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January 17, 2002
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Kristina Loquist at (916) 651-4011
SACRAMENTO - Assemblyman Joe Simitian (D-Palo Alto) announced today that legislation to return local property taxes to local communities for local programs was approved by the Assembly Local Government Committee and forwarded to the Assembly Appropriations Committee for its consideration. Assembly Bill (AB) 100, authored by Assemblyman Simitian, returns to local governments the property taxes that the state diverted to bridge budget deficits in the early and mid-1990’s.
“Assembly Bill 100 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 live within its means.” 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 dollar 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. The Legislative Analyst estimates that the tax shift grows about 6% per year.
AB 100 limits ERAF growth so the amount of money local governments provide for schools will be capped. Schools will continue to receive full funding from the State. While similar legislation introduced in prior years has been vetoed by the Governor, AB 100 addresses many of the concerns cited by the Governor in his veto messages.
“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 governments,” 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 governments.”
Redwood City Mayor Dick Claire said, “AB 100 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.”
Simitian served on the Palo Alto City Council and the Santa Clara County Board of Supervisors during the implementation of the ERAF shift, and was therefore well aware of the impact the State’s approach had on local communities. For that reason AB 100 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.