An Opinion Piece: Lighting a Fire Under Proposition 13

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Navigating the politics of local government funding can be treacherous.  City Managers are flameschallenged to bring together their ambitions for their cities, the demographics of unique populations, and the realities of incoming revenues and expenditures.

Few would argue that assuring public safety is one of the primary objectives of local government.   But what happens when municipal leaders are unable to secure growing funding levels necessary to support this objective?  Without careful planning the community can suffer.

By now everyone is familiar with Proposition 13, California’s Constitutional Amendment passed in 1978.  Its goal was to slow down property tax increases for home owners.  It reset property tax levels and established limits on the annual increases that could be levied on continuously owned homes.

The California legislature passed a number of Proposition 13-enabling laws.  Essentially the Controllers of each of the 58 counties in the state were told to add up the property tax revenues they received each year for three years.  This total, divided by three, resulted in an annual property tax revenue for the county.

The Controllers were told to do the same calculation for each local entity receiving property tax funding, to determine an average amount of annual funding that each entity received over the three year period.

The average annual property tax revenue for the county was then divided by the average annual funding received by each entity in the county.  Thus, the allocation percentage rate for each entity was firmly established, with no review or adjustment process included in the legislature’s enabling laws.  Growth in property values was expected to provide for growth in government revenues, and presumably, for the accompanying growth in the cost of running the entities that received a portion of taxes.

In Eastern Contra Costa County this allocation process went into effect in the early 1980’s.  At the time the area was primarily agricultural, with less than 8,000 residents.  There were four volunteer fire departments that handled fire suppression and medical emergencies.

In the middle 1990’s the area began to grow, providing a less expensive place to buy or rent a home for workers who were willing to tolerate long Bay Area commutes.  For many years during the 2000’s Brentwood, now a city with nearly 60,000 residents, was the fastest growing city in California.  Oakley saw a similar growth boom.

When the property tax allocation rate was set for fire and emergency medical services in East Contra Costa, using the state-mandated method, the allocation rate was determined to be 7%, sufficient for operations at that moment in time.  When the same process was applied to other fire districts in the county, those fire districts, serving established populated areas with paid firefighters, the allocation rates were much high.  As a consequence other fire districts in the county received 14%, 15%, 21% and as much as 30%, for providing the same fire and emergency medical services to their residents.

Fast forward through time to the present and East Contra Costa has over 110,000 residents in two cities, Brentwood and Oakley, as well as the towns of Discovery Bay, Byron, and Knightsen along with Bethel Island and the Marsh Creek area.  The region continues to grow.

The East Contra Costa Fire Protection District (ECCFPD) was formed in 2002 with the consolidation of a number of smaller districts.  It is the agency charged with providing life-sustaining fire and emergency medical services to the residents, businesses and visitors to a 249-square mile urban, suburban and rural territory.

“We have a crisis in the East County,” said Gus Vina, City Manager of Brentwood, “and we all need to work together to come up with solutions.”

Vina was speaking to the Contra Costa County Board of Supervisors at a November, 2015, meeting as leader of an East Contra Costa Fire Protection District (ECCFPD) Task Force.  The group was trying to come up with solutions to the structural financing deficiency that exists today, that originated when allocations were set almost 40 years ago.  This funding deficiency has forced the now unionized district to shrink from eight fire stations to just three permanent stations.

“The three-station model, which is what the district can afford today and into the future, presents a level of public safety risk that is unacceptable.  It puts the fire personnel in a working environment that has to improve,” Vina said.

Vina was in his first year as City Manager in Brentwood, coming from a series of municipal finance and managerial positions in Encinitas, Sacramento and Stockton.

The prior June, 2015, Vina had assembled a Task Force to address the ECCFPD funding problem.  The Task Force consisted of Vina and the City Manager of Oakley, Bryan Montgomery, three fire chiefs, three firefighter union leaders, and the chiefs of staff of two county supervisors.  But no members of the public were invited to participate.

As Vina spoke addressing the county Board of Supervisors he was asking for a one-time contribution that would enable the fire district to open and staff one more fire station, bringing the district’s total to four.  These temporary funds would run out in July, 2017.  By then, it was hoped, another solution would be found to bring fire services to an acceptable level.

The Task Force was successful in obtaining over $2 million in one-time funds from the County and the cities of Brentwood and Oakley.  The crisis was clearly recognized by government at the municipal and county levels.

