Questions & Answers

WHAT IS PROP. 22 AND WHAT WOULD IT DO?

Prop. 22, the Local Taxpayer, Public Safety and Transportation Protection Act is a proposed constitutional amendment on California’s November 2010 statewide ballot. The initiative would stop the State from raiding or borrowing funding used for local public safety, transportation, transit and other essential local government services.  Specifically, Prop. 22 would:

  • Prohibit the State from taking, borrowing or redirecting local taxpayer funds dedicated to public safety, emergency response and other vital local government services. Prop. 22 would close loopholes to prevent taking funds currently dedicated to cities, counties, special districts and redevelopment agencies. It would also end the State’s fiscally irresponsible practice of borrowing local government property tax funds.
  • Protect vital, dedicated transportation and public transit funds from State raids.  Prop. 22 would prohibit the State from redirecting, borrowing or taking the gasoline excise tax (HUTA) allocated to cities and counties for local street and road maintenance and improvements. Prop. 22 also prohibits the State from taking or redirecting Public Transportation Account (PTA) revenues dedicated to public transit.
  • Protect local taxpayers by keeping more of our local tax dollars local where there’s more accountability to voters, and by ensuring once and for all that our gas taxes go to fund road improvements. Prop. 22 also reduces pressure for local tax and fee increases that become necessary when the State redirects local funds.   


WHY IS PROP. 22 NEEDED?

The State has continued its irresponsible practice of taking and borrowing local taxpayer dollars and dedicated transportation funds.  The 2009/10 state budget borrowed and took approximately $5 billion in city, county, transit, redevelopment and special district funds despite the fact that voters have overwhelmingly passed ballot measures to keep local funding at the local level to provide essential local services. These raids and previous, ongoing state raids and borrowing jeopardize the services Californians need most, including police, fire and emergency 911 services; local economic development and redevelopment; mass transit like buses and commuter rail; and transportation improvements like road repairs and congestion relief. We need to pass this measure to protect these vital local services from State raids and borrowing.

ISN’T FUNDING FOR LOCAL GOVERNMENT AND TRANSPORTATION ALREADY PROTECTED FROM STATE RAIDS?

California voters have overwhelmingly passed separate measures to prevent the State from raiding local government and transportation funds. Even so, each and every year the State attempts to take or borrow local government, transportation and transit funding using loopholes, or illegal funding diversions that have only been stopped after expensive and lengthy court battles. In the 2009/10 fiscal year alone, the Legislature:

•    Borrowed approximately $2 billion in property taxes from local governments, despite no clear path to repay these funds; took $2.05 billion in local redevelopment funds; and shifted nearly $1 billion in transit funding away from local transit agencies. The courts have since ruled the transit shift unconstitutional. Finally, the so-called “gas tax swap” in the 2010/2011 budget could result in transit losing more than $600 million annually.

Prop. 22 would close loopholes in current law that the legislature has exploited to take or divert local funds.   And it would tighten sections of the law to prevent illegal State funding raids of local government and transportation funds before they happen.  
 

WHY DOES PROP. 22 PREVENT THE STATE FROM BORROWING LOCAL GOVERNMENT AND TRANSPORTATION FUNDS?

The local government revenue protection measure approved by voters in 2004 (Prop 1A) and the transportation revenue protection measure approved by voters in 2006 (Prop 1A) included provisions that allow the State to borrow these funds during fiscal emergencies. However, after several budget cycles it is clear that these borrowing provisions are not only bad for local governments and transportation services, but fiscally irresponsible for the State.  Borrowing these dedicated funds only plunges our state deeper into debt because the funds must to be repaid, with interest, within three years.

The borrowing provisions were meant to provide an outlet in short-term budget emergencies, but instead are being used to paper over structural budget problems.  For example, the State has no clear way to pay back the $2 billion plus interest in local property taxes that the State borrowed as part of the 2009/10 State budget, yet lawmakers borrowed these funds anyway.  

