TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Kim Summers, City Manager
PREPARED BY: Kristen Crane, Assistant City Manager
SUBJECT:
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Resolution Opposing California Initiative No. 21-0042A1, the Taxpayer Protection and Government Accountability Act
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RECOMMENDATION
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Adopt Resolution 24-4762, entitled: A Resolution of the City Council of the City of Murrieta, California, Opposing California Initiative #21-0042A1, which would Significantly Undermine Local Control and Disrupt the Ability of Local Governments to Provide Essential Services and Infrastructure.
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PRIOR ACTION/VOTE
None.
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
The November 2024 ballot is slated to include a proposed initiative, sponsored by the California Business Roundtable (CBRT), entitled "The Taxpayer Protection and Government Accountability Act," that would revise the California Constitution with provisions that are anticipated to put billions of local government tax and fee revenues at risk statewide for funding public services. The CBRT is an association representing large-scale national corporations. If this initiative passes, it will significantly undermine local control, and it is anticipated that there will be significant negative impacts on the City of Murrieta's operations and core service delivery, including public safety, recreation and library services, capital infrastructure projects, general operations, and more.
The proposed ballot measure aims to limit voters' authority and input, adopt new and stricter rules for raising taxes and fees, and may make it more difficult to impose fines and penalties for violating State and local laws.
The League of California Cities and a broad coalition of local governments, labor and public safety leaders, infrastructure advocates, and businesses strongly oppose this initiative.
Currently, the ability of local governments to raise revenues by way of implementing fees or taxes is substantially governed and restricted by State statute and constitutional provisions, including the voter-approved provisions of Proposition 13 of 1978, Proposition 218 of 1996, and Proposition 26 of 2010. Any time the City of Murrieta considers updating a revenue source such as user fees for services, Development Impact Fees, Landscape Lighting District Assessments, etc., the City follows the thorough process required by State law, which both structures how the fees are determined (e.g., based on the cost for service or with a nexus study structuring the fee based on proportional impact) and provides a robust public noticing process, as well as a public voting process for certain types of new or increased assessments or taxes. The Taxpayer Protection and Government Accountability Act proposes to significantly add and expand restrictions on voters and local government tax and fee authority.
Fees and Taxes
As a standard financial practice, local governments levy various fees and other charges to provide funding for core public services.
Not exclusive to the City of Murrieta or local government in general, major examples of fees and charges affected by this initiative are:
• Nuisance abatement charges, such as for weed, rubbish, and general nuisance abatement to fund community safety, code enforcement, and neighborhood cleanup programs;
• Commercial franchise fees;
• Emergency response fees, such as in connection with driving under the influence (DUI);
• Advanced Life Support (ALS) transport charges;
• Document processing and duplication fees;
• Transit fees, tolls, parking fees, and public airport and harbor use fees; and
• Facility use charges, parks and recreation services fees, and garbage disposal tipping fees.
Virtually every city, county, and special district must regularly (generally annually) adopt increases in fee rates and charges and revise rate schedules to accommodate new users and activities or recover the costs of providing services. Most of these would be subject to new standards and limitations under the threat of legal challenges.
Based on the current volume of fees and charges imposed by local agencies, including Council-adopted increases to accommodate inflation, the League of California Cities estimates the amount of local government fee and charge revenue at risk throughout California is approximately $2 billion per year, including those adopted since January 1, 2022. Over ten years, $20 billion of local government fee and charge revenues will be at heightened legal peril.
As written, the proposed initiative would retroactively reverse or cancel any taxes or fees passed since January 1, 2022. For the City of Murrieta, examples of affected fees and charges adopted since January 1, 2022, that could be at risk include:
• Solid waste user fees;
• Development Impact fees;
• User Fees for certain City services (adopted in Spring 2023); and
• Assessments for Landscape Lighting District and Community Service Districts.
In all cases, the examples above were long-term existing fees or assessments that were updated following the requirements established in State law as identified above to confirm the fees and charges were appropriate, correctly noticed to the public and do not exceed the cost of providing the service.
If this ballot measure passes, the City will need to cease charging these fees and assessments, which will necessitate having to significantly reduce the local public services funded by these measures, unless the tax is re-submitted for voter approval, which would be a costly and time-consuming process and may not ultimately successfully achieve what would be a newly-required threshold for approval. It is also possible that the City could encounter expensive litigation as an outcome.
Reductions in local government tax revenues impact core services and infrastructure, including fire and emergency response, law enforcement, streets and roads, parks, libraries, affordable housing, homelessness prevention, and mental health services. This may also impact drinking water and sewer sanitation services for the four local water district partners that serve Murrieta.
Fines and Penalties
Under existing law, cities are required to provide due process before imposing a penalty or fine for violation of its municipal code:
1. A local agency must adopt administrative procedures that govern imposing fines and penalties, including providing a reasonable period of time for a person responsible for a continuing violation to correct or remedy the violation [Gov't Code 53069.4].
2. Notice must be given to the violating party before imposing the penalty; and allow the party to be heard and present any facts or arguments [Merco Construction Engineers v. Los Angeles Unified School District (1969) 274 CA 2d 154, 166].
3. The fine may not be "excessive" [U.S. Constitution amendments VIII and XIV].
The November 2024 ballot initiative would convert administratively imposed fines and penalties into taxes unless a new, undefined, and ambiguous "adjudicatory due process" is followed. This provision may put at risk the authority to impose fines and penalties for state and local law violations. Examples of fines and penalties in Murrieta include code enforcement citations, penalties applicable to work being performed without a permit or license, or delinquent permits or licenses.
In summary, Initiative #21-0042A1, anticipated to be on the California ballot in November 2024, raises significant financial concerns for cities throughout California, including Murrieta. This is particularly true because the established fees, charges, assessments, etc., that are charged locally to pay for core services were developed and implemented following a robust process established in State law as approved previously by California voters.
Cities throughout California have voiced their opposition to this ballot measure. So far, the League of California Cities has reported over 220 cities that have formally opposed this initiative. In Riverside County, these cities include (to date) Banning, Beaumont, Cathedral City, Corona, Indian Wells, Indio, Norco, Palm Desert, Perris, Temecula, and Wildomar.
FISCAL IMPACT
Although adopting the proposed Resolution has no direct fiscal impact, the passage of this initiative is anticipated to affect the City of Murrieta significantly. Many of the financial means that the City of Murrieta relies upon to provide services would be at risk, even though they have all been adopted lawfully and have been in place for many years. Examples include solid waste user fees, development impact fees, certain Citywide fees for services, and assessments for Landscape Lighting District and Community Service Districts.
ATTACHMENTS
1. Fact Sheet Initiative No. 21-0042A1
2. Full Text of Proposed State Ballot Initiative No. 21-0042A1
3. Resolution No. 24-4762