In early 2016 a pair of Brentwood residents approached Vina with a solution to the ECCFPD funding problem they thought would work.  These two had researched the community’s history, and recognized that a new tax measure would not have the support to pass.  In 2012 the community had rejected an ECCFPD parcel tax measure, and in early 2015 the community had rejected a benefit assessment district proposal.  Clearly, at least to these two residents and tax payers, area voters would not approve a new tax.

So they suggested adjusting the property tax allocation rate percentages using a section of the County Controller’s rulebook, the California Revenue and Taxation Code.  According to Chapter 6, Section 99.02 of this code, if two government entities agreed to a change, and it satisfied a small number of stipulations, the change could be made on a local level, without involvement of the state legislature.

The two residents suggested reallocating 5.2% of the property tax funds collected within the fire district’s territory to the fire district.  That would raise the ECCFPD property tax funding level to about the county’s average, 12%, giving the fire district the necessary funds to permanently open and staff three additional stations.  This would double the number of stations that current funding provided.

The reallocation could be phased in over four years so that the money could come from the anticipated growth of property tax funding, and thus not affect current revenues.  In this way no funding for current programs would be reduced.  The growth of property tax funding would just be a little slower.

The City Managers, though, felt that seeking new ECCFPD funding from taxpayers was the way to go. When the two residents asked Vina to participate in the Task Force, and they were refused, the two started a community conversation about property tax reallocation.

The two local residents began presenting their reallocation idea to service groups and local leaders.  They were encouraged by the reception, and so they formed a non-partisan citizens action committee to publicize the reallocation concept.

An Oakley City Councilwoman, Sue Higgins, attended one of the group’s public meetings.  She looked over the numbers, and how much each property tax-receiving entity would shift to the fire district.  Her entity, the City of Oakley, could participate in solving the fire district’s funding problem by shifting $36,000 to the fire district, cumulatively, in each of four years.  With a budget of about $15 million she felt her city could easily find the money.  She left the meeting enthusiastic about bringing the idea forward to her peers on the City Council.

When she reviewed the idea and the amount of future money the city would contribute to ECCFPD with her City Manager, Bryan Montgomery, she changed her mind.  The $36,000 was beyond the financial capability of her city, she later understood.  Reallocation of existing property tax funds was not something in which Oakley could participate, she said, based on the conversation with her City Manager.

Through the summer months of 2016 the Task Force moved forward.  The Task Force hired a company to create a civic engagement platform, to educate the public on the crisis situation and determine the public’s attitude towards various funding methods.  In the online survey the public voiced significant support for reallocating current property taxes, and only modest support for new taxes.

The Task Force continued to refine its new-tax strategy, and eventually came up with a utility user tax that would generate general revenue funds for the cities of Brentwood, Oakley and the county.   Contra Costa County, though, declined to put it on the November, 2016 ballot, while the two cities moved forward.

A professional public opinion poll was conducted, and just prior to committing to the tax measure Vina told the Brentwood City Council that such a tax measure would receive support from only about 40% of the voting public, according to the polling. In order to pass the measure would need voter approval of 50% plus one.

Recognizing the urgency to do something, anything, to increase funding for the fire district, the City Council decided to move forward with placing the utility user tax on the November ballot.  They conceded that at the proposed tax rate passage was unlikely, so they cut the tax rate by roughly one-third.  The hope was that it might pass at this reduced rate.

So in spite of a failed parcel tax in 2012, a failed benefit assessment district proposal in early 2015, online Internet survey results, and public opinion polling, City Managers Vina and Montgomery let their City Councils go forward with the utility user tax.

The result?  Over $200,000 spent on consultants and services in 2016, plus the staff time the two cities expended as they prepared the initiative for the ballot, and the hours and hours of city staff time spent educating the public on the proposition, all for naught.   The tax measures received just less than 40% approval, as polling had predicted, and they failed.

Our municipal leaders should gain valuable wisdom from this experience, namely, to pay attention to the history of their constituencies.  Asking for something that has been repeatedly denied is … what’s that definition of insanity?  Ah, yes, posing the same question over and over, hoping for a different answer.  (Or words to that effect.)

The ECCFPD continues to be plagued by inadequate funding, putting the lives and property of residents within their jurisdiction at risk, while city and county leaders mull over what to do next.

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