HomeMy Public PortalAbout05-21-2002LPFAThis Agenda contains a brief general description of each item to be considered. Copies of the
Staff reports or other written documentation relating to each item of business referred to on the
Agenda are on file in the Office of the City Clerk and are available for public inspection A person
who has a question conceming any of the agenda items may call the City Manager at (310) 603-
022q ext. 200
Procedures forAddressinq the Counci!
IN ORDER TO EXPEDITE CITY COUNCIL BUSINESS, WE ASK THAT ALL PERSONS
WISHING TO ADDRESS THE COUNCIL FILL OUT A FORM PROVIDED AT THE DOOR, AND
TO TURN IT IN TO THE CITY CLERK PRIOR TO THE START OF THE MEETING FAILURE
TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE COUNCIL IN
THE ABSENCE OF THE UNANIMOUS CONSENT OF THE COUNCIL
AGENDA ITEMS ON FILE FOR CONSIDERATIO ~ ~~~n~
~T~C IVEG
AT THE REGULAR MEETING OF CITY OF LYNW00~
THE LYNWOOD PUBLIC FINANCE AUTHORIITIrC-TV cr_ERKS oFricE I
TO BE HELD ON MAY 21, 2002 ~QY 1 6?~~( ~
600PM P~
COUNCIL CHAMBERS 7,g~g~l0~lliuili2igi4i5i6
11330 BULLIS ROAD, LYNWOOD, CA 90262
ARTURO REYES C~-~-Lti ~~Q~~
PRESIDENT ~'.~y,
A'
FERNANDO PEDROZA LOUIS BYRD
VICE PRESIDENT MEMBER
PAUL H. RICHARDS, II RAMON RODRIGUEZ
MEMBER MEMBER
CHIEF ADMINISTRATIVE OFFICER FINANCE DIRECTOR
FAUSTIN GONZALES ALFRETT~A EARNEST
SECRETARY TREASURER
ANDREA L. HOOPER IRIS PYGATT
OPENiNG CEREMONIES
1 CALL TO ORDER
2. ROLL CALL OF MEMBERS
Fernando Pedroza
Louis Byrd
Paul H Richards, II
Ramon Rodriguez
Arturo Reyes
3. CERTIFICATION OF AGENDA POSTING BY SECRETARY
PUBLIC ORAL COMMUNICATIOfdS
(Regarding Agenda Items Only)
PUBLIC ORAL COMMUNICATIONS
IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIAL
DISCUSSION OF THE ISSUE BY THE LYNWOOD PUBLIC FINANCE AUTHORITY, BUT
IT IS ALL RIGHT FOR THE LYNWOOD PUBLIC FINANCE AUTHORITY MEMBERS TO
REFER THE MATTER TO THE STAFF OR SCHEDULE SUBSTANTIVE DISCUSSION
FOR A FUTURE MEETING.
(The Ralph M Brown Act, Government Code Section 54950-54962, Part III, Paragraph 5)
MINUTES OF PREVIOUS MEETING
NONE
RECEIVE AND FILE A REPORT ON AB 1865 ERAF AND AB 2209 LOCAL
GOVERNMENT PENSION FUNDS
Comments.
Based on a report prepared by the analyst to the Assembly Committee on
Appropriations, to balance the 1992-93 and 1993-94 state budgets, the state
shifted about $4.5 billion (in current dollars) in property tax revenues from cites,
counties and special districts to the ERAF established in each county for the benefit
of K-12 schooi districts The passage of AB 1865 would phase in an ERAF cap
over four years, contingent upon a measure of the adequacy of the General Fund
resources AB 2209 aliows local agencies to impose a higher property tax rate to
continue making payments in support of pension programs approved by the voters
before July 1, 1978
This item was carried over from the last regular meeting as requested by staff
Recommendation
Staff recommends for the members of the Public Finance Authority to receive and
file this item
ADJOURNMENT
THE NEXT REGULARLY SCHEDULED MEETING WILL BE HELD ON JUNE 4, 2002 AT
6~00 P M, IN THE COUNCIL CHAMBERS OF THE CITY HALL, 11330 BULLIS ROAD,
CITY OF LYNWOOD, CALIFORNIA.
