Motion by Supervisor Zev Yaroslavsky

October 17, 2000

MOTION BY SUPERVISOR ZEV YAROSLAVSKY

In the years since California voters approved Proposition 13 in 1978, local governments have relied increasingly on a variety of fees and other levies to help offset the erosion of their property tax revenue base and preserve essential programs.

One of government's most critical functions is to address health, environmental and economic concerns and to mitigate negative impacts wherever possible. Regulatory fees - such as those levied on restaurants to pay for health inspections, on vehicle registration to pay for smog checks, and on land developments to offset negative impacts - play a critical role in this effort.

In 1991, for example, California instituted a regulatory fee on paint companies and other businesses involved in the production of toxic lead-based products. The revenue funds a statewide program to screen children for lead poisoning, to track their treatment, and help identify the sources of the offending lead contamination.

The Sinclair Paint Company subsequently filed suit and challenged the fee as a de facto tax. The State Supreme Court ultimately rejected its argument, declaring that government may impose fees on companies which make contaminating products in order to help correct adverse health effects related to those products.

Today, a coalition of oil, tobacco, and liquor interests are trying to accomplish by ballot what they failed to accomplish by lawsuit, amending the state constitution to declare most of such regulatory fees to be taxes. These can only be enacted by a two-thirds vote of the Legislature, and locally, only by a majority or super-majority vote of the public. As a result, fewer such fees would likely be enacted in the future.

The non-partisan Legislative Analyst has recognized that this proposition’s primary fiscal effect would be to cripple government's ability to support programs critical to protecting public health and the environment, and further erode local control by starving local governments of even more funding. The potential revenue loss is unknown, but could well be significant.

I, THEREFORE, MOVE THAT the Board of Supervisors express its opposition to Proposition 37 on the November 7, 2000 ballot, whose passage would erode local control, potentially cost taxpayers millions in lost revenue, and jeopardize vital health and environmental programs.