Cities sue state over Prop. 57
None of Nevada County’s towns are joining a 38-city lawsuit that challenges paying off the recently approved $15 billion deficit bond with city sales taxes.
But the county’s municipalities are in support of a ballot initiative aimed at the November election. That effort could limit the state’s ability to take money from local governments to suit its own budget needs.
On Thursday, 38 cities, many heavily dependent on sales taxes from auto malls and shopping centers, filed suit against Proposition 57, Gov. Arnold Schwarzenegger’s $15 billion plan to bridge the state’s budget shortfall. The proposition was approved by voters on Tuesday. The act allows a quarter of cities’ sales tax revenue to be taken by the state to secure bond payments.
Roseville joined the lawsuit, and the sentiment among the cities is distrust, according to John Sprague, Roseville assistant city manager.
“Sales tax is one of the major revenue sources for many of our communities. Traditionally, it is one of the revenue sources the state hasn’t gone after,” Sprague said.
And while the state is promising to give back an equivalent amount by redirecting property taxes so there is no net loss, Sprague and other local officials aren’t buying it. He said Roseville has yet to receive its full share of money generated by the Vehicle License Fee that was rolled back by Schwarzenegger last fall. And cities and counties in general are still smarting from previous state raids on local revenue to overcome budget shortfalls.
“All this boils down to is there is very little trust,” Sprague said.
As far as Nevada County’s cities are concerned, none are party to the lawsuit nor are they planning on joining it, according to Nevada City City Manager Mark Miller, Grass Valley City Councilwoman Dee Mautino and Truckee Town Manager Stephen Wright.
Those officials said they do, however, support the Local Taxpayers and Public Safety Act, an initiative that would require voter approval before the state could take local government money in the future.
“The Truckee Town Council is unanimously in support of that initiative,” Wright said.
Mautino called the initiative “very important.” She said that while the council supports the measure, members can only advocate for it on an individual basis, something she is doing.
“We’re trying to get the petition out so we can get signatures,” Mautino said.
The California State Association of Counties, the League of California Cities and the California Special Districts Association are spearheading the measure, which would also require more timely reimbursements from the state whenever it mandates a program, service or added cost onto local governments. The groups must submit 598,105 valid signatures by April 16 to qualify for the November ballot.
Meanwhile, the $15 billion bond won’t be derailed by the lawsuit, according to state officials. Treasurer Phil Angelides said even if the court rules against using sales taxes to repay the bonds, the state could still sell and repay them with other funds.
Along with Roseville, cities behind the lawsuit include Cerritos, Burbank, Palm Springs, Fresno, Alameda and Hayward.
The Associated Press contributed to this story.
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