COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager’s Office

DATE:

September 7, 2006

BOARD MEETING DATE:

September 12, 2006

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

John L. Maltbie, County Manager

SUBJECT:

County Manager’s Report #15

A.

Resolution in support of Proposition 1A, Transportation Funding Protection; Legislative Constitutional Amendment

RECOMMENDATION:

Adopt a resolution in support of Proposition 1A, Transportation Funding Protection; Legislative Constitutional Amendment.

VISION ALIGNMENT:

Commitment: Redesign our urban environment to increase vitality, expand variety and reduce congestion

Goal(s): Goal 10—Public transportation choices are convenient, affordable, accessible and safe.

BACKGROUND:

Proposition 1A would amend the State Constitution to limit the conditions under which the Legislature and Governor can suspend the constitutionally established allocation of gasoline sales tax for transportation purposes.

Approved by voters in 2002, Proposition 42 amended the State Constitution to dedicate most gasoline sales tax revenue to transportation purposes (the Transportation Investment Fund). However, Proposition 42 included language that allows for the suspension of this automatic allocation when the state experiences fiscal difficulties. In addition, Proposition 42 was silent as to when the funds would have to be repaid to the Transportation Investment Fund.

DISCUSSION:

Since 2002, the state has suspended Proposition 42 in 2003-4 (partially) and in 2004-05. In addition, the Governor proposed suspension of Proposition 42 funding for the 2005-06 State Budget. This proposal was rescinded in the May Revision.

San Mateo County’s portion of Proposition 42 funds is approximately $2.5 million annually. From the 2003-04 and 2004-05 suspensions, San Mateo County has lost approximately $4.1 million. As a result, the County’s road pavement condition index declined. However, the funding was paid back in August 2006.

Proposition 1A would ensure stable on-going revenue for agencies that rely on transportation funds to deliver projects and services. While Proposition 1A would provide the state some flexibility to borrow these funds, it requires clear repayment deadlines and limits on the number of loans made.

C/CAG staff notes that (this) Proposition 1A will provide transportation funds protections similar to those provided to local resources in the Proposition 1A approved by voters in November 2004. Supporters include CSAC.

FISCAL IMPACT:

While this does not have a direct fiscal impact, it will better ensure that funding, upon which the County relies, is not suspended the Legislature and Governor.

B.

Resolution in support of Proposition 1B, Highway Safety, Traffic Reduction, Air Quality and Port Security bond Act of 2006

RECOMMENDATION:

Adopt a resolution in support of Proposition 1B, Highway Safety, Traffic Reduction, Air Quality and Port Security bond Act of 2006.

VISION ALIGNMENT:

Commitment: Redesign our urban environment to increase vitality, expand variety and reduce congestion

Goal(s): Goal 10—Public transportation choices are convenient, affordable, accessible and safe.

BACKGROUND:

Proposition 1B provides $19.925 billion in bonds for state highway improvements, repairs, upgrades to reduce congestion, and for local streets and roads including seismic improvements to local bridges, mass transit, and carpool lanes.

DISCUSSION:

Proposition 1B will provide approximately $2 billion to cities and counties. San Mateo County is anticipated to receive approximately $18.4 million from this program. There are also competitive funds including corridor mobility project funding for which San Mateo County may apply.

The Legislative Analysts notes that, “If the bonds are sold at an average interest rate of 5 percent, the cost would be about $38.9 billion to pay off both the principal ($19.9 billion) and interest ($19.0 billion). The average repayment for principal and interest would be about $1.3 billion per year.”

The California State Association of Counties took a support position on Proposition 1B.

FISCAL IMPACT:

San Mateo County is anticipated to receive $18.4 million, in addition to competitive grant funding. Unknown, new or expanded operations/maintenance costs.

C.

Resolution in support of Proposition 1C, Housing and Emergency Shelter Trust Fund Act of 2006

RECOMMENDATION:

Adopt a resolution in support of Proposition 1C, Housing and Emergency Shelter Trust Fund Act of 2006.

VISION ALIGNMENT:

Commitment: Offer a full range of housing choices

Goal(s): Goal 9—Housing exists for people of all income levels and for all generations of families.

