During the June 14, 2019 League of California Cities Revenue and Tax Committee (R&T), there was a mix of great news balanced against immediate calls for action.  And while it is great news that the State adopted on time a clearly fiscally prudent budget, there are both trailer bills and impactful other bills that require your attention.  And note there is a lot more beyond this discussion within the State’s $215 Billion Budget and $152 Billion General Fund Budget, in addition to other legislative bills you may want to explore (see the League’s HOT bills notice).  What we highlight here are notable items from R&T meeting, starting with the good, moving to calls for action, and finishing on a high note. For the latest on any bill and to see the League’s position, use the League’s “Bill Search“.

1. $650 Million in the State Budget for homeless – Good and Bad

The Good:  NEW Funding for unsheltered/homeless services for local agencies.

The Bad:  Big agencies “might” be prioritized.

Stay alert and be active as the trailer bill is being drafted now.  Ideas range from direct allocations to large cities along with competition based allocations or allocations based on established criteria.  The Governor prefers models that directs the $650 Million to 13 of the largest cities and regional bodies (as continuums of care).  Others prefer allowing all cities direct access to these funds.  Contact your local State representatives to recommend how you’d like to see this funding allocated.

2. $750 Million – Good and Get Ready.

The Good:  Funding for your agency to support planning services and capital funding to build infrastructure for in-fill projects

Get Ready: These grants will go fast.

The Budget includes $250 million available to local agencies to support their planning efforts.  This is available to Counties, Cities, County Offices of Education, and School Districts.  Another $500 million in competitive grants from the State Department of Housing & Community Development (HCD) for gap funding for infrastructure improvements required for specific residential or mixed-use infill development.

3. Loss of local control – A Call for Action

The League of California Cities and agencies support a principal of letting local agencies shape their communities to their voter’s preference.  Therefore, we are highlighting several still active bills that would remove local control.  Please be active and spread the word to contact bill authors and your representatives to consider opposing these bills.

• SB 330 – Worse and even Worse (development within one-quarter mile of a rail stop).  Next hearing 6/19/19 – Assembly Housing & Community Development
  • For these projects, it eliminates local parking requirements.
  • Even worse. Locks up impact fees for 3 years to only those in place and at the level set when the “preliminary” development application was received.  It would also ban project specific fees, such as those to offset a local impact (i.e., no mitigation fees).
• AB 516 – Bad and Worse (limitations on parking enforcement). Next hearing 6/25/19 – Senate Transportation committee.
  • Bad- This bill would prohibit towing any vehicle with an expired registration past 6 months as well as other prohibitions on towing (such as invalidate 72-hours notices to move the vehicle).
  • Worse- It would prohibit placing a “boot” or towing any car with 5 or more unpaid parking tickets.
  • This bill is focused on ending parking impacts on those relying on their cars for housing. It is currently being reviewed in the Senate Transportation Committee and Senate Public Safety committee.
• AB 1112 – Bad and Worse (limits on bike/scooter/other mobility shared services). Still in the Senate Transportation committee.
  • Bad- It would prohibit any agency from banning bike/scoter ride share services in their community
  • Worse- It would restrict an agency from applying higher risk control or insurance requirements, or other conditions that a company would argue are “effectively” a ban of their service.
  • Strange- It could also require cities to make payments to ride share services if they are required to establish operations in lower income areas where ride sharing is not profitable.
• SB 266 – Bad (push certain CalPERS payments to local agencies).  Next hearing 6/26/19 – Assembly Public Employment and Retirement
  • Bad – If CalPERS later finds that an agreed benefit should not have been pensionable, this bill would let CalPERS retain those contributions (and not refund back to the agency) and push down to the agency the responsibility to possibly make new payments to the retiree to make them whole (I.e., continue the value of the benefit CalPERS found to be non-pensionable). It may also require the agency to monitor where the retiree (or their surviving spouse) resides to deliver future payments.

4. AB 1400 – Bad (Fire safety claims presumption expanded to non-safety)

Still in the Senate Labor, Public Employment and Retirement committee. See more from the League about this and other bills that would impact Workers’ Compensation.

Bad: This bill provides all the firefighter presumptions in workers compensation “broadly” to all non-sworn fire staff.  Presumptions are rarely rebutted by employers.  League recommends to oppose this bill.

5. Online Sales Tax collection expanded (AB 147)- Good and great, but wait

Good:  Set lower exemption limits that allows 99.4% of the missing online sales tax to be collected, including requiring all sellers on large platforms (like Amazon & Ebay) to comply regardless of their individual sales volume.

Great:  Could be 1% to 3% increase in your sales tax.

Wait: Don’t count on it yet.  There may be delays for businesses to comply and CDTFA to process these new applications and incoming proceeds.  Some expect we may not have regular, dependable cash-flow until mid to late 2020.

6. Possibly Awesome – SB 5 and bringing back more Tax Increment

Would provide a path for a local agency to get State commission approval to access State school’s tax increment for local projects.  There would be no impact to school funding and would free up $2 billion annually to finance affordable housing and infrastructure projects.  This passed out of the Senate on a 31-4 vote with strong bipartisan support.

7. Possibly Awesome – Governor appoints City Council member to CalPERS Board

It is with sincere hope that we share the Governor has appointed a Palm Springs Councilmember to the CalPERS Board, Lisa Middleton.  Lisa retired from the State Compensation Insurance Fund as the Senior Vice President of Internal Affairs.  Stay tuned as we hope to catch up with Lisa and explore her ideas on how to support cities and local agencies through her role on the CalPERS Board.

8. Possibly Awesome – New State Treasurer streaming road show

At the most recent League of California Cities Revenue and Tax Committee, a representative of new State Treasurer Fiona Ma, CPA, shared the priorities of her office that includes expanding communication to local agencies, as demonstrated by her 10 City Tour with all visits available via live streaming.  State Treasurer Ma has identified Housing, Jobs, and Environment as her top initiatives.  State tuned as we will dive deeper in the coming months with our newer Treasurer.

9. End on a high note

• SB 1366 did not move forward. This would have removed local control related to retail cannabis locations.   This bill would have required all agencies where Prop 64 received 50% or more voter support to permit retail cannabis sales.  The total number of retail locations would be one for every six where alcohol is sold (grocery, gas station, or liquor stores).
• Attempts failed to limit SB1 tax allocation when an agency does not meet housing development targets. Instead, the Governor and Legislature are moving towards carrots and not sticks to help with housing development (expect more grant programs).
• ACA 1 could reduce from 2/3 to 55% voter approval for public infrastructure and affordable housing. While this measure is currently pending, as a constitutional amendment it doesn’t fall under normal legislative timelines and may go slow as there is still time before next year’s Primary and Presidential elections.
• PG&E Bankruptcy and fire liability not extended to government agencies. League of California Cities aggressively helped stop bills that would have spread liability for recent fires from strict liability to fault based, meaning the liability from a business’s equipment failures would be shared by others (perhaps including the agencies that grated easement for power lines and equipment).