach proposes a change in State law to require that
when the State borrows money from federal fiscal year cities, it does so at the beginning of October
Item 18. - Page 2
REQUEST FOR COUNCIL ACTION
MEETING DATE: 4/19/2010 DEPARTMENT ID NUMBER: AD 10-014
rather than the beginning of July. The proposed bill would only affect the cities of Long Beach,
Huntington Beach, El Segundo, Inglewood, and South Lake Tahoe.
The Intergovernmental Relations Committee has reviewed this legislation and is recommending that
the City Council support AB 2663.
Environmental Status: N/A
Strategic Plan Goal: Maintain, Improve and Obtain Funding for Infrastructure and
Equipment.
Attachment(s):
- . .o ®
1. AB 1594 Huber — Sacramento Delta-Peripheral Canal
2. AB 2663 Lowenthal — Federal Fiscal Year Cities
3. Support Information on AB 2663
Item 18. - Page 3
ATTACHMENT # 1
CALIFORNIA LEG I SLAT URE-2009-10 REGULAR SESSION
ASSEMBLY BILL No. 1594
Introduced by Assembly Member Huber
(Coauthors:Assembly Members Chesbro,Fong,Gaines,Torlakson,
and Yamada)
January 4, 2010
An act to add Chapter 1.5 (commencing with Section 115)to Division
1 of the Water Code, relating to the Sacramento-San Joaquin Delta.
LEGISLATIVE COUNSEL'S DIGEST
AB 1594, as introduced, Huber. Sacramento-San Joaquin Delta:
peripheral canal.
Existing law requires various state agencies to administer programs
relating to water supply, water quality, and flood management in the
Sacramento-San Joaquin Delta.
This bill would prohibit the construction of a peripheral canal, as
defined, that conveys water from a diversion point in the Sacramento
River to a location south of the Sacramento-San Joaquin Delta, unless
expressly authorized by the Legislature. The bill would require the
Legislative Analyst's Office to complete an economic feasibility analysis
prior to the enactment of a statute authorizing the construction of a
peripheral canal. The bill would also require that the construction and
operation of a peripheral canal not diminish or negatively affect the
water supplies, water rights, or quality of water for water users within
the Sacramento-San Joaquin Delta watershed.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
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Item 18. - Page 5
AB 1594 —2—
The people of the State of California do enact as follows:
1 SECTION 1. Chapter 1.5 (commencing with Section 115) is
2 added to Division 1 of the Water Code, to read:
3
4 CHAPTER 1.5. PERIPHERAL CANAL
5
6 115. As used in this chapter, the following terms have the
7 following meanings:
8 (a) "Delta"means the Sacramento-San Joaquin Delta,as defined
9 in Section 12220.
10 (b) "Peripheral canal"means a facility or structure that conveys
11 water directly from a diversion point in the Sacramento River to
12 pumping facilities of the State Water Project or the federal Central
13 Valley Project south of the Delta.
14 116. (a) Notwithstanding any other law, a peripheral canal
15 shall not be constructed unless expressly authorized pursuant to a
16 statute enacted by the Legislature on or after the date on which
17 this section becomes effective.
18 (b) Prior to the enactment of any statute authorizing the
19 construction of a peripheral canal,the Legislative Analyst's Office
20 shall complete an economic feasibility analysis that includes both
21 of the following:
22 (1) The total cost of the construction project.
23 (2) Expected impacts of the construction project on taxpayers,
24 water ratepayers, and the General Fund.
25 118. Notwithstanding any other law, the construction and
26 operation of a peripheral canal shall not diminish or negatively
27 affect the water supplies,water rights,or quality of water for water
28 users within the Delta watershed.
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Item 16. - Page 6
ATTACHMENT #2
CALIFORNIA LEGISLATURE-2009-10 REGULAR SESSION
ASSEMBLY BILL No. 2663
Introduced by Assembly Member Bonnie Lowenthal
(Coauthor: Senator Lowenthal)
February 19, 2010
An act to add Article 7.1 (commencing with Section 53834) to
Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code,
relating to local government.
LEGISLATIVE COUNSEL'S DIGEST
AB 2663, as introduced, Bonnie Lowenthal. Local government:
federal fiscal year.
Existing state constitutional law requires specified revenues from the
ad valorem tax on real property, the Highway Users Tax Account, the
Transportation Investment Fund, and the revenue from taxable property
in a redevelopment project to be deposited in various accounts and to
be allocated, in part, to cities, counties, or cities and counties, for
prescribed purposes. Existing law also requires, for specified periods
during the 2009-10 and 2010-11 fiscal years, the borrowing, transfer
or suspension of these allocated revenues, as prescribed.
