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San Bernardino City Council Meeting
Proposed Agenda for Lobbyists' Report
October 2, 2000
1. Discussion of State Budget
a) Local Government funding
Mr. Chavez
2. Important BiIlslIssues affecting San Bernardino
Mr. Bader
3. Cultural Center and Earthquake Retrofit funding
Mr. Chavez
4. Parks Bond and Water Bond
Mr. Chavez
5. Alameda Corridor
a) SANBAG
Mr. Bader
6. Relationship with Governor
a) League of California Cities
Mr. Bader
7. Comments and Questions from the Mayor and Council
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10/02/00 HON 09:22 FAX 918 441 4577
STRATEGIC ED SRVS
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STRATEGIC EDUCATION SERVICES
October 2, 2000
To: Mayor Valles and Members of the Common Council
From: Chuck Bader and Bill Chavez
Re: Review of significant legislation/issues from the close of the legislative session.
We have prepared for your review summaries of several pieces of legislation that are very
significant to the City. While these bills are important in their own right the issues they raise are
even more important.
The issues involved will no doubt be with us next year and into the future.
The bills are as follows:
1. SB 1982 (Alpert) and SB 2000 (Polanco) - Redistribution of sales tax on a
population basis rather than situs basis.
2. SB 402 (Burton) - Binding arbitration for police and fire.
3. SB 1637 (Burton) - Cap on the ERAF property tax shift.
4. AB 2838 (Hertzberg) - LAFCO
5. SB 996 (Johnston) - Workers' Compensation benefits
6. AB 2412 (Migden) - Internet sales tax
7. AB 1219 (Kuehl) - Tract map approval: adequacy of water supplies
8. AB 265 (Davis) & AB 907 (Ducheny) - San Diego power bills
We would urge your staff to review these bills with an eye toward what they mean in the
future. Naturally, we're available for discussion purposes or to put them in touch with "experts"
in Sacramento.
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SB 1982 (Alpert) and SB 2000 (Polanco)
Redistribution of Sales Tax on a Population Basis
The Bills
Both of these bills proposed a program of distributing sales tax revenues on a countywide
population basis, rather than the current situs basis.
The good news is that both bills first failed passage in the Senate Local Government
Committee (thanks to Nell Soto's vote). Later they were watered down and passed out of the
Senate. They never were assigned to committee in the Assembly, consequently they died.
A conference committee was formed with Senators Peace, Perata and Poochigian along
with Assemblymembers Aroner, Longville and Runner as members. The Committee discussed the
redistribution at length but never came to any consensus.
Two members of the committee, Assemblymembers Aroner and Longville indicated that
they strongly believed in this type of reform. Consequently, we can expect one or the other of
these legislators to introduce such legislation next year.
Significance
The redistribution of sales tax would be catastrophic to cities that have planned ahead and
entered into commitments to attract sales tax producing development to their cities.
One of the problems we have is that there are several studies that have been critical of the
efforts cities have gone to attract retail tax producing developments in their cities. The
implication is that the cities are subsidizing such development, which would have taken place in
the region anyway.
Another problem we have is the total refusal of the legislature to accept any responsibility
for its raid on property taxes, through the ERAF shift, which removed the tax incentives for non-
retail development such as residential development. Related to this problem is the lack of
knowledge on most legislators' part about the basics oflocal government finance.
Status:
Both bills died "at the desk" in the Assembly.
SB 402 (Burton)
Binding Arbitration for Police and Fire
Summllty
This bill provides final and binding arbitration of disputes regarding economic issues
within the scope of arbitration between any local agency employer and employee organizations
representing its firefighter or law enforcement employees.
It defines "scope of arbitration" for purposes of the bill to mean economic issues, including
salaries, wages and overtime pay, health and pension benefits, vacation and other leave
reimbursements, incentives, differentials, and all other forms of remuneration. The scope of
arbitration shall not include any issue that is protected by what is commonly referred to as the
"management rights" clause contained in Section 3504 of the Government Code.
Notwithstanding the foregoing, any employer subject to this title that is not exempt under Section
1299.9 may supersede this subdivision by adoption ofan ordinance that establishes a broader
definition of scope to arbitration".
Significance
This bill clearly removes budget authority over police and fire services from the hands of
locally elected representatives and places it in the hands of an outside arbitrator who is not at all
accountable to the citizens.
