REPORT TO COUNCIL
SUBJECT
Title
Adopt Positions on State and Local Ballot Measures for the June 5, 2018 Election
Report
BACKGROUND
This report provides an opportunity for the Sunnyvale City Council to take positions on state and local measures on the June 5, 2018 Ballot. The report summarizes each measure, provides the City’s adopted policy on the measure (if any), and a staff recommendation, when appropriate. Council Policy 7.4.16 Ballot Measure Positions, states that staff will provide analysis and a position recommendation on only those ballot measures that directly impact City business. City business is defined as all matters directly related to service delivery, or otherwise contributing to the City's operational success (Per Council Policy 7.4.14 Legislative Advocacy Positions).
The Ballot Measure Positions policy also states that review of measures prior to the publishing of the Santa Clara County Registrar of Voter’s Voter Information Pamphlet (Pamphlet), will most likely not include staff analysis. As of the publishing of this Report, the Pamphlet is not yet publicly available. Some of the analysis provided below is based on limited information.
Staff's recommendations are generally based on existing City policies from documents such as the General Plan, Legislative Advocacy Positions, and impact on City services and/or operations.
As required by state law, no public funds have been or will be used to campaign for or against any of these measures.
EXISTING POLICY
Council Policy 7.4.16 Ballot Measure Positions: As soon as possible following the release of the Secretary of State's Official Voter Information Guide or the Santa Clara County Registrar of Voter's Voter Information Pamphlet, staff will present to Council a report reviewing proposed ballot measures.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378 (a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
DISCUSSION
A brief analysis of each measure follows including a measure summary and, for statewide measures only, the California Legislative Analyst's estimate of state and local government fiscal impact; for those measures deemed City business, City staff analysis by the appropriate department, existing City policy citation (if any), and, as appropriate, a staff recommendation are also identified.
Staff recommendation options are: Support, Oppose, No Staff Recommendation, or Take No Position. While the meaning of Support and Oppose recommendations are clear, "No Staff Recommendation" and "Take No Position" are clarified as follows:
No Staff Recommendation - Consistent with City policy, staff does not provide analysis or make recommendations on measures that do not impact City business as defined in Council Policy 7.4.14, Legislative Advocacy Positions.
Take No Position - Despite a measure's ability to impact City business, Staff may recommend that Council abstain from taking a position. This recommendation to remain neutral on an issue may be made for a variety of reasons (e.g., ballot language is not clear; the pros and cons of the business impact cancel each other out; etc.). The reason for recommending this position will be explained as part of the staff analysis.
State and local ballot measures deemed City business
Proposition 68 - Bonds for Environment, Parks and Water.
Summary: Authorizes $4 billion in general obligation bonds for: parks, natural resources protection, climate adaptation, water quality and supply, and flood protection. Fiscal Impact: Increased state bond repayment costs averaging $200 million annually over 40 years. Local government savings for natural resources-related projects, likely averaging several tens of millions of dollars annually over the next few decades.
Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact: Increased state bond repayment costs averaging about $200 million annually over the next 40 years.
Savings to local governments, likely averaging several tens of millions of dollars annually over the next few decades.
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State Bond Cost Estimates: |
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Authorized new borrowing |
$4.0 billion |
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Average annual cost to pay off bonds |
$200 million |
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Likely repayment period |
40 years |
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Source of repayment |
General tax revenues |
City of Sunnyvale Staff Analysis (Environmental Services): Staff is recommending that the City take a “support” position on Proposition 68. If approved, Proposition 68 could be used to fund solutions for managing drought conditions, water conservation efforts, and increasing water supplies. Additionally, Proposition 68 funding can potentially be used for local park and open space improvements.
If approved, the City of Sunnyvale will be eligible for grants on specific projects that help make the City’s water supplies more secure through investment in drought preparedness. Overall, the City could leverage Proposition 68 funding when competing for matching grants for parks, water and climate action projects.
Proposition 68 will also assist the SFPUC and the Santa Clara Valley Water District in funding solutions to sustain our water supply. In addition, potential funding could be used to enhance the City’s parks with improved equipment, amenities, and preventative maintenance activities.
Existing City Policy:
• GOAL EM-1 ADEQUATE WATER SUPPLIES: Acquire and manage water supplies so that existing and future reasonable demands for water, as projected in the 20-year forecast, are reliably met.