DATE: May 21, 2002
TO: TI-~ HONORABLE CHAIRMAN AND MBERS OF THE AGENCY
FROM: Faustin Gonzales, City Manager (
SUBTECT: RECEIVE AND FILE A REPORT ON -i 865 ERAF AND AB 2209 LOCAL
GOVERNMENT PENSION FUNDS
~-" PURPOSE:
To have the members of the Public Finance Authority to receive and file this item
BACKGROUND:
Two bills are currently being proposed that deal with local government finance.
AB I865 phases in a cap of the property tax shifts from cities, counties, and special districu to
the Educational Revenue Augmentation Fund (ERA) in each county, content upon the condition
of the state General Fund.
AB 2209 allows local agencies to impose a higher property tax rate to continue making payments
in support of pension programs approved by the voters before luly l, 1978.
ANALYSIS
AB ] 865 (Canciamillal
Based on a report prepared by the analyst to the Assembly Committee on Appropriations, to
balance the 1992-93 and 1993-94 state budgets, the state shifted about $4.5 billion (in current
dollars) in property ta~c revenues from cites, counties and special districts to the ERAF
established in each counry for the benefit of K-12 school districts. Under the Proposition 98
minimum funding guarantee, the ERAF shift reduced the amount of the state Genera) Fund
,__, support for the schools on a dollar-for-dollar basis. The shift was established as a permanent,
annual transfer of funds; there was no sunset date for the shift. Thus, the shift continues each
, year. Since that time, reversing or at least mitigating the ERAF shift has been a top priority for
local governments.
The passage of this bill would phase in an ERAF cap over four years, contingent upon a measure
of the adequacy of the General Fund resources. The cap would be adjusted for mflation annually
thereafter, the local agencies would keep all of the property tax growth above the cap.
AB 2209 (Chul
In ] 985, the Legislature capped local extraordinary property tax rates for payment of voter-
approved pension programs at their 1982-83 or 1983-84 levels. Without the ability to increase
their extraordinary proper[y ta~c rates, local agencies are forced to drain their general funds to
provide the difference in pension programs as inflation and cost of living increase.
Proposition 13 limited the property tax rate to 1%, except for indebtedness approved by the
voters before July 1, 1978. In its 1982 Carman v. Alvord decision, the California Supreme Court
declared that pre-1978 voter-approved pension programs constitute an indebtedness that local
officials could finance with a property tax rate outside the ]% limit. In 1985, the Legislature
responded with AB 13, which capped local extraordinary property ta~c rates at their 1982-83 or
1983-84 levels.
Originally the bill addressed only the Ciry of Monterey Park. The recent amendments would
include approximately 26 local agencies in the state that levy an extraordinary tax to fund
pension plans to find relief in this bill. The City of Lynwood is one of those 26 local agencies.
RECOA~IEENDATION:
Staff recommends for the members of the Public Finance authority to receive and file this item.
. _ ; ~ 2JllA IfiEM
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AB l 865 Assembly Bill -1NTRODUCED
BILL NUMBER: AB 1865 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Canciamilla
JANUARY 31, 2002
An act to amend Section 41209.1 of the Education Code, and to add
Section 97.92 to the Revenue and Taxation Code, relating to local
government finance.
LEGZSLATIVE COUNSEL'S DIGEST
AB 1865, as introduced, Canciamilla. Local government finance.
Existing property tax law requires the county auditor, in each
fiscal year, to allocate property tax revenue to local jurisdictions
in accordance with specified formulas and procedures, and generally
requires that each jurisdiction be allocated an amount equal to the
total of the amount of revenue allocated to that jurisdiction in the
prior fiscal year, subject to certain modifications, and that
jurisdiction's portion of the annual tax increment, as defined.
Existing property tax law also reduces the amounts of ad valorem
property tax revenue that would otherwise be annually allocated to
the county, cities, and special districts pursuant to these general
allocation requirements by requiring, for purposes of determining
property tax revenue allocations in each county for the 1992-93 and
1993-99 fiscal years, that the amounts of property tax revenue deemed
allocated in the prior fiscal year to the county, cities, and
special districts be reduced in accordance with certain formulas. It
requires that the revenues not allocated to the county, cities, and
special districts as a result of these reductions be transferred to
the Educational Revenue Augmentation Fund (ERAF) in that county for
allocation to school districts, community college districts, and the
county office of education.