What’s more, because the State has the authority to borrow local government and transportation funds, it creates mass uncertainty for cities and counties who need to plan and pass their local budgets, and for transportation and transit planners who aren’t sure if they can rely on these revenues in any given year.

HOW DOES PROP. 22 IMPACT THE RECENT GAS TAX “SWAP”?

Prop. 22 will strengthen constitutional protections for the new amount of gasoline tax. At a minimum, the measure will:

  • Prohibit the Legislature from diverting, borrowing or using the new increase in gasoline tax for non-transportation purposes.  It also includes a prohibition on using the county/city share of HUTA to pay off state bond indebtedness.
  •  Strengthen protections for Public Transportation Account (PTA) funds which are dedicated to public transit, including funds from the existing sales tax on diesel fuel (which was not eliminated), and funds from the slight increase to the sales and use tax on diesel. Together, these diesel tax funds amount to $430 million annually for local transit and intercity rail. The measure protects these and other PTA revenues by:
  • Prohibiting the Legislature from diverting, borrowing, appropriating or otherwise using these and other PTA revenues for anything other than bona fide transportation planning and mass transportation purposes.
  • Prop. 22 also prohibits the Legislature from diverting Public Transportation Account revenues to pay for expenses of the State’s General Fund.  


DOES PROP. 22 INCREASE OR DECREASE REVENUES FOR LOCAL GOVERNMENTS OR FOR TRANSPORTATION AND TRANSIT?

Prop. 22 does not increase or decrease the existing revenues that are dedicated to local government, transportation and transit funds. It simply prevents the State from borrowing or raiding existing local government, transportation and transit revenues that voters have dedicated to these services.

WON’T PROP. 22 MAKE OUR STATE’S BUDGET SYSTEM EVEN WORSE?

First, these are revenues that have historically been dedicated to cities, counties and special districts to fund local government services, or to transportation and transit. It’s fiscally irresponsible for State Government to raid funds from local governments.  

Second, it’s important to remember that these are funds that voters have ALREADY dedicated to local government, transportation and transit services. Prop. 22 does not dedicate any NEW funding for these services, but instead ensures that the will of voters is upheld by protecting local government and transportation funds from further State raids and borrowing.

This reform is fiscally responsible and a key step in long-term reform for California. The State has gotten itself into this deep fiscal mess in large part because lawmakers have relied on budget gimmicks like tapping into voter-protected funds and borrowing which only pushes our problems into the future.

HOW DOES PROP. 22 FIT INTO THE NEED FOR BROAD REFORM OF STATE GOVERNMENT IN CALIFORNIA?

Prop. 22 is a necessary and responsible first step toward fiscal reform in California. Virtually everyone agrees that State reforms must include the restoration of more local control over local tax dollars, and moving services closer to the people at the local level. This measure ensures local control, predictability, and accountability for local tax dollars that are used to provide the most essential local services.  

WILL PROP. 22 IMPACT FUNDING FOR PUBLIC SCHOOLS, HEALTHCARE OR OTHER SERVICES?

No. Prop. 22 does not take away funding from schools or any other service funded by the State because it only protects EXISTING funds that are already dedicated to local services like public safety and transportation. And this measure in no-way alters Proposition 98, which guarantees funding levels for K-14 schools.

HOW WILL PROP. 22 IMPACT TAXPAYERS?

Prop. 22 provides further protections for existing revenues that voters have already dedicated to local government, transportation and transit services. It does not increase taxes. In fact, Prop. 22 protects taxpayers by keeping more of our tax dollars local where they’re more accountable. And Prop. 22 decreases pressure for local tax and fee increases at the local government level that become needed when the state takes local revenues and local governments are forced to look for new revenues to protect vital services.






 

 

Paid for by Yes on 22/Californians to Protect Local Taxpayers and Vital Services, a coalition of taxpayers, public safety, local government, transportation, business and labor, with major funding from the League of California Cities (non-public funds and CitiPAC) and the California Alliance for Jobs Rebuild California Committee
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