COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager's Office

DATE:

January 3, 2002

BOARD MEETING DATE:

January 8, 2002

TO:

Honorable Board of Supervisors

FROM:

John L. Maltbie, County Manager

SUBJECT:

County Manager's Report Number One

1. Board Agenda Packet Deadlines

Effective April 2002, agenda packets will be distributed to each Board Member one-week prior to scheduled meetings. As you know, the current process requires Clerk of the Board staff to distribute packets by 5:00 PM on the Thursday prior to the Board meeting. My office has completed an analysis of what it would take for each department to move that to 5:00 PM on the Tuesday prior to the meeting, and what the consequences of the move would be.

Overall, the departments did not express any major conflicts that would prohibit a change. However, as you know, the transition to electronic document web publishing of the agenda packet is currently underway. We are still in the process of training staff and troubleshooting the system. Therefore, the County Manager's Office will implement the revised agenda packet deadlines by April of 2002. This will allow us to proceed with the smooth transition of publishing the Agenda and supporting documents to the web without further consequence.

Legislative Report #1

2. March 2002 Ballot Measures

As you know, the State faces a $4 billion current year and $12.4 billion 2002-03 budget shortfall. In anticipation of the January 10, 2002 release of the Governor's proposed spending plan, numerous proposals to minimize the impact of the shortfall have already surfaced. These include tax increases, program cuts, debt financing and an already aborted sales tax initiative for public safety.

State Treasurer Phil Angelides has proposed a restructuring of California's debt by moving some of the state's fixed-rate general obligation bonds to the consistently cheaper variable-rate bonds. Additionally, the Treasurer proposes to level out the currently "front loaded" debt payments to more equal payments over the life of the bond. This plan would save $223 million in the current fiscal year, $920 million in 2002-03 and $964 million in the following fiscal year.

Some believe that debt payment restructuring or authorizing additional debt could simply result in shifting the problem out to future years. Some argue that the state should take advantage of the current favorable lending rates to restructure the state's long-term debt and authorize additional debt to stimulate the economy with infrastructure projects.

There are six propositions on the upcoming March 5, 2002 ballot, two would authorize additional debt and one measure that would "fence-off" an estimated $1.4 billion in state General Fund tax revenue. The following is a summary of the March 5, 2002 ballot:

Number and Title

Summary

Proposition 40

The California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002

Would authorize the issuance of $2.6 billion in general obligation bonds to finance projects that protect rivers, lakes and streams; beaches and coastal areas threatened by pollution; and preserve open space and farmland; restore historical and cultural areas. Fiscal Impact: state cost of about $4.3 billion over 35 years or $172 million annually.

Proposition 41

Voting Modernization Bond Act of 2002
(Shelley-Hertzberg Act)

Would authorize $200 million in general obligation bonds to fund new county voting machines. Fiscal Impact: state cost of $255 million over 10 years or $26 million annually and $67 million county cost in matching funds.

Proposition 42

Transportation Congestion Improvement Act. Allocation of Existing Motor Vehicle Fuel Sales and Use Tax Revenues for Transportation Purposes Only.

Would require beginning July 1, 2003 existing revenues from sales and use tax on motor vehicle fuel used for transportation purposes only for five years. Beginning July 1, 2008 that revenue be used for public and mass transportation projects, city and county street and road repairs and state highway improvements. Would require 2/3 legislative action to suspend or modify allocation percentages. Fiscal Impact: 2008-09 shift of $1.4 billion in state gasoline tax, increasing annually thereafter.

Proposition 43

Right to Have Vote Counted

Amends the Constitution to declare that a voter who casts a vote in an election in accordance with the law shall have that vote counted. Fiscal Impact: no additional cost.

Proposition 44

Chiropractors. Unprofessional Conduct

Amends the Chiropractic Act to clarify unprofessional conduct and required investigation of licensee; revocation upon second conviction or multiple convictions and specifies insurance fraud offenses. Fiscal Impact: no additional cost; potential state savings resulting from lower workers' compensation and Medi-Cal costs.

