COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager’s Office

DATE:

August 11, 2005

BOARD MEETING DATE:

August 16, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

John Maltbie, County Manager

SUBJECT:

County Manager’s Report #14

A.

Resolution calling for the State to reimburse fully San Mateo County's expenditures related to the statewide special election on November 8, 2005

RECOMMENDATION:

Adopt a resolution calling for the State to reimburse fully, in fiscal year 2005-06, San Mateo County for expenditures the County will incur for complying with the Governor’s order to conduct a statewide special election on November 8, 2005.

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government

Goal(s): Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

BACKGROUND:

On June 13, 2005, Governor Schwarzenegger called for a special election. Citing concerns about California’s budget, his proclamation highlights initiative measure 1131 (now labeled Proposition 76—State Spending and School Funding Limits. Initiative Constitutional Amendment).

While there is a possibility that the Governor could cancel the special election, several deadlines related to the statewide special election have passed including what statewide initiative and legislative measures have qualified for the election and argument and rebuttal submissions. As of July 27, eight initiatives have qualified for the statewide special election.

DISCUSSION:

CSAC is urging the Legislature to take immediate action to reimburse fully counties for the cost of the November 8, 2005 statewide special election. To that end, they are asking that individual counties join the effort by passing resolutions and contacting their local legislators.

According to the Office of the Registrar of Voters, San Mateo County is expected to spend $700,000 on costs directly related to the statewide special election. This does not include costs the County will incur as a result of regularly scheduled election activities. The Governor’s proclamation calling for the special election states that funds for relevant costs shall be included in the State Budget for 2006-07 fiscal year or sooner. CSAC is urging that reimbursement be made this fiscal year (2005-06).

In 2003, counties spent $55 million for the statewide special recall election. San Mateo County spent $1.3 million for costs related to the statewide special recall election. The County has not been reimbursed for those costs.

FISCAL IMPACT:

The Registrar of Voters estimates San Mateo County will spend $700,000 on costs directly related to the statewide special election.

B.

Resolution in support of legislation related to mechanisms replacing the Property Tax Administration Grant funds.

RECOMMENDATION:

Adopt a resolution in support of legislation related to mechanisms replacing the Property Tax Administration Grant funds.

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government

Goal(s): Goal #20—Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

BACKGROUND:

As part of the May Revision, the Governor proposed eliminating $3 million in grant funds to San Mateo and Marin counties. Since these counties are “basic aid” counties, the Administration argued none of the property tax revenues generated by these counties is available to offset the state’s Proposition 98 General Fund obligation.

While County staff was able to secure current year funding from the Property Tax Administration Grant program, the Legislature (and ultimately the Governor through his approval of the state budget) eliminated the program. According to CSAC, the program started in 1995-96 “during a period of declining revenue, when county assessors were facing significant backlogs in reappraisals as a result of a decline in home values. The $60-million program was an attempt to shore up a system which was falling behind, and thus costing the state money since every property tax dollar that goes to schools is one less dollar out of the state’s General Fund obligations to pay for education under Proposition 98.”

The California Assessors Association is developing a legislative proposal based on conversations with the Department of Finance. While the proposal has not been completed, it is anticipated to be introduced and passed before the recesses for the year (September 9). Modeled after a program that preceded the Property Tax Administration Grant program, the proposal would create a loan program. Counties that elect to participate would be subject to a number of conditions as part of the loan. But should the conditions be met, the loan would be forgiven.

DISCUSSION:

While counties are required to cover the administrative costs (save the grant program funds) of assessing property values, statewide counties only receive 19% of the revenue. In San Mateo County, each dollar of property tax is divided among many agencies.

w

Schools

65%

w

County

14%

w

Cities

12%

Special District

9%

In addition, counties cannot recover administrative costs from recipient agencies. While cities and special districts pay a share, school districts do not.

Funding from the program or replacement is critical to the ability of the Assessors office in ensuring current assessments. For 2005-06, the Assessor announced a 7.4% increase in property tax revenues.

FISCAL IMPACT:

Estimated at $2.2 million per year.