This bill would make several legislative findings and declarations
relating to cites,counties,and cities and counties that observe the federal
fiscal year calendar. The bill would provide that if the Legislature
transfers, borrows from, or suspends these allocated revenues, the
respective transaction would be suspended during the months of July,
August, and September for a city, county, or city and county observing
the federal fiscal year. The transfer, borrowing, or suspension of
revenues would instead commence on October 1.
99
Item 18. - Page 8
AB 2663 —2—
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
1 SECTION 1. The Legislature finds and declares all of the
2 following:
3 (a) Cities,counties,and cities and counties observing the federal
4 fiscal year calendar instead of the state fiscal year calendar
5 experience an additional burden when the state borrows or suspends
6 local government revenues in the first three months of the state
7 fiscal year.
8 (b) The required transfer, suspension,or borrowing of funds by
9 the state in the months of July,August,or September require cities,
10 counties, and cities and counties observing the federal fiscal year
11 calendar to make drastic budgetary reductions in the last three
12 months of their fiscal year.
13 (c) Relief is needed so that cities, counties, and cities and
14 counties that observe the federal fiscal year calendar may remit
15 those payments to the state at the beginning,rather than at the end,
16 of their fiscal year.
17 SEC.2. Article 7.1 (commencing with Section 53834)is added
18 to Chapter 4 of Part I of Division 2 of Title 5 of the Government
19 Code, to read:
20
21 Article 7.1. Federal Fiscal Year Local Governments
22
23 53834. (a) For purposes of this article,both of the terms shall
24 have the following meanings:
25 (1) "Federal fiscal year" means a fiscal year beginning on
26 October 1 and ending September 30.
27 (2) "Federal fiscal year city, county, or city and county"means
28 any city, county,or city and county that observes the federal fiscal
29 year calendar.
30 (b) If the Legislature transfers, borrows, or suspends revenues
31 allocated to a federal fiscal year city, county, or city and county,
32 the transaction shall be suspended during the months of July,
33 August, and September. The transfer, borrowing, or suspension
34 of revenues shall instead commence on October 1.
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Item 18. - Page 9
-3— AB 2663
1 (c) This section shall apply to all of the following transactions
2 enacted by law on and after January 1, 2011, involving funds and
3 revenues allocated to a federal fiscal year city, county, or city and
4 county:
5 (1) The borrowing,transfer,or suspension of revenues allocated
6 in accordance with subdivision (a) of Section 1 of Article XIII A
7 of the California Constitution.
8 (2) The borrowing,transfer,or suspension of revenues from the
9 Highway Users Tax Account required to be apportioned pursuant
10 to Section 3 of Article XIX of the California Constitution.
11 (3) The borrowing,transfer,or suspension of revenues from the
12 Transportation Investment Fund allocated pursuant to subdivision
13 (b) of Section 1 of Article XIX B of the California Constitution.
14 (4) The borrowing transfer, or suspension, of funds allocated
15 to a redevelopment agency pursuant to subdivision (b) of Section
16 16 of Article XVI of the California Constitution.
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Item 18. e Page 10
ATTACHMENT #3
January 2010
FEDERAL FISCAL YEAR BILL BACKGROUND PAPER
STATE LEGISLATION AMENDMENT FOR
STATE BORROWING DURING PERIODS OF FISCAL YEAR OVERLAP
Background
For many years, the State has borrowed funds from local government to increase
cash flows to the State's cash-strapped budget. This borrowing creates an
undue hardship on five cities that observe the federal fiscal year (October 1 —
September 30), as the borrowing hits those cities at the end of their previous
fiscal year, as opposed to the beginning of the new fiscal year, as is the case for
nearly every other city who observe the State's fiscal year (July 1 — June 30).
Unlike 99 percent of cities in the State of California, the City of Long Beach,
Huntington Beach, Inglewood, El Segundo, and South Lake Tahoe operate on
the federal fiscal year. The federal fiscal year begins three months after the
beginning of the State fiscal year, and runs from October 1st to September 30tn
Of the State's 480 cities, City of Long Beach, Huntington Beach, Inglewood, El
Segundo, and South Lake Tahoe are the only five cities that use the federal fiscal
year.
Current Situation
During years of reduced cash flow to the State's budget, the State borrows
money from cities. For federal fiscal year cities, this becomes a problem during
the months of July, August, September, the beginning of the State fiscal year,
and also the last three months the federal fiscal year. The funds these cities are
most concerned about include Proposition 1 A borrowing, Proposition 42
borrowing, and Highway User Tax borrowing, as well as reductions in
Redevelopment funds. Significant reductions in Proposition 1A, Proposition 42,
and Highway User Tax funds during the last three months of the City's budget
cycle cause undue stress on the City's financial resources, and compromises
services provided to the community.