Proposition 45

Legislative Term Limits. Local Voter Petitions

Allows voters to submit petitions to permit their incumbent legislator to run for re-election and serve maximum of four years beyond current term limit. Fiscal impact: unknown county costs up to several hundreds of thousands to verify voter petition signatures.

Background

As of October 2001, the State of California had $26 billion of general fund bond debt, of which $20 billion of general obligation bonds and $6 billion of lease-payment bonds; and another $12 billion is authorized but not yet sold. The state General Fund bond debt will be $3.2 billion during fiscal year 2001-02; and increase to $3.7 billion by 2005 and will decline thereafter.

Some financial managers believe that the state's debt ratio should not exceed a fixed percentageasy of no more than 5 or 6 percent. Currently, the state's debt ratio is about 4.7 percent. According to the Legislative Analyst Office (LAO), the approval of the two bonds on the March 2002 ballot would only slightly increase the debt ratio. Additionally, the LAO acknowledges that regardless of the debt ratio, it is critical and fiscally prudent for the state to address its highest priority infrastructure needs with a multiyear capital outlay plan. The state has no such comprehensive plan.

A significant amount of debt financing is being considered for the November 2002 ballot. Governor Davis has indicated his strong support for $10 billion in general obligation bonds for school facilities and Senate President Pro Tem John Burton has expressed his intention to pursue authority for $2 billion in housing bonds. Finally, looming among costly unfinished state business is the issuance of revenue bonds to fund the multi-billion energy purchases.

There are three measures on the March 5, 2002 ballot that benefit California's local agencies worthy of your consideration.

a)

Recommendation: Approve a resolution in support of Proposition 40, The Clean Water, Clean Air, Safe Neighborhood Parks and Coastal Protection Act of 2002

Proposition 40, enabled by Assembly Bill 1602 (Keeley, Chapter 875, Statutes of 2001) authorizes voter approval of $2.6 billion in general obligation bonds:

_

$1,275 billion to finance land, air and water conservation, including improvements to water quality and supply, including improving the safety of drinking water, flood control, water quality and reliability;

_

1,057.5 billion for park and recreation including purchase of beaches, recreational areas, habitats and open space; and

_

267.5 million for historical and cultural preservation.

This measure requires an annual independent audit.

The funds will be appropriated by the Legislature for state projects, as well as to make local assistance grants according to the following spending plan: $372.5 million on the basis of population for the acquisition and development of neighborhood, community and regional parks; $200 million in accordance of Roberti-Z'berg-Harris Urban Open Space and Recreational Program Act; and $260 million for urban and special need parks programs; 60 percent of the $372.5 million shall be allocated to cities and to districts other than regional parks and 40 percent allocated to counties and regional park districts.

State Department of Parks and Recreation is required to adopt criteria and procedures for evaluating local assistance grant applications.

Support and Opposition

Support for Proposition 40 includes Audubon California, League of Women Voters and AARP who argue the "Clean water, clean air and safe parks benefit all Californians. Yes on Proposition 40 is a prescription for a healthy California." League of Women Voters. "California's economy depends on preserving quality of life. The investments provided by this measure will keep California's tourism industry strong, helping California companies attract and keep employees and strengthening communities throughout the state." California Business Properties Association.

Opponents, including Senator Ray Haynes, Assemblyman Dick Dickerson and the National Tax Limitation Committee, who argue Proposition 40 simply provides more "pork" for the legislature to allocate on their favorite district projects, regardless of value or need of the project as is evidenced with the "misuse" of voter approved Proposition 12 and 13 two years ago; and that California can not afford additional debt when faced with a project budget deficit of $12 billion.

The San Mateo County Park and Recreation Commission recommends your Board support Proposition 40.

