Cities Brace for Possible Effects of Prop. 218

By LESLEY WRIGHT SHELBY GRAD and HOPE HAMASHIGE

Nov. 3, 1996 12 AM PT

SPECIAL TO THE TIMES

Some Orange County cities are bracing for the possibility of more cutbacks if voters approve Proposition 218, a measure backed by the Howard Jarvis Taxpayers Assn. designed to further curtail the ability of local governments to raise taxes.

The proposition would require agencies to win voter approval for all future taxes as well as some of those that already exist. Property assessments that fund street lighting, park maintenance and other services would also have to go before the voters.

The measure does not cover property taxes. But Jarvis’ landmark Proposition 13 already restricts local government from increasing property taxes.

About half the county’s 31 cities would be threatened with revenue losses if the measure passes, including Santa Ana, San Clemente, Huntington Beach, Garden Grove and Irvine.

Officials said that if the assessments are placed before voters and fail, cities would have to find money elsewhere in their tight budgets to pay for the critical services.

“There is no way to make it up except [by] cutting [other] services,” said Rod Coloma, finance director in Santa Ana, which could lose as much as $10 million. “And since 65% of our budget is for police and fire, that is the place you have to start looking.”

Other cities, including Laguna Beach, Fountain Valley and Fullerton, don’t have assessment districts that would require voter approval. But like all local governments, they would have to place any future assessments to a vote.

Despite these concerns, many Orange County activists and even some elected officials strongly back Proposition 218, calling it a natural extension to Proposition 13, the 1978 tax-cutting measure.

In fact, backers said Proposition 218 simply requires public votes on utility taxes, property assessments and other levies that local governing bodies have used in recent years to generate revenues since Proposition 13 severely limited their taxing abilities.

“They’re just an end run against Prop. 13,” said Joel Fox, head of the Howard Jarvis Taxpayers Assn. “We’re not creating anything new here. We’re building on laws that have been around a long time.”

Fox and others said they have little sympathy for city officials who fear losing tax revenue if the measure is approved.

“What they’re suggesting is that they don’t trust the voters of our community,” Fox said. “We don’t eliminate the ability to raise taxes, we just require a vote. These officials will have to go out and make an argument to voters that these assessments will have to be raised.”

But many government officials said the proposition is poorly crafted and contains a variety of troubling provisions that invite legal challenges.

The most controversial provision of the measure involves voting on property assessments that pay for services in a specific area. Under Proposition 218, the levies must be placed before property owners for a referendum. Renters would not have a vote. Moreover, owners of properties with high assessed values would have a weighted vote compared to those with less pricey holdings.

“It completely disenfranchises 3 1/2 million people in the state of California,” said Garden Grove City Manager George Tindall, “because they rent their homes instead of owning them.”

The rules would create special problems in renter-heavy beach cities, where many properties are summer residences owned by people who live outside the area.

“You could potentially have a situation where people who don’t live here are deciding the city’s policies,” said San Clemente City Manager Michael W. Parness.

Supporters of the measure defend the voting procedure, saying that property owners alone should decide on the assessments because they are the ones who must pay the levies. Large landowners should have a weighted vote, backers add, because they are most affected by the assessments.

But other provisions of Proposition 218 are also raising eyebrows. Critics say the measure would eliminate the utility tax and assessment exemptions that several cities now give to low-income residents and seniors citizens, forcing them to pay the full levies.

It would also require government agencies--including school districts--to pay the same share of assessments as private property owners. Now, some public properties are exempt from the levies. The cost of this provision varies from district to district, but officials estimated that the countywide school losses could exceed $1 million.

Local governments--but especially cities--have faced a string of financial blows over the last few years. In the early 1990s, the state reduced the share of property tax revenue received by municipalities, forcing cities to cut staff and services.

Last year, the California Supreme Court upheld another tax-restricting measure, Proposition 62, which required that a variety of local taxes win voter approval.

Cities are still trying to determine whether the decision invalidates utility and hotel taxes approved by city councils prior to the high court ruling. If the taxes are voided, such cities as La Habra and Stanton would be forced to make massive service cuts and layoffs. But Proposition 218 supporters said that the tax-limiting measures simply allow taxpayers--rather than city councils--to make decisions involving service levels and taxes.

“It puts these decisions in the hands of the voters,” said Patrick Quaney, of the Concerned Citizens Committee of Orange County. “It lets me the taxpayer make the determination.”

Also contributing to this report was Times correspondent Russ Loar.

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Cities Await Vote

City officials are still trying to assess the effect should voters approve Proposition 218, which would require that agencies win voter approval for all future taxes and property assessments as well as some existing ones. The measure is backed by the Howard Jarvis Taxpayers Assn. Here are some of the ways cities could be affected:

Cities: Anaheim

Effects: Lighting assessments in some areas will have to go before voters.

Revenue at risk*: About $20,000

Cities: Brea

Effects: City will have to pay assessments on municipal property; false-alarm fees for home security devices could be affected.

Revenue at risk*: $440,000

Cities: Buena Park

Effects: Might have to eliminate discounts on water rates for low-income families and senior citizens; proposed assessment district for refurbishment of its tourist district would go before voters.

Revenue at risk*: None

Cities: Costa Mesa

Effects: Landscape assessments would have to be placed before voters.

Revenue at risk*: $12,000

Cities: Cypress

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Dana Point

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Fountain Valley

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Fullerton

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Garden Grove

Effects: Landscaping and lighting assessment districts might have to be reconfigured or possibly abandoned because of provisions of the law.

Revenue at risk*: $1.8 million

Cities: Huntington Beach

Effects: Could lose fees paid by city-owned water company.

Revenue at risk*: $3 million

Cities: Irvine

Effects: Landscape and lighting assessments and 1% utility users tax could go before voters.

Revenue at risk*: $400,000 to $650,000

Cities: La Habra

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: La Palma

Effects: Lighting and landscaping assessments would have to be placed before voters. Low-income residents would no longer be exempt from city utility tax.

Revenue at risk*: $500,000

Cities: Laguna Beach

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Laguna Niguel

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Laguna Hills

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Lake Forest

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Los Alamitos

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Mission Viejo

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Newport Beach

Effects: Three business improvement districts would have to be placed before voters.

Revenue at risk*: None

Cities: Orange

Effects: Three landscape assessment districts would have to go before voters.

Revenue at risk*: $460,000

Cities: Placentia

Effects: Sewer maintenance, lighting and landscaping assessments would have to be placed before voters.

Revenue at risk*: $1.2 million to $2.8 million

Cities: San Clemente

Effects: Lighting and landscaping assessments would have to be placed before voters. Low-income residents and senior citizens would no longer be exempt from assessment districts.

Revenue at risk*: $2.5 million

Cities: San Juan Capistrano

Effects: Future taxes and assessments would have to go before voters.

Revenue at risk*: None

Cities: Santa Ana

Effects: Several fees--including business license levies--may be eliminated; downtown business improvement district may go up for a vote.

Revenue at risk*: $10 million

Cities: Seal Beach

Effects: Street lighting assessment would have to be placed before voters.

Revenue at risk*: $120,000

Cities: Stanton

Effects: Lighting and landscaping assessment may be placed before voters; low-income residents would no longer be exempt from city utility tax.