BACKGROUND:

Proposition 1C provides $2.850 billion in bonds for battered women shelters, low-income housing for seniors, homeownership assistance for the disabled and working families and repairs and accessibility improvements for apartments of families.

DISCUSSION:

There is no guarantee of what funding, if any, San Mateo County could receive from Proposition 1C. However, staff from the HEART (Housing Endowment and Regional Trust) of San Mateo County note that the previous housing bond, Proposition 46, brought a total of $19.3 million to the County and impacted 772 units of housing. The County’s share of Proposition 46 funding included:

Local Housing Trust Fund (HEART)

$2.0 million

CalHFA

1.3 million

Emergency Housing Assistance Program

1.6 million

Multifamily Housing Program—Supportive Housing (Belmont Apartments)

$2.7 million

Multifamily Housing Program (includes Grand Oaks development)

10.3 million

The Legislative Analysts notes that, “If the federally taxable bonds were sold at an average rate of 6.5 percent and the remaining bonds at an average rate of 5 percent, the cost to the state would be about $6.1 billion to pay off both the principal ($2.85 billion) and the interest ($3.3 billion). The average payment would be about $204 million each year.”

The California State Association of Counties took a support position on Proposition 1C.

FISCAL IMPACT:

Unknown. Potentially positive.

D.

Resolution in support of Proposition 84, Water Quality, Safety, and Supply; Flood Control; Natural Resource Protection; Park Improvements; Bond; Initiative Statute

RECOMMENDATION:

Adopt a resolution in support of Proposition 84, Water Quality, Safety, and Supply; Flood Control; Natural Resource Protection; Park Improvements; Bond; Initiative Statute.

VISION ALIGNMENT:

Commitment: Preserve and provide people access to our natural environment.

Goal(s): Goal 14—Important natural resources are preserved and enhanced through environmental stewardship.

BACKGROUND:

Proposition 84 would allow the state to issue up to $5.4 billion in general obligation bonds for safe drinking water, water quality, water supply, flood control, natural resource protection and park improvements. Find attached a chart of the fund allocation by program.

DISCUSSION:

Analysis by staff has not revealed any direct allocation of Proposition 84 bond revenues directly to San Mateo County. However, the funded programs could provide San Mateo County competitive grant opportunities for key projects.

Proposition 84 advocates note that the proposition dedicates some funding to specific areas and watersheds in the San Francisco Bay Area. Bay Area related funding includes:

Funding Amount

Program

Bond Funding Category

$138 million

Water supply and water quality projects for San Francisco Bay Region

Integrated Water Management & Water Quality

$180 million

Bay-Delta and Coastal Fishery Restoration Projects

Protection of Rivers, Lakes & Streams

$108 million

San Francisco Bay Area Conservancy for coastal watershed protection

Protection of Beaches, Bays and Coastal Waters

$45 million

Coastal Conservancy for Monterey Bay watershed protection

Protection of Beaches, Bays and Coastal Waters

$37 million

North Coast water supply and water quality projects

Integrated Water Management & Water Quality

$52 million

Central Coast water supply and water quality projects

Integrated Water Management & Water Quality

$180 million

Local flood control subvention funds

Flood Control

While the Public Works Department does not anticipate significant increases in grant resources from the passage of Proposition 84, the Parks and Recreation Division might be able to benefit from some of these programs. The $108 million for the San Francisco Bay Area Conservancy includes a minimum 20 percent set aside for projects in watersheds draining directly to the Pacific.

Proposition 84 will with San Mateo County’s 1/8th cent sales tax for parks and recreation programs. Parks and Parks Foundation staff believe the measures complement each other. The capital funds from the bond will allow cities and the County to stretch the sales tax dollars and apply more to operations and maintenance. Additionally, the sales tax gives can be used as match or an identified source of on going maintenance and operating funds, which could provide an advantage in applying for the bond grant funding.

The California State Association of Counties took a neutral position on Proposition 84. The Urban Counties Caucus has taken a support position.

FISCAL IMPACT:

Unknown. Potentially positive.

E.