Alignment

Support for Proposition 40 aligns with your Board's Shared Vision 2010 commitments of Preserve and provide people access to our natural environment and Leaders work together across boundaries to preserve and enhance our quality of life; and achieves goals (14) important natural resources are preserved and enhanced through environmental stewardship; and (15) residents have nearby access to green space, such as parks and recreational opportunities.

A resolution in support of Proposition 40 Clean Water, Air, Safe Neighborhood Parks and Coastal Protection Act of 2002 is attached for your consideration.

b)

Recommendation: Approve a resolution in support of Proposition 41, Voting Modernization Bond Act of 2002

Proposition 41, enabled by the passage of Assembly Bill 56 (Shelley-Hertzberg) to authorize voter approval for the issuance of $200 million in state bonds to allow counties to purchase modern voting equipment. Reportedly, many California counties continue to use the outdated punch card or the now infamous "chad" system. A five-member Voting Modernization Board would be created to consider application and award the proceeds of the bonds to counties to purchase new election equipment. Counties are required to provide a $1 in matching funds for each $3 in state funds.

Support and Opposition

Proposition 41 is supported by Assembly Majority Leader Kevin Shelley, Secretary of State Bill Jones, League of Women Voters, California Common Cause and the California Public Interest Research Group who argue that "Citizens need to know that their votes count and in a disputed race, the results can be reliably checked." Also citing the Secretary of State's official analysis, "Innovations in voting technology provide significant benefits - including ease of use, accessibility, accelerated reporting of results, meeting the needs for multiple ballots and multiple language ballots, improvements in security and reduced costs."

Opponents include Assemblyman Dennis Mountjoy, Howard Jarvis Taxpayers Association and the National Tax Limitation Committee who argue that "new voting machines should be purchased with the billions of dollars Californians pay in income tax, sales tax and other taxes ...not with new bonds," and that "California families should not be expected to pay more because Sacramento politicians carelessly spent last year's $8 billion tax surplus."

Alignment

Support for Proposition 41 aligns with your Board's Shared Vision 2010 commitment to Realize the potential of our diverse population and works toward the goal (2) civic engagement - including voting, public service, charitable giving, volunteerism and participation in public discussions of important issues - is uniformly high among the diverse population.

Honorable Warren Slocum, San Mateo County Assessor-County Clerk-Recorder urges the Board support Proposition 41 on the March 2002 ballot. A resolution in support of Proposition 41 Voting Modernization Bond Act of 2002 is attached for your consideration.

c)

Recommendation: approve a resolution in support of Proposition 42, Transportation Congestion Improvement Act

The State of California spends more than $15 billion annually to maintain, operate and improve its highways, streets, roads and mass transit systems. Half of these revenues come from local taxes and transit fares with the remainder coming from federal and state motor fuel and diesel fuel taxes and truck weight fees.

Currently, the state imposes two types of taxes on gas and diesel fuel: an excise tax of 18 cents on each gallon gasoline and diesel fuel; and a sales tax on the sales of gasoline and diesel fuel. As of January 1, 2002 the statewide sales and use tax rate is 6 percent. About $3 billion in revenue is realized from the excise tax is currently dedicated to transportation improvements. However, only a small portion of sales tax on gas is used for transit purposes. The major o the sales tax on gas goes to the state General Fund to support health, education, social services, corrections and provide local assistance.

Proposition 42 would require shifting the state's share of the gasoline sales tax revenue that is currently deposited into the state General Fund to the Transportation Investment Fund (TIF); and that beginning in fiscal year 2003-04 through 2008 TIP funds would be allocated according to the statutory formula; then beginning in 2008-09 TIF funds would be allocated: 20 percent to public mass transit, 40 percent subject to the State Transportation Improvement Program (STIP), 20 percent to city street and highway maintenance and 20 percent to county street and highway maintenance.

The measure requires a two-thirds vote of the Legislature to change the allocation or suspend the transfer of the funds.