This bill would, for each successive qualified fiscal year, as
defined, beginning on or after July 1, 2009, modify these reduction
and transfer provisions by restricting the total amount of revenue
allocated to a county's ERAF to the applicable revenue shift limit,
as defined. This bill would provide that, after the revenue shift
limits are fully implemented, the amount of revenue allocated to a
county's ERAF be adjusted annually by an inflation factor, as
provided. This bill would require those revenues that may not be
allocated to the county's ERAF as a result of this limitation to
instead be allocated among local agencies in the county in accordance
with each local agency's proportionate share of those revenues that
would be deposited in the county's ERAF in the absence of this bill.
This bill would also require that the reduction, resulting from this
bill, in the amounts of ad valorem property tax revenue deposited in
the county's Educational Revenue Augmentation Fund, be applied
exclusively to reduce the amounts of ad valorem property tax revenue
allocated from that fund to school districts and county offices of
education. By imposing new duties upon local tax officials in the
annual allocation of ad valorem property tax~revenues, this bill
would impose a state-mandated local program.
This bill would also state the intent of the Legislature, and
would require the Director of Finance to make certain adjustments,
with respect to ensuring that the modifications required by this bill
and earlier acts to property tax revenue allocations do not have a
net fiscal impact on school districts or community college districts,
Page 1 of 4
http.//info.sen.ca.gov/pub/bill/asm/ab_ 1851-1900/ab_ 1865_b~ll_20020131 _introduced.html 5/1 /2002
AB 1865 Assembly Bill - r,JTRODUCED
or upon the state's obligation under the California Constitution to
provide funding to those districts.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill woulcl provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 91209.1 of the Education Code is amended to
read:
91209.1. (a) (1) Pursuant to paragraph (2) of
subdivision (b) of Section 41209, the Director of Finance shall
annually adjust "the percentage of General Fund revenues appropziated
for schoo2 districts and community colleqe districts, respectively,
in the 1986-87 fiscal year " for purposes of applying
paragraph (1) of subdivision~(b) of Section B of Article XVI of•the
California Constitution, to reflect those property tax revenue
allocation modifications T required by the
amendments made to Chapter 6(commencing with Section 95) of Part 0.5
of Division 1 of the Revenue and Taxation Code and by the
qualifying
provisions in a manner that ensures that those modi£ications
will have no net fiscal impact upon the amounts that are otherwise
required to be applied by the state for the support of school
districts and community college districts pursuant to Section 8 of
Article XVI of the California Constitution.
~~~
~~
(2) For pvrposes of this section, "qualifyinq provisions" means
the following: ~
(A) The amendments made to Chapter 6(commencing with Section 95)
of Part 0.5 of Division 1 of the Revenue and Taxation Code during the
1991-92 Regular Session and the 1993-94 Reqular Session.
(B) The amendments made [o Sections 97.2 and 97.3 of the Revenue
and Taxation Code by Chapter 1111 of the Statutes of 1996.
(C) Section 97.92 of the Revenue and Taxation Code.
(b) Notwithstanding any other provision of law, for the 2002-03
fiscal year and each fiscal year thereafter, the percentage of
"General Fund revenues appropria[ed for school districts and
community college districts, respectively, in fiscal year 1986-87,"
for puzposes of paragraph (1) of subdivision (b) of Section 8 of
Article XVI of the California Consti[vtion, sha11 be deemed to 6e the
percentage of General Fund revenues that would have been
appropriated for those entities if the amendments made to Chapcer 6
(commencing with Section 95) of Part 0.5 of Division 1 of the Revenue
and Taxation Code during the I991-92 Regular Session, the amendmen[s
made to that same chapter during [he 1993-94 Regular Session, and
Section 97.92 of the Revenue and Taxation Code, had been operative
for the 1986-87 fiscal year.
(c) In no event may the recaIcula[ions required by subdivisions
(a) and (b) result in a percentage thaC exceeds the "percentage of
General Fund revenues appropriated for school dis[ricts and community
college districts, respec[ively, in fiscal year I986-87,~' for
purposes of paragraph (1) of subdivision .(b) of SecCion 8 of Article
XVI of the California Constitution prior to the amendments made to
Chapter 6(commencing with Section 95) of Part 0.5 of Division 1 of
the Revenue and Taxation Code during the 1991-92 Regular Session.
Page 2 of 4
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AB 1865 Assembly Bill - iivTRODUCED Page 3 of 4
(d) It is the intent of the Legislature ~~-eaa.et~r~
r~,_ ., _,,a: ~ . ~
~ ~ ~--~~.,- to ensure ~~
the following:
(1) That the changes required by the -a-~=~g~,~
~:r qualifying provisions in the allocations
of ad valorem property tax revenues do not have a net fiscal impact
upon school districts, as defined in
Section 91302.5, or community college districts.
