Members: Terry Henderson (Chair), La Quinta; Dave Sander (Vice Chair), Rancho Cordova; Paul Arevalo, West Hollywood; Karen Avilla, Carson; Robert Biery, Westlake Village; Irwin Bornstein, Mission Viejo; Mary Bradley, Sunnyvale; Holly Brock-Cohn, Livermore; Donald Callison, American Canyon; Jose Cisneros, San Francisco; Cheryl Cox, Chula Vista; Ken Desforges, Diamond Bar; Richard Dixon, Lake Forest; Pam Easter, Rancho Cucamonga; Michael Edmiston, California City; Glen Everroad, Newport Beach; Kathleen Griffith, Lompoc; Matthew Hawkesworth, Rosemead; Vincent Hernandez, Manteca; Chip Holloway, Ridgecrest; Connie Jackson, San Bruno; Jim Janney, Imperial Beach; Mike Kasperzak, Mountain View; Maria Lara, Pleasanton; Randon Lane, Murrieta; Ludmyrna Lopez, Richmond; Suzanne Mallory, Manteca; Rene Mendez, Gonzales; Robert Ming, Laguna Niguel; Joseph Montes, Alhambra/Moorpark; Paul Navazio, Davis; Michael Noll, Signal Hill; Laura Parisi, Laguna Beach; Martin Pastucha, Pasadena; Cindy Pierce, Chico; Sepi Richardson, Brisbane; Andy Smith, Union City; Niroop Srivatsa, Lafayette; Karen Stepper, Danville; Fred Strong, Paso Robles; Cody Tubbs, Elk Grove; Craig Vejvoda, Tulare; Joe Vinatieri, Whittier; A. Kay Vinson, Murrieta; Kris Wang, Cupertino; Thomas Whiteside, Selma; Michael Wilson, Vallejo Robert Woolley, Clovis
Staff: Kanat Tibet and Dan Carrigg
League Partners: Brenda Narayan, Strategic & Leg. Communications, MuniServices LLC; Paul Whitelaw, Sr. Vice President, Willdan
Committee members made self-introductions
There was no public comment.
Committee Chair Terry Henderson, Council Member, City of La Quinta gave an overview of how the committee would operate under Robert’s Rules of Order. Joseph Montes, City Attorney, Cities of Alhambra and Moorpark, was introduced as the Committee’s City Attorney’s Department representative and Parliamentarian.
Terry Henderson explained the role of the policy committees, how recommendations are made to the League Board of Directors, the significance of the Revenue and Taxation policy committee, and the task bestowed upon its members.
Terry Henderson explained how the League’s 2009 strategic goals are formulated at the League Leaders meeting every year in November. The committee received a copy of the 2009 goals as a handout. Richard Dixon, Council Member, City of Lake Forest told the committee that AB 32 and SB 375 contradict the 2009 strategic goals and made a motion to “ask the board of directors to send a letter to the governor and to the appropriate state legislators to suspend Ð not less than one year, up to two years Ð AB 32 and SB 375 until funding is identified. Robert Ming, Council Member, City of Laguna Niguel, seconded the motion. Fred Strong, Mayor Pro Tem, City of Paso Robles, asked for an amendment to add “unfunded mandates” into the verbiage along with AB 32 and SB 375’s suspension. During the discussion, Mike Kasperzak, Council Member, City of Mountain View, elaborated that there was no need to lose the League’s credibility for asking for something that was so obvious. Karen Stepper, Council Member, City of Danville, argued that the committee should not water down the motion by adding the “unfunded amendments” to the verbiage. The committee agreed to keep the motion at “the board of directors to send a letter to the governor and to the appropriate state legislators to suspend - not less than one year, up to two years - AB 32 and SB 375 until funding is identified.” Against: 2 NO’s. AYES: The rest of the entire group (over 40 people) voted yes to move the motion.
Dan Carrigg brought the committee up to speed on the League federal priorities, the League’s efforts in Washington D.C., and the recent developments regarding the federal economic stimulus package. Since November, California has been at the table with the Obama team determining priorities. As development occur, the League legislative team will get information out on the federal economic stimulus package. Also, the League Web site has a special section/button with recent updates on the status of the package.
The committee reviewed the League’s Summary of Existing Policy and Guiding Principles and the steps in which the committee can recommend policy adoption to the League Board of Directors. Dan Carrigg explained that the existing document has been evolving over the years and represents the League’s traditional positions. If the League lobbyists have any doubts about where the League stands regarding introduced legislation and what kind of position the League should take, they bring the bills to the policy committees to discuss and take a position.
Robert Ming, Mayor, Laguna Niguel, requested to have the language under the “reduce competition” policy to be reviewed.
Speakers: Dan Carrigg, Legislative Director, League of California Cities and Michael Coleman, Fiscal Policy Advisor, League of California Cities
Dan Carrigg and Michael Coleman gave an update on what has been going on with the state budget since late November. Dan elaborated how the negotiations between the lawmakers from both sides of the aisle and the governor fell apart before the Christmas holiday. As a result, Democrats decided to go their own way with creative proposals that would only require a majority vote. Thus, 14 budget bills were packaged together by the Democrats without any input from the Republicans, and passed with majority vote. The bills went to the Governor for his signature. The Governor had a long list of things to be added to the bills. The negotiations between the Democrats and the Governor continued through the holidays. On December 31, the Governor vetoed the bills and introduced his budget proposal, which also covered the 2009-10 budget-year. The Governor’s proposal is good for the cities and does not take away or borrow any local monies. At this point, the Republicans are back in the negotiations and the Big Five are continuing discussions.