The Solution
The City of Long Beach proposes a change to the State XXXXXX Code (to be
determined by Legislative Counsel). This change would allow the State to
borrow money from federal fiscal year cities under their current legal authority,
but requires that the State do so at the beginning of the city's fiscal year
(October) for cities that do not use the State's fiscal year. The proposed bill
would only affect the City of Long Beach, and possibly four other cities:
Huntington Beach, El Segundo, Inglewood, and South Lake Tahoe.
Item 18. - Page 12
Impact on the State
The State will not see an overall decrease in funds as a result of this proposed
amendment. The amendment merely shifts the transfer of funds from the
beginning of the State's fiscal year (starting in July) to the beginning of the
federal fiscal year (October) for those five cities only. The entire payment cycle
will be fulfilled. The State will receive the same amount of revenue from cities on
the federal fiscal year as it will from every other city.
Example of State Borrowing
The last example of this borrowing was a proposal in 2009 to delay Highway
User Tax allocations to individual cites for a period of five months. Highway User
Tax allocations are made to cities on a monthly basis, and used to finance city
transportation operation costs. If the State had carried out their proposed plan,
the City of Long Beach would have lost a total of $1,928,221 in transportation
revenues during the months of August, September, and October. These are
critical months due to the fact that they are the final three months in the fiscal
year of any city using the federal fiscal year. As Long Beach uses the majority of
Highway User Tax funds for critical transportation services (such as street light
repair crews, pothole crews, etc), Long Beach would have had to made drastic
operation cuts if that proposal had been approved by the Legislature.
Item 18. a Page 13
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FREQUENTLY ASKED QUESTIONS
Why is this amendment needed?
This amendment is needed because State borrowing creates an undue
hardship on five cities that observe the federal fiscal year, as well as
compromises services provided to the communities in those cities. State
borrowing during the months of August, September, and October hits
cities observing the federal fiscal year at the end of their previous fiscal
year, as opposed to the beginning of the new fiscal year, as is the case for
nearly every other city.
What will this amendment do?
• This amendment allows the State to borrow money from the City under
their current legal authority, but requires that the State do so at the
beginning of a city's fiscal year for cities that do not use the State's fiscal
year. The amendment shifts the transfer of funds from the beginning of
the State's fiscal year (starting in July) to the beginning of the federal fiscal
year (starting in October) for only the Cities of Long Beach, Huntington
Beach, Inglewood, El Segundo, and South Lake Tahoe.
Which programs and services are affected when the State borrows money?
® Programs and services funded by Proposition 1A, Proposition 42, and
Highway User Tax funds suffer reductions in hours as a result of State
borrowing at the end of their city's fiscal year. Proposition 42 and
Highway User Tax funds are used for transportation improvements such
as local street repair, as well as transportation operations such as street
maintenance, street lighting, traffic signal maintenance, etc.
What are the financial impacts of this amendment?
• This amendment will not affect the State's overall revenue when they
borrow from cities. The State will receive the same amount of revenue
from cities on the federal fiscal year as it will from every other city.
Programs and services funded by Proposition 1A, Proposition 42, and
Highway User Tax funds will benefit from greater financial stability as a
result of this amendment.
When was the last example of this type of borrowing and what was the
impact?
® The State announced a proposal in 2009 to delay Highway User Tax
allocations to individual cites for a period of 5 months. This proposed
plan, would have resulted in a total loss of $1,928,221 to the City of Long
Item 18. - Page 14
Beach. These monies are transportation revenues during the months of
July, August, and September. While the State ultimately did not take the
Highway User Tax funds, Long Beach would have had to make drastic
service reductions in either transportation services or General Fund
services to make up that loss of nearly $2 million.
Why should only cities on the federal fiscal year benefit? Doesn't the State
borrow from other cities as well?
® Only cities on the federal fiscal year should benefit because these cities
are hit by State borrowing at the end of their fiscal years as opposed to
99% of every other California city who begin their fiscal year during these
months and have the ability to plan for the loss of revenue.
How will the proposed amendment affect the State's cash flow?
® This proposed amendment does not affect the State's annual revenues. It
merely shifts the transfer of funds to the beginning of a city's fiscal year for
cities that do not use the State's fiscal year. The State will receive the
same amount of revenue from cities on the federal fiscal year as it will
from every other city. The impact on cash flow is expected to be very
minimal, as this proposed change would likely shift less than $20 million
by three months.
Why does the timing of borrowing matter, if funds are returned to the City
in the same fiscal year they were borrowed?
® The timing of borrowing is critical. Cities observing the federal fiscal year
are in the process of closing their fiscal years during the months of July,
August, and September. Cities cannot financially support unplanned State
borrowing during these months if they only have three months to close out
the fiscal year.
Item 18. - Page 15