Attorney General No.


Secretary of State No.



LOCAL GOVERNMENT REVENUE SOURCES. INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE. Replaces Vehicle License Fee with increased share of property taxes as primary source of local government revenues. Limits local government's authority to impose sales and use taxes. Establishes School Assistance Fund for Education in each county, funded by VLF allocations and additional retail sales and use taxes. Prohibits Legislature from altering allocations or delaying revenues from local government taxes. Requires state reimbursement for mandated programs or services by end of fiscal year. Permits local governments to either continue performance or suspend state mandates if Legislature fails to make timely appropriation. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: The initiative would have the following major fiscal effects, the magnitude of which would depend on future actions by the state and local governments and interpretation of the measure's provisions by the courts: (1) Annual shift of about $7 billion in VLF and sales taxes from cities and counties to K-14 districts; offset by a roughly comparable shift of property taxes from K-14 districts to cities and counties; and (2) Higher and more stable local government revenues than otherwise would have been the case, potentially several billion dollars annually. Conversely, significant changes to state finance, potentially including higher state taxes or lower spending on state programs than otherwise would have been the case. The state fiscal effect would be commensurate with the measure's impact on local governments.


John A. Ramirez, Rutan & Tucker, LLP, P.O. Box 1950, Costa Mesa, CA 92628-1950, (714) 641-5100



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