Furthermore, it is not an isolated effort by Sen. Burton, the President Pro Tern of the
Senate, to reward public employees' unions. Currently awaiting the Governor's signature is SB
1960 (Burton) that would empower school unions to collect "agency fees" from employees of the
public schools and community colleges that are not members of the union. A similar bill, SB 645
(Burton) was signed and implemented last year that applies to employees of the University of
California and the California State University System.
We can expect similar efforts in the future.
Status: Passed by both houses of the legislature. Enrolled to the Governor. Awaiting his
signature or veto. The Governor has said that he will sign this type of bill.
SB 1637 (Burton)
Cap on ERAF Shift
SummaI)'
This bill caps the annual increase in local property taxes that are transferred to the
Educational Revenue Augmentation Fund (ERAF). These funds are used to support education
and thereby reduce some of the state's financial obligation to the public schools.
The cap phases in over three years. After fiscal year 2002-03 the amount of revenue
allocated to ERAF would be "frozen" at the 2002-03 level.
Significance
The long term significance of this bill will only be determined in the future. It doesn't
reimburse local government for funds taken in the past. It continues taking funds in the future. It
does allow local government to keep all of the increases in property taxes in the future.
The obvious question is what happens the next time the state is short of money?
Nevertheless, SB 1637 does address the ERAF issue and provide some opportunity for
growth in local revenues.
Status: Passed both houses of the legislature, enrolled to the Governor, awaiting his signature or
veto.
AD 2838 (Hertzberg)
LAFCO
The Bill
AB 2838 is the legislative response to the Report of the Commission of Local Governance
for the 21 st Century entitled "Growth Within Bounds".
It is a comprehensive review ofLAFCO's responsibilities. Some would say that it moves
the LAFCOs toward being a regional planning agency. "Preserving open spaces and agricultural
lands" is added to the purposes of a LAFCO.
The bill provides for an expansion in the membership on a LAFCO and increased
representation for special districts.
Attached is a listing of the major provisions of the bill under the title of "LAFCO - Notes
on Major Provisions of the Bill".
Significance:
AB 2838 expands substantially the responsibilities ofLAFCOs. While it reflects the above
referenced Commission Report, many of the Commission's recommendations were not included,
watered down or eliminated through the legislative process. Next year there may well be a "clean
up" bill offered dealing with LAFCO's. Possibly a followup bill will be introduced with provisions
of the Commission's report included that were not in the final version of AB 2838.
I would recommend that your planners and other staff that deal with LAFCO should
review the Commission Report and this bill carefully.
Status:
Enrolled to the Governor, awaiting his signature or veto.
AD 2838 (Hertzberg)
LAFCO - Notes on Major Provisions of the Bill
Maior Recommendations of The Commission on Local Governance for the 21st Centurv
1. LAFCO's policies and procedures must be clarified
2. LAFCO's must be neutral, independent, and provide balanced representation for counties, cities
and special districts.
3. LAFCO's powers must be strengthened to prevent sprawl and ensure the orderly extension of
government services.
4. The Legislature must strengthen LAFCO's policies to protect agriculture and open space lands
and other resources.
5. The Legislature must comprehensively revise the state-local fiscal relationship.
6. The Legislature must develop incentives to encourage coordination oflocal plans within each
region.
7. The Legislature must enhance communication, coordination, and the procedures ofLAFCO's
and local governments.
8. The Legislature must increase opportunities for public involvement, active participation, and
information regarding government decision-making.
Specific Provisions of AD 2838
1. Require County Committee on School District Reorganization to provide written notice to
LAFCO before initiating proceedings to consider any reorganization plan. It also requires the
County Committee to hold a public hearing on receipt of a resolution of a local agency for
consideration of unification or other reorganization.
2. Review of request by a city or district to extend services outside its jurisdictional boundary.
3. Post required notices ofLAFCO proceedings on its website.
4. Requires LAFCO to provide written notice ofa proposed reorganization that may affect school
attendance for a district to the County Office of Education and each school superintendent
whose district would be affected.
5. Requires LAFCO to provide mailed notice to all registered voters and owners of property
within 300 feet of the exterior boundary of the property that is the subject of a commission
hearing.
6. Defines "landowner".
7. Requires 20 days prior notice of a LAFCO hearing.
8. Each LAFCO should adopt written policies and procedures including lobbying disclosure and
reporting requirements.
