By John Pinkney
Local government finances are significantly changed by Proposition 218. This initiative, approved in November 1996 by state voters, applies to more than 7000 counties, cities, schools, special districts, re-development agencies, community college districts, and regional organizations in California.
A Guide to the Chapters of Proposition 218
This guide helps local officials, legislatures, and the local government to understand and implement Proposition 218. The guide has five chapters that include:
- Understanding the vocabulary of Proposition 218
- How Proposition 218 changes Local Governance and Finance
- Are existing revenues affected by Proposition 218?
- What can a local government do to raise New Revenues?
- May residents overturn Local Assessments, Taxes, and Fees?
- How Local Finance and Governance are changed by Proposition 218
Nearly 20 years ago, Proposition 13 stopped local authorities from raising property taxes. This proposition specified that two-thirds of voters must approve the specified tax for specific governmental programs. For this reason, local governments have relied upon other tools for revenue including property-related fees, assessments, and other taxes. Proposition 218 ensures equal use of local revenue tools.
Uncertainties Regarding Proposition 218
Based on our intensive review, the proposition requirements include:
- water standby charges
- local initiatives
- election procedures
- legal standards of proof
- sewer assessment revenues
We will also provide information where other parties have different opinions.
Local Revenues Are Not Affected
Annually, more than 50 billion dollars of taxes, fees, and assessment are raised by California local governments. Instead, the new proposition applies to small subsets of revenues.
Local Governance Changed by Provision 218
This proposition changes both local finance and governance roles to local property owners and residents. Some elements of the proposition are apparent while others will be seen in years to come.
Increased Role for Property Owners and Residents
In the past, there were minimal roles for property-owners in approving revenue-raising measures for local government. Instead, the local authorities raised revenues by increasing assessment fees, business license fees, general-purpose taxes, and hotel occupancy fees.
Local Government Remains Responsible for Expenditure
Local governing boards will be elected and get the approval of property-owners to spend the raised revenues with an exclusion of emergency cases.
State Government Role May Expand
This proposition can alter the responsibilities and roles of the state regarding the local government in various ways. For the local government to set rules governing finance, the legislature must interpret the proposition. The legislature receives these requests and processes them. It is now complicated to restructure the state-local program.
For a better understanding of Proposition 218, please contact us at our law firm for further questions.