• GOAL EM-2 WATER CONSERVATION: Promote more efficient use of the City’s water resources to reduce the demands placed on the City’s water supplies.
• GOAL EM-3 RELIABLE AND SAFE WATER DISTRIBUTION: Proactively maintain the water distribution system infrastructure to ensure the reliable and safe delivery of water under normal and emergency conditions to both current and future customers.
• Policy LT-10.1 Support activities and legislation that will provide additional local, county, and regional park acquisition, development, and maintenance and recreational opportunities. (Previously Open Space and Recreation Policy 2.2.C.1)
Staff Recommendation: Support
Proposition 69 - Transportation Funding.
Summary: Requires that certain revenues generated by a 2017 transportation funding law be used only for transportation purposes and generally prohibits Legislature from diverting funds to other purposes. Fiscal Impact: No direct effect on the amount of state and local revenues or costs but could affect how some monies are spent.
Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact: Proposition 69 would have no direct effect on the amount of state and local revenues or costs, as the measure does not change existing tax and fee rates. The measure could affect how some monies are spent by ensuring that revenues from recently enacted taxes and fees continue to be spent on transportation purposes. Fiscal Impact: No direct effect on the amount of state and local revenues or costs but could affect how some monies are spent.
City of Sunnyvale Staff Analysis (Public Works): Proposition 69 amends the State Constitution to require that the Legislature spend revenues from the new and existing diesel sales taxes and transportation improvement fees (SB 1) on transportation purposes. Proposition 69 also prohibits the state from loaning out these revenues (except for cash flow purposes), and using transportation improvement fee revenues to repay state transportation bonds without voter approval. The only way to change these requirements would be for the voters to approve another constitutional amendment in the future. The measure would have no immediate fiscal impact but ensures these revenue sources remain available and dedicated for transportation-related improvements.
Sunnyvale is expected to receive approximately $2.5 million annually to support its pavement maintenance and rehabilitation efforts. The City’s pavement preservation goal of reaching and maintaining a Pavement Condition Index (PCI) of 80 align with the goals of SB 1. Sunnyvale will be starting its first SB 1 funded pavement preservation project in spring 2018 and has a rolling five-year pavement plan which is dependent upon receipt of this funding. Upon achieving the goal of PCI 80, the City will be allowed to spend funding on other transportation initiatives and priorities. Receiving $2.5 million annually is a net positive affect to the City’s Capital Improvement Program (CIP).
Existing City Policy:
• Policy LT-12.9 Consider the importance of tax generation (retail, hotel, auto, and business-to-business uses) to support the fiscal health of the community and to fund municipal services.
• General Plan, Chapter 3 Land Use and Transportation - Policy 46: Support statewide, regional, and sub-regional efforts that provide for a safe, effective transportation system that serves all travel modes consistent with established service standards.
Staff Recommendation: Support
Proposition 72 - Taxes for Rainwater Capture Systems.
Summary: Permits Legislature to allow construction of rain-capture systems, completed on or after January 1, 2019, without requiring property-tax reassessment. Fiscal Impact: Possible minor reduction in annual property tax revenues to local governments.
Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact: Possible minor reduction in annual property tax revenues to local governments.
City of Sunnyvale Staff Analysis (Environmental Services): Proposition 72 would allow the California State Legislature to exclude rainwater capture systems added to properties after January 1, 2019, from counting as new construction. Legislation associated with Proposition 72 would define a rainwater capture system as a facility designed to capture, retain, and store rainwater flowing off rooftops or other manmade above-ground hard surfaces for onsite use. Currently, homeowners adding a rainwater capture system to their property counts as “new construction” and is therefore assessed for taxable value. This ballot measure would incentivize the installment of rainwater capture systems by not counting and taxing the project as “new construction.”
Staff is recommending that the City take a Support position on Proposition 72. Incentivizing customers to invest in rain capture devices will free up water supplies from conventional sources for other uses.
Proposition 72 would result in lower property tax revenues for residential properties installing rainwater capture systems after January 1, 2019. The loss tax revenues due to Proposition 72 are expected to be minor because rainwater capture system installations represent a small share of all property tax payments made within the City of Sunnyvale.
Existing City Policy:
• GOAL EM-2 WATER CONSERVATION: Promote more efficient use of the City’s water resources to reduce the demands placed on the City’s water supplies.
Staff Recommendation: Support
State and local ballot measures deemed City business with staff not recommending a specific position
Proposition 70 - Cap-and-Trade Amendment.