Support and Opposition

Support for Proposition 42 includes California State Office of Emergency Services, California Taxpayers' Association, California Organization of Police and Sheriffs, California Highway Patrol and the California State Automobile Association Board. They argue that Proposition 42 requires the "gasoline sales tax we're already paying be spent improving our highways, local streets and mass transit without increasing or imposing any new taxes. Years of neglect have left California with the Nation's third most deteriorated roads."

Opponents include California State Teachers Association, Health Access of California, California State Firefighters' Association, California Tax Reform Association and Latino Issues Forum who argue that the measure is "ill conceived -- pitting vital programs against each other - and badly timed...locks into the Constitution in 2002, spending priorities for 2008. And, it puts transportation funding ahead of priorities for education, health and safety concerns."

Alignment

Support for Proposition 42 aligns with your Board's Shared Vision 2010 commitment to Redesign our urban environment to increase vitality, expand variety and reduce congestion and works toward goal (7) Maintain and enhance the public safety of all residents and visitors and (10) Public transportation choices that are convenient, affordable, accessible and safe.

A resolution in support of Proposition 42 Transportation Congestion Improvement Act is attached for your consideration.

3. Federal Changes

Education

As part of that final days efforts was the passage of the education reform measure dubbed "No Child Left Behind Act." Many claim the measure is the most meaningful education reform achieved in years. The President's signature is anticipated. This complex legislation includes mandatory testing in reading and math in grades three to eight, programs to improve teaching of reading, school accountability measures and tutoring programs.

According to the Administration, this legislation is designed to give states more flexibility in achieving higher standards of achievement. The states will set the standards and choose the test. Additionally, this legislation seeks to force states and local schools to pay more attention to poor and low-achieving students. States will have four years to ensure that all teachers are qualified to teach in their subject.

According to the California Teachers Association, 42,000 of California's 301,000 public school teachers currently have emergency teaching credentials and that number is expected to rise to 65,000 within the next two years. Furthermore, it is reported that 50 percent of all new teachers quit within five years; coupled with the large number of teachers approaching retirement age within the next 10 years, cloud California's ability to meet the legislation's goal that teachers be fully credential within four years.

The new legislation requires states establish four-year plans to ensure all teachers are qualified to teach in their subject areas. If districts fail, the state can take control of the district's teacher-training money; if the state fails to comply the federal government can take over the state's program. Compliance came with a 46.4 percent increase in federal funding for California's teacher-preparation increasing from $228.4 million in 2001 to $334.3 million in 2002-03.

Health

The Labor-HHS-Education appropriation includes $6.1 billion for health resources and services, including a $312 million set-aside for the construction and renovation of health care facilities. In May 2001, San Mateo County requested federal assistance with the $124,000 million San Mateo County General Hospital and Clinics construction costs.

I am pleased to report that as a result of Congresswoman Anna Eshoo's diligence $600,000 of the $312 million set-aside has been designated to the construction costs of the Psychiatric Emergency Services Center at San Mateo County General Hospital.

4. University of California Conducts Mental Health Policy Seminar

Your Board has a long history supporting the "decriminalization" of the mentally ill and advocates of mental health coverage parity. On Saturday, January 12, 2001 the University of California, Berkeley's Institute of Governmental Studies and the Office of Continuing Medical Education at the University of California San Francisco are conducting a symposium on Coping with Mental Illness and Crafting Public Policy. The symposium is designed for medical practitioners, policymakers, scholars, media and the interested public. Among the topics are mental health funding and parity - What can be done to strengthen and enhance coverage and delivery for the mentally ill? What challenges remains in implementing federal and state parity legislation? Papers and background materials will be available on the IGS web site.

The text of a recent speech made by on the panelists, Judge Harold Shabo's speech, Social Costs: Criminal Justice and Mental Health System Gaps that Contribute to the Criminalization of Mentally Disordered Persons is already available online at http://mentalhealth policy.berkeley.edu/

San Mateo County Health Services Agency and Mental Health will keep your Board apprised of any programs, policies or initiatives that emanate from the upcoming symposium.