Resolution in support of Proposition 86, Tax on Cigarettes; Initiative Constitutional Amendment and Statute

RECOMMENDATION:

Adopt a resolution in support of Proposition 86, Tax on Cigarettes; Initiative Constitutional Amendment and Statute.

VISION ALIGNMENT:

Commitment: Ensure basic health and safety for all.

Goal(s): Goal 5—Residents have access to healthcare and preventative care.

BACKGROUND:

Proposition 86 would impose a 13 cent tax on each cigarette ($2.60 per pack) sold in California. The funds generated from this tax would first offset any reduction in revenue generated from Proposition 10 (a 50 cent tax for child development programs). The remainder of the revenue would be allocated to various newly created accounts: Health Treatment and Services Account (52.75 percent), Health Maintenance and Disease Prevention Account (42.25%) and Health and Disease Research Account (five percent).

Under current law, cigarettes sold in California are subject to an 87-cent excise tax. The tax includes Proposition 10, 25 cents for tobacco education and other programs, 10 cents to the general fund and 2 cents for breast cancer research.

DISCUSSION:

The Legislative Analyst has estimated the Proposition would generate approximately $1.2 billion in 2006-07 with declining amounts thereafter. The Legislative Analyst notes that this estimate is uncertain given the magnitude of the increase. As a result, staff has been unable to determine how much funding San Mateo County would receive should Proposition 46 pass. However, SMMC emergency services and the County’s Health Families/Healthy Kids program could receive funding.

Under Proposition 46, approximately $756 million (74.5 percent of the Health Treatment and Services Account) would be dedicated to hospital emergency and trauma care. While the allocation formula has not been established it will consider factors including number of emergency department encounters, charity care costs, bad-debt costs and county indigent care costs.

Proposition 46 would also dedicate 45.5 percent of the Health Maintenance and Disease Prevention Account (approximately $367 million in 2007-08) to children’s health coverage. San Mateo County’s Health Families/Health Kids programs could benefit from this funding.

The California State Association of Counties took a neutral position on Proposition 86. The Urban Counties Caucus has taken a support position.

FISCAL IMPACT:

Unknown. Potentially positive.

F.

Resolution in opposition to Proposition 88, Education funding; Real Property Parcel Tax; Initiative Constitutional Amendment and Statute

RECOMMENDATION:

Adopt a resolution in opposition to Proposition 88, Education funding; Real Property Parcel Tax; Initiative Constitutional Amendment and Statute.

VISION ALIGNMENT:

Commitment: Provide equal access to educational opportunity

Goal(s): Goal 3—all children 0-5 have access to childcare/early learning opportunities that contribute to their entering kindergarten ready to succeed.

BACKGROUND:

Proposition 88 would impose California’s first statewide parcel tax of $50. While the state directs a portion of property tax to the Educational Revenue Augmentation Fund (ERAF), State government does not currently impose a parcel tax or a property tax.

Proposition 88 would generate approximately $450 million annually. Since this is a (flat) parcel tax, this amount would likely not increase save for growth in the number of taxable parcels. Approximately $30 million would be dedicated to backfilling the decline in state income tax. An additional 0.2 percent (approximately $1 million) would be dedicated to county administration of the parcel tax.

DISCUSSION:

San Mateo County would generate approximately $10.75 million per year from the $50 parcel tax on the estimated 215,000 taxable parcels in San Mateo County.

The amount of funding San Mateo County’s schools would receive is unknown. However, San Mateo County parcel taxpayers could generate more funding than the county receives through Proposition 88. In effect, San Mateo County could become a donor county.

Proposition 88 does not provide allocation formulas for the largest portions of funding (class size reduction, textbooks and materials, and safety and security). Instead, the language requires that the funding “be apportioned directly to school districts, county offices of education, and public charter schools on a per-pupil basis.” The Legislature would be charged with establishing an allocation formula that includes weighted per-pupil rates with factors such as pupil disabilities, English proficiency and socioeconomic status. That is, the high costs associated with certain students would be accommodated by a higher per-pupil allocation for such students.