9. The bill adds preservation of open spaces and agricultural lands and efficiency in providing
governmental services to the purposes of a LAFCO.
10. Increases the membership ofLAFCO from 5 to 7 member (7 to 9 in Los Angeles County).
11. Requires prezoning consistent with the General Plan as a condition of annexation to a city.
12. Agreements with the LAFCO of an adjoining county when considering proposals that affect
both counties.
13. Authorizes a LAFCO to require disclosure of contributions expenditures and independent
expenditures in support or opposition to a proposal. LAFCO may require lobbying disclosure
and reporting requirements.
14. Provides a budgeting process and funding by the cities, county and special district.
15. Requires the County elections official to verify signatures on a petition and provides for the
costs of verification.
16. Authorizes the Commission to appoint its staff.
17. Requires review of spheres of influence every 5 years.
18. The determination ofa city's sphere of influence that includes any of the Norton Air Force
Base Redevelopment Project Area will not preclude any other local agency from providing
facilities or services related to development.
19. Representation of special districts on LAFCO.
20. Proceedings for a "special reorganization" dealing with incorporation of the entire area
detached from one city as another city to be consistent with those of the incorporation of a
city.
21. Revises the percentage of registered voters or landowners who must sign petitions for various
changes or reorganizations.
22. Adds the following to factors to be considered in a reorganization proposal:
a) The ability of the newly formed or receiving entity to provide services.
b) Timely availability of adequate water supplies.
c) Will the proposal assist the receiving entity in achieving its fair share of the regional
housing needs?
d) Urban growth boundary or similar measure adopted by the voters.
e) Information from land owners or relating to existing land use designations.
23. Statewide guidelines for the incorporation process.
24. Conditions on a request for reconsideration of a commission resolution.
25. Consideration of resolutions of objection to a proposed action.
26. Consultation with affected districts.
27. Reimbursement for mandated costs through the Commission on State Mandates
SB 996 (Johnston)
Workers' Compensation Benefit Increase
Summary
Last year the Governor vetoed SB 320 (Solis), a workers' compensation benefit increase
bill because it was too expensive. SB 996 is essentially the same bill.
Last year it was estimated that the cost ofSB 320 was about $1.5 billion, statewide. The
Governor had indicated that he would sign a benefit bill that cost no more than $450 million.
This bill was sponsored by the California Labor Federation and the California applicants'
Attorneys Association.
The benefit increases include:
1. Temporary disability and permanent total disability indemnity benefits
2. Permanent Partial disability
3. Maximum life pension benefit
4. Death benefits
The administrative changes include:
1. Appointment of a court administrator to supervise and evaluate the workers
comp courts and judges.
2. Require W/C Judges to be licensed attorneys with 5 years experience in W/C
law.
3. Prepare educational materials for treating physicians
4. Direct the Labor Commissioner to develop a w/c coverage enforcement
program.
5. Expand the alternative dispute resolution to permit arbitration of any dispute.
6. Increased penalties for uninsured employers.
7. Expand the uses of the Fraud Assessment Fund fees.
8. Eliminate the treating physician presumption of correctness, except when the
employee has pre-designated a personal physician.
9. Allow self insured employers and their case managers access to the same
medical information to which insurers are allocated access under existing law.
Significance
The Governor has said that he will veto this bill because it is too expensive, just as he did
the same bill last year. This may be good news, however, the unions and the attorneys have been
unwilling to compromise. They may run the same bill next year - and the next. Will the Governor
stand fast on this even in his reelection year of 2002?
The costs to all employers would be significant. Let's hope he holds fast.
Incidentally, item #5, the alternative dispute resolution process holds great promise to
employers to cut the costs of litigation on worker's comp issues. I recommend that your claim
manager look at it carefully.
AB 2412 (Migden)
Internet Sales and Use Tax
Summary
This bill, known as the "clicks and mortar" bill amends the sales and use tax law to more
clearly address how existing nexus rules apply to Internet retailers. "It is not intended to expand
the number of businesses that are required to collect sales or use tax but rather to ensure that an
business with an internet site and a sales presence in California collects tax on its internet sales if
the internet business sells substantially the same products under substantially the same name as the
bricks and mortar store".
In other words, the bill tries to prevent Barnes and Noble from selling a book in their store
and processing the sale through their website in order to avoid California sales tax.
The bill deals with Nexus Law, which is quite complicated. It provides a definition of
"substantial ownership interest".