Summary: Beginning in 2024, requires that cap-and-trade revenues accumulate in a reserve fund until the Legislature, by a two-thirds majority, authorizes use of the revenues. Fiscal Impact: Beginning in 2024, potential temporary increase in state sales tax revenue, ranging from none to a few hundred million dollars annually, and possible changes in how revenue from sale of greenhouse gas emission permits is spent.
Summary of Legislative Analyst’s Estimate of Net State and Local Government Fiscal Impact: Potential temporary increase in state sales tax revenue from the sale of manufacturing and certain other equipment beginning in 2024. Amount could range from no increase to a few hundred million dollars annually. Possible change in the mix of cap-and-trade funding provided to state and local programs.
City of Sunnyvale Staff Analysis (Finance): Beginning January 1, 2024, Proposition 70 would create a Greenhouse Gas Reduction Reserve Fund for future cap-and-trade revenues generated from the State Air Resources Board’s auctioning or sale of greenhouse gas emissions allowances. The measure would require a one-time, supermajority vote to authorize use of the revenues within this fund. Between January 1, 2024 and a successful vote, the measure would also suspend a sales tax exemption for certain types of manufacturing and other equipment.
The supermajority vote requirement to access revenue generated under cap-and-trade could have an impact on funding available for local programs. The temporary end of the sales tax exemption for certain manufacturing and other equipment could result in a temporary increase in sales tax revenue for the City.
Despite the endorsement from Governor Jerry Brown, the measure does not otherwise have a broad base of support. The measure also seems designed to inhibit access, even if only temporarily, to revenues generated under the cap-and-trade program. The ultimate fiscal impact to the City is uncertain but likely to be minimal. The City does not currently receive cap-and-trade funding. It is also unclear how much sales tax revenue would be generated by this measure, as the end to the exemption is only temporary. For this reason, Staff’s recommendation is to take no position on Proposition 70.
Existing City Policy:
• Council Policy 7.1.1: To maintain a diversified and stable revenue base that generates the resources necessary to sustain essential City services over the Long Term Financial Plan.
• Climate Action Plan (CAP) Action 4.3.: Pursue local, regional, state, and federal grants to assist with potential costs to the City and the community and support successful implementation of the CAP
Staff Recommendation: Take no position
State and local ballot measures deemed not City business
All measures deemed not City business are presented for potential Council action, however, do not include staff analysis or recommendation
Proposition 71 - Ballot Measure Effective Date.
Summary: Provides that ballot measures approved by a majority of voters shall take effect five days after the Secretary of State certifies the results of the election. Fiscal Impact: Likely little or no effect on state and local finances.
Regional Measure 3 - Bay Area Traffic Relief Plan.
Summary: Shall voters authorize a plan to reduce auto and truck traffic, relieve crowding on BART, unclog freeway bottlenecks, and improve bus, ferry, BART and commuter rail service as specified in the plan in this voter pamphlet, with a $1 toll increase effective in 2019, a $1 increase in 2022, and a $1 increase in 2025, on all Bay Area toll bridges except the Golden Gate Bridge, with independent oversight of all funds.
FISCAL IMPACT
As required by state law, no public funds have been or will be used to campaign for or against any of these measures and therefore there is no fiscal impact to this report.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of the City Clerk and on the City's website.
ALTERNATIVES
1. Adopt the following staff-recommended positions on the ballot measures deemed City business, including any items where staff recommends Council remain neutral (take no position).
Support - Prop 68 Bonds for Environment, Parks and Water.
Support - Prop 69 Transportation Funding.
Support - Prop 72 Taxes for Rainwater Capture Systems.
Take no position - Prop 70 Cap-and-Trade Amendment.
2. Adopt alternative positions on the ballot measures.
3. Other action as directed by Council.
STAFF RECOMMENDATION
Recommendation
Alternative 1:
1. Adopt the following staff-recommended positions on the ballot measures deemed City business, including any items where staff recommends Council remain neutral (take no position).
Support - Prop 68 Bonds for Environment, Parks and Water.
Support - Prop 69 Transportation Funding.
Support - Prop 72 Taxes for Rainwater Capture Systems.
Take no position - Prop 70 Cap-and-Trade Amendment.
Staff
Prepared by: Lupita Alamos, Senior Management Analyst
Reviewed by: Teri Silva, Assistant City Manager
Approved by: Kent Steffens, City Manager