For facilities funding, Proposition 88 would allocate $500 per pupil for eligible schools. However, the Legislative Analyst estimates only 40 noncharter schools (serving less and 1 percent of noncharter enrollment) and 100 charter schools (serving approximately 25 percent of charter enrollment) would be eligible for such funding. Staff has been unable to determine if any San Mateo County schools would be eligible.

Proposition 88 is silent on the allocation of the data system funding. Presumably, the allocation formula would be established by the Legislature.

The County would be responsible for collecting the $50 parcel tax and transferring the revenue. Staff estimates that administration of the parcel tax could be approximately $75,000 per year.

While 12 San Mateo County school districts have been successful in securing parcel taxes, the remainder may have a more difficult time should Proposition 88’s $50 parcel tax be imposed on San Mateo County.

The California State Association of Counties and the Urban Counties Caucus have taken an oppose position on Proposition 88.

FISCAL IMPACT:

Unknown.

G.

Resolution in opposition to Proposition 90, Government Acquisition; Regulation of Private Property; Initiative Constitutional Amendment

RECOMMENDATION:

Adopt a resolution in opposition to Proposition 90, Government Acquisition; Regulation of Private Property; Initiative Constitutional Amendment.

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:

Proposition 90 would prevent local and state governments from taking or damaging private property to promote other private uses. This proposition also requires governments to pay property owners for “substantial economic losses” from a taking or damage for public purposes. Damage is a government action to private property, where the action includes, for example, downzoning, elimination of access to the private property and limitations on the use of private airspace.

Taking of public property

Under current law, state and local governments can use the power of eminent domain to take private lands for a public purpose in exchange for just compensation, which includes the fair market value and other costs (moving and some business costs/losses). There are a wide array of public purposes including creation of public works such as roads and schools and abating public nuisances such a criminal activity and blight. Public purposes also include to develop higher value businesses in an area and to enhance tax revenues.

Proposition 90 would require governments to state the public use for which the property is to be taken, would restrict the purposes for which government can take property and would increase the amount that government must pay property owner for such takings. The proposition would also. The Proposition would prohibit private property takings to transfer to (another) private use or to change the change the type of use or increase tax revenues. Takings for public uses such as roads, schools, parks and other instances in which the government retains ownership of the property are generally allowed. While, under current law, just compensation includes fair market value, the Proposition may increase the amount paid to landowners. The Proposition redefines just compensation to be the value of money needed to place the property owner in the same position monetarily as if the property has not been taken.

Damage to public property

Under current law, state and local governments pass law, regulations and other rules. These rules can impact negatively the value of private property such as limitations on the amount, type or height of development on a property. This loss of value need only be compensated if the government action deprives the owner of virtually all beneficial use of the property.

Proposition 90 would require governments to pay property owners for damage to private property unless the damage is for public health or safety purposes. The Proposition defines damage as “substantial economic loss” due to government action. Examples include government limitations on the amount of development permitted on a parcel and height limits. The Legislative Analyst notes that the scope of Proposition 90 could be very broad. The Analyst writes, “the broad language of the measure suggests that its provisions could apply to a variety of future governmental requirements that impose economic losses on property owners. These law and rules could include requirements relating, for example, to employment conditions, apartment prices, endangered species, historical preservation, and consumer financial protection.”

DISCUSSION:

Proposition 90 would substantially alter how state and local governments operate. Court decisions would likely be required to better define “substantial economic loss” and scope the losses already enumerated in the Proposition (downzoning, access and airspace). Governments would need to either budget for the cost of paying property owners for government actions (i.e. passage of new laws, regulations and ordinances), employ other techniques such as incentives or simply not act on some issues.

Proposition 90 will prevent the taking of property to transfer to (another) private owner. As a result, governments could acquire the property only through negotiation. This could result in acquisition costs greater than if taken under current eminent domain laws. The Proposition also could increase the costs for talking property to keep in public ownership. Even in instances where the owner is willing to sell property, the cost of acquisition could increase since the owner will base her asking price on the amount that could be received if taken through eminent domain.

The California State Association of Counties and the Urban Counties Caucus have taken an oppose position on Proposition 90.

FISCAL IMPACT:

Unknown. Potentially significant increased costs.