Significance
At both the State and Federal Governmentalleve\ there is great reluctance to commence
taxation of the internet or sales over the internet. At the same time small retailers are complaining
about unfair competition from internet retailers who collect no state sales tax thereby lowering the
price of their products.
We can expect this conflict to be fought out for several years in the legislature.
Status: The bill passed both houses of the legislature and is "enrolled" to the Governor, awaiting
his signature or veto. The Governor has expressed opposition to taxing internet sales.
AD 1219 (Kuehl)
Water Supply as a Condition of Tract Map Approval
The Bill
AB 1219 would prohibit any local agency from approving a residential development unless
the local agency finds that a sufficient, reliable water supply is available. The measure would
prohibit any local agency from approving a residential development of200 homes or more unless
the supply is available.
The water supply planning criteria may include reasonable water supply reductions to
existing users during multiple dry years.
AB 901 of 1995 states that a water provider that has more than 3000 domestic service
connections may provide an assessment of water supply availability to the local planning agency.
By prohibiting local planning agencies from approving tentative maps if there is not a sufficient,
reliable water supply, this bill takes the next step to ensure that the benefits anticipated from SB
901 are fully realized.
Significance:
Although this bill failed this year it gives a clear indication where the environmental and
planning community is headed in the future. Furthermore, Assemblywoman Shelia Kuehl will be a
Senator next year with even more influence than she had this year. I sense that she will introduce
similar legislation next year. Furthermore, it will probably prohibit major developments of
residential, commercial or industrial property without the requisite sign off from the water agency.
The bill was opposed by all of the major players in the business and local government
communities in Sacramento. It passed out of the Assembly and died in the Senate Appropriations
Committee.
Your planners should become acquainted with this legislation. It has broad ramifications
Status:
Died in the Senate Appropriations Committee
AB 265 (Davis) and AB 970 (Ducheny)
San Diego Power Bills
The Bills
AB 265 establishes rate relieffor customers of San Diego Gas and Electric Company.
The bill is double joined to AB 970, which is an attempt by the legislature to speed up the process
of approving the siting process for new thermal power plants.
AB 265 places a cap (ofSO.065/kw) that SDG&E may pass on to most of its customers.
It includes a "balancing account" with some offsets which could result in customers having to
make up the difference between the cost of electricity to SDG&E and what the utility can charge
the customer under the cap. This difference could amount to a large "balloon" payment being due
and payable Jan. 1,2003.
AB 970 is a first step toward the encouragement of new power plants to increase
electricity generating capacity. There is a tremendous "tug of war" over development of plants
and environmental protection. AB 970 establishes the Governor's Clean Energy GREEN TEAM
with jurisdiction over power plant siting. It provides for an expedited plant siting process for
thermal plants that "will not cause a significant adverse effect on the environment or the electrical
system".
Significance:
The cost of electricity to consumers, businesses and government in San Diego County has
tripled over the last 3-4 months. Last year there were news reports of great increases in the
wholesale costs to the utilities of power. Since there was a statutory cap on all utilities last year
the utilities absorbed the losses. This year the cap on SDG&E's price to its consumers was
removed per the provisions of the electric deregulation law.
While it is still unclear if SDG&E acted wisely in contracting for its electric supplies, and
what impact those decisions had on its pricing policies, the underlying problem is a lack of supply.
That problem is made more critical by our state's rapid economic expansion and the failure to
develop adequate generating capacity.
This supply problem is a state-wide problem. It is my understanding that So. CaI. Edison
has experienced similar cost increases in its purchasing of wholesale electric supplies. Edison is
still under the cap that limits what it charges its customers.
That cap on Edison's pricing expires in 2002. Furthermore, there is a statutory process
available to Edison to pay offits "stranded assets" early and thereby have the cap released early.
In other words, it is possible that the huge price increases could hit the Edison market area
next year or the year after that.
Currently it takes at least 5 years to gain site approval and construct a generating plant.
Capping prices doesn't solve that problem. In fact the cap could result in shortages, brownouts or
even blackouts. This problem does not lend itself to a quick legislative "fix".
This is a very complex issue that pits power generators against environmentalists. Both
sides are digging in for a fight with big stakes involved. Needless to say, the consequences to a
city could be huge. For starters, our city staff should become knowledgeable in these two bills
and this issue.
Status of both bills: Signed into law by the Governor