(2) That the changes required by the aar -aa=~g ~;Se
see~~- qvalifying provisions in the allocations
of ad valorem property tax revenues do not have a net fiscal impact
upon the amounts of revenue otherwise required to be applied by the
__ state for the support of school districts and community college
districts pursuant to Section 8 of Article XVI of the California
Constitution.
SEC. 2_ Section 97.42 is added to the Revenue and Taxation Code,
to read:
97.92. Notwithstanding any other provision of this chapter, for
purposes of annual ad valorem property tax revenue allocations, a21
of the following apply:
(a) The total amount of ad val`orem property tax revenue annually
allocated to a county's Educational Revenue Augmentation Fund may not
exceed the applicable revenue shift limit as described below:
(1) For the first qualified fiscal year and each fiscal year
thereafter until the second qualified fiscal year, the total amount
of ad valorem property tax revenue allocated to the county's
Educational Revenue Augmentation Fund for the immediately preceding
fiscal year, plus BO percent of that fund's otherwise applicable
share of the annual tax increment.
(2) For the second qualified £iscal year and each fiscal year
thereafter until the third qualified fiscal year, the total amount of
ad valorem property tax revenue allocated to the county's
Educational Revenue Augmentation Fund for the immediately preceding
qualified fiscal year, plus 60 percent of that fund's otherwise
applicable share of the annual tax increment.
(3) For the third qualified fiscal year and each fiscal year
thereafter until the fourth qualified fiscal year, the total amount
of ad valorem property tax revenue allocated to the county's
Educational Revenue Augmentation Fund for the immediately preceding
qualified fiscal year, plus 90 percent of that fund's otherwise
applicable share of the annual tax increment.
(9) For the fourth qualified fiscal year and each fiscal year
thereafter until the fifth qualified fiscal year, the total amount of
ad valorem property tax revenue allocated to the county's
Educational Revenue Augmentation Fund £or the immediately preceding
qualified fiscal year, plus 20 percent of that fund's otherwise
applicable share of the annual tax increment.
(5) For the fifth qualified fiscal year and each fiscal year
thereafter, the total amount of ad valorem property tax revenue
allocated to the county's Educational Revenue Augmentation Fund for
the fourth qualified fiscal year, compounded annually by an inflation
factor that is the percentage change, rounded to the nearest
one-thousandth of 1 percent, from October of the prior fiscal year to
October of the current fiscal year in the California Consumer Price
Ind'ex for all items, as determined by the Department of Industrial
Relations. The amount specified in this paragraph may not, in any
fiscal year after the fifth qualified fiscal year, be less than the
total amount of ad valorem property tax revenue allocated to a county'
s Educational Revenue Augmet~tation Fund pursuant to this paragraph
for that fiscal year.
(b) Those amounts o£ ad valorem property tax revenue that may not
be allocated to the county's Educational Revenue Augmentation Fund as
a result of the limits in subdivision (a) shall instead be allocated
among the local agencies in the county in accordance with each local
http://info.sen.ca.gov/pub/bill/asm/ab_ 1851-1900/ab_ 1865_biil_20020131 _inuoduced.html 5/ 1/2002
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AB ] 865 Assembly Bill - li~~I'RODUCED
Page 4 of 4
agency's proportionate share of the total amount of ad valorem
property tax revenues that would be required to be allocated to the
county's Educational Revenue Auqmentation Fund in the absence of thi=
section.
(c) Each reduction resulting from the implementation of
subdivision (a) in the amount of ad valorem property tax revenues
deposited in the county's Educational Revenue Augmentation Fund shall
be applied exclusively to reduce the amounts that are allocated from
that fund to school districts and county offices of education, and
may not be applied to reduce the amounts of ad valorem property tax
revenues that are allocated from that fund to community college
districts.
(d) For purposes of this section, "qualified fiscal year" means a
fiscal year beginning on or after July 1, 2009, in which the Director
of Finance certifies, on or before November 1, both of the
following:
(1) The General Fund reserve is at least 3 percent of revenues,
excluding the revenues derived from the 0.25 percent sales and use
tax rate imposed pursuant to Sections 6051.3 and 6201.3.
(2) Actual General Fund revenues for the period May 1 to September
30, inclusive, equal or exceed the May Revision forecast prior to
the November 1 determination.
