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May 24, 2002

For More Information, Contact:
Kristina Loquist at (916) 651-4011


SACRAMENTO – After a year-and-a-half effort, Assemblyman Joe Simitian’s legislation to return local property taxes to local communities for local needs has been approved by the Assembly Appropriations Committee and is on its way to the full Assembly for consideration.  Assembly Bill (AB) 2100, authored by Simitian (D - Palo Alto), returns to local governments the property taxes that the state diverted to bridge budget deficits in the early and mid-1990s.

“Assembly Bill 2100 is a win-win-win. It provides more money for local programs, guarantees full funding for schools, and does not increase taxes,” said Assemblyman Simitian. “It does that by requiring the State to curb its constantly growing take-away of local property taxes.” Simitian further noted that, “Returning local funds to local folks so they can make decisions about funding local programs makes all the sense in the world.”

To balance the budget in 1992-93, the Legislature and then-Governor Pete Wilson used local property tax revenues from counties, cities, special districts, and redevelopment agencies to pay for the State’s share of local school district funding.  Today, this shift of dollars into the State’s Educational Revenue Augmentation Fund (ERAF) represents almost $4 billion in lost property tax revenues for local government programs, and the amount gets larger every year.  In fact, the State’s Legislative Analyst estimates that the tax shift grows about 6% per year.  “When you look around and wonder why the sidewalks aren’t fixed, libraries aren’t open, and there are homeless folks on our local streets – it all has to do with the loss of local funds over the past decade,” observed Simitian.

AB 2100 limits ERAF growth so the amount of money local governments send to the State will be capped. While similar legislation introduced in prior years has been vetoed by the Governor, AB 2100 addresses many of the concerns cited by the Governor in his veto messages.

Redwood City Mayor Dick Claire said, “AB 2100 is just the kind of bill we should be looking at in today’s fiscal climate. It’s reasoned and gradual in its approach, and is fair to both the cities and the State. It’s clear Simitian hasn’t forgotten his roots in local government.”

“The use of local funds by the State started out as a temporary band-aid to shore-up the State’s finances, and ended up being a permanent burden on local communities,” Simitian said. Simitian acknowledged that the State will face tremendous fiscal challenges in 2002, but observed that “Despite the budget challenge that lies ahead for the State, I don’t think we can or should use that as an excuse to delay coming to grips with the needs of local communities around the State.”

Simitian served on the Palo Alto City Council and the Santa Clara County Board of Supervisors during the implementation of the ERAF shift, and is therefore well aware of the impact the State’s approach had on local communities. For that reason, his proposal to curb the State’s take-away of local funds was the first bill he introduced when he was sworn in last year. “It’s long past time for State government to stop balancing its budget on the backs of our local governments,” Simitian noted.