Michael Coleman elaborated on the Governor’s and the Democrat’s budget proposals and their impacts on cities.
Dan informed the committee that the League has e-mailed the Department of Finance Director, asking to reexamine and reevaluate alternatives to the deferral of HUTA funds proposed by the governor. The current proposal defers the payments until Sept-Oct 2009 without any interest, which puts some cities into serious cash crunch.
Michael reassured the committee members that the taxes collected at the local level cannot be borrowed by the state. From a revenue perspective, most of the budgets should be fine.
Speaker: Mark Hill, Program Budget Manager, Department of Finance
Mark Hill, Program Budget Manager, Department of Finance, gave an update on the fiscal conditions surrounding the state and the Governor’s budget proposal. Mark elaborated that the revenues are significantly down and some expenses are up. Furthermore, normal credit markets are not available and the state is not able to borrow. As a result, the state is running out of cash. Grant programs and bond programs had to stop. What comes after this is unclear. If the budget negotiations produce a result by February 1, the state could get back to the bond market.
Recently, the credit rating of the state was downgraded. At this point, state programs are competing against one another for cash. There will most certainly be a few low cash funds even if the budget passes in February 1. Prop 42, and HUTA payments would need to be deferred. This indeed is not a normal budget process. The anticipation is to have a budget that covers the 2009-10 budget. Once things settle, there may be adjustments after June 2008. The economy looks like it is getting worse.
The January budget proposal borrows 4.7 billion dollars in Revenue Anticipation Warrants (RAWS) to bridge the current budget and the next year’s budget. On the other hand, the federal economic stimulus package could help shore up the budget with some cash infusion and prevent borrowing. State understands that local governments are financially stranded too. As no fast recovery to the economic conditions is seen on the horizon, the state acknowledges that a one- time budget solution is not going to fix the ongoing budget issues. Thus, borrowing Prop 1A or Prop 42 dollars is seen as a one-time infeasible solution, not a permanent fix.
Speaker: David Jones, Lobbyist, Emanuels Jones & Assoc.
David Jones, lobbyist for the California Redevelopment Association (CRA), gave an update on the League and CRA’s ongoing efforts and campaign to make sure that the state does not take away any more of the redevelopment monies in the new budget. The efforts focus on mobilizing and educating people and organizations such as environmental communities, local builders, and local unions that the legislators care about regarding the vital role of redevelopment in creating jobs and energizing local economies.
David also mentioned the lawsuit that CRA filed against the state seeking to block sections of budget trailer bill AB 1389 which was a part of the 2008-09 state budget, which authorized a one-time raid of $350 million in redevelopment funds. CRA argues that the Constitution requires that redevelopment funds can be used only to finance specified redevelopment activities. Also, taking redevelopment funds could also unconstitutionally impair contracts, particularly covenants pledging future tax revenues to pay bonds.
Speaker: Assembly Member Roger Niello, Vice Chair of the Assembly Budget Committee
Assembly Member Roger Niello addressed the committee and provided the Republican perspective to the Governor’s budget proposal. Mr. Niello elaborated that the “tone and tenor” of things have changed. The state has more bills than revenues (tax monies) coming in. The Republicans acknowledge that revenues have to be a part of the budget fix solutions. A combination of cuts, taxes, and reforms are needed. Even if the budget seems balanced on the paper, it looks like the revenues will further deteriorate due to the economic conditions nationwide, and case-loads will increase. Thus, the structural deficit will persist without significant budget reforms.
Speaker: Terry Henderson, Council Member, City of La Quinta
Terry Henderson informed the committee about the subcommittee’s report and recommendations on the SSUTA. Dan Carrigg elaborated some of the aspects of the Agreement and answered questions. Fred Strong made a motion to “have the board adopt the recommended actions of the League staff in the SSUTA analysis.” Sepi Richardson seconded the motion. The committee voted “all in favor.” The motion to “have the board adopt the recommended actions of the League staff in the SSUTA analysis” moved.
Speaker: Michael Cohen, Deputy Legislative Analyst, Legislative Analyst’s Offic
Michael Cohen, Deputy Legislative Analyst, Legislative Analyst’s Office, gave highlights from the LAO’s recently released report “California’s Cash Flow Crisis” and answered members’ questions. A copy of the report can be found at http://www.lao.ca.gov/2009/stadm/cash_flow/cash_flow_011409.pdf
Terry Henderson and Dan Carrigg provided an update on the status of the 2008 work program and elaborated the work program for 2009, the League strategic goals, the additional department goals, and answered member questions. Irwin Bornstein suggested the “long term cost control and how the League can be instrumental in fixing the budget crisis” be added to the department work program by replacing the “provide information on GASB” item.
Meeting notes prepared by Kanat Tibet, Legislative Analyst, League of California Cities