(e) The Director of Finance shall, on or before November 1 of each
year, determine whether the conditions described in subdivision (d)
have been met.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because
this act provides for offsetting savings to local agencies or school
districts that result in no net costs to the local agencies or school
districts, within the meaning of Section 17556 of the Government
Code.
http://info.sen.ca.gov/pub/bilUasm/ab_1851-1900/ab 1865_bill_20020131_introduced.html 5/1/2002
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Lea ue of Cali#ornla ' ' ~
9 C1t1Q_
1400 K Strcct
Sacramemo, CA 9551
916.65S.8200
Bener Cities-A Better Life FA~ 916 658.8240
~+'~+nv.caci tics. orF
March 19, 2002 -
TO• Mayors and City Managers in Cities with Extraordinary Property Tax
Rates for Public Pensions:
Aibany Bell Beverly Hiils
Cioverdaie Coalinga Com ton
EI Monte Eureka P
Glendora Fairfax
• Huntington Beach Huntington Park
Lynwood Maywood Monrovia
Montebello Monterey Park Oakiand
Oxnard Rialto Richmond
San Anselmo San Fernando San Gabriel
Watsonville
FROM Dwight Stenbakken, Director of Legislation and Policy
RE. AB 2209 (Chu). Legislation to Permit Extraordinary Property Tax
Rates for Public Pensions
Assembly Member Judy Chu has introduced legislation to deal with the long-standing problem
of publicly-approved, extraordinary proeprty rates to help fund public pension debt. In its current
form, the bill deals only with Monterey Park, but the author intends to amend the bill to cover all
cities with these extraordinary property tax rates
The California Supreme Court in the 1982 Carman v. Aivord decision declared that pre-197g
voter-approved pension programs constitute an indebtedness that local o~cials could finance
with a property tax rate outside the 1% limit imposed by Proposition 13. In 1985, the Legislature
resaonded wiin AB 13 ihai capped extraordinary property tax rates at their 1982-g3 levels.
There are currently 26 local agencies in California that are subject to the cap imposed in 1985
The cities in this category are listed above. AB 2209.,wAUld,;pefmit thQSe„~Fa~, agencies,.to~
+mpose,:higher property tax ra#es to cover more~ of the debt for public pension purposes.
Assembly Member Chu has asked us to alert you to this legislation and further asks for your
direct support when this legislation is debated in the Legislature The League supports
AB 2209 We recommend.contacting the author's office directl~r to re~isteryouur support of
.,~....-- -._- _
AB 22~9 'i'li.e, corrtacf in:Assembly Member Chu`s office is Julio Martinez He c~n' be reach~c!
at 916/319 2295 The 6ifl has yet to be assigned to a committee, but it will fikely 6e heard in
either Assembly Local Government or the Assembly Revenue and Taxation Committee
i'
f
Assembly Bill 2209
Assemblymember Judy Chu
Subject: Property Tax Cap for Local Government Retirement Funds
Problem: In 1985, the Legislature capped local extraordinary property tax rates for
payment of voter-approved pension programs at their l 982-83 or 1983-84 levels.
Without the ability to increase tt~eir extraordinary property ta~c rates, local agencies are
forced to drain their general funds to provide the difference m pension programs as
inflation and cost of living increase.
Assembly Bill 2209: This bill allows local agencies to unpose a higher property tax rate
to continue making payments m support of pension programs approved by the voters
before July l, 1978.
Background: Proposition 13 lumted the property tax rate to 1%, except for indebtedness
approved by the voters before July I, 1978 In its 1982 Carman v, qivord decision, the
California Supreme Court declared that pre-1978 voter-approved pension prograrns
constitute an mdebtedness that local officials could finance with a property tax rate
outside the 1% limit. In 1985, the Legislature responded with AB 13, which capped local
extraordinary property tax rates at their 1982-83 or 1983-841evels.
Currently, the 26 local agencies m the state that levy an extraordinary tax to fund pension
plans and may find relief m this bill are•
~ounty of Santa Clara Lynwood
Albany Maywood
Bell Monrovia
Beverly Hills Montebello
Cloverdale Monterey Park
Coalinga Oak]and
Compton Oxnard
E1 Monte Ria]to
Eureka Richmond
Fairfax San Anselmo
Glendora San Fernando
Huntington Beach San Gabnel
Huntington Park Watsonville
Please contact Julio Martmez at 319-2295 if you have any questions.
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