That the City Council APPROVE AND ADOPT RESOLUTION NO. ________ ENTITLED:  A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA, CALIFORNIA OPPOSING INITIATIVE NO. 21-0042A1.

In 2018, the "Tax Fairness, Transparency, and Accountability Act," also known as Initiative No. 17-0050A1, was circulated for signatures to qualify for the November 2018 ballot.  If the initiative had been approved by voters, Initiative No. 17-0050A1, would have limited the ability and authority of local governments to control local revenues. Through the successful advocacy of municipalities and the League of California Cities (League), Initiative No. 17-0050A1 failed to qualify for the November 2018 ballot.

On January 4, 2022, Initiative No. 21-0042A1 was filed with the California Secretary of State for possible consideration on the November 2022 ballot.  Based on a review by the League, Initiative No. 21-0042A1 is potentially even more detrimental to local government finances than Initiative No. 17-0050A1 was, and the League, along with a broad coalition of local governments, public safety, transportation and infrastructure, and business advocates are requesting cities adopt a resolution in opposition to the initiative.

Background
Initiative No. 21-0042A1, which is supported by an association of California's wealthiest corporations, including oil, insurance, finance, and pharmaceutical companies, would create significant loopholes that allow corporations to avoid paying their fair share for impacts their operations have on local communities, while also providing them an avenue to potentially evade enforcement should their business operations violate state and local laws pertaining to environmental protection, public safety, and public health.

Perhaps more concerning to cities are the aspects of Initiative No. 21-0042A1 related to municipal finance.  For example, if approved Initiative No. 21-0042A1 would enact new and stricter rules regarding local taxes and fees, threatening local control, voter authority, and the means by which cities fund projects and programs that serve the public.  As noted in the League's legal analysis (Attachment 1), Initiative No. 21-0042A1 would:

- Limit voter input by prohibiting local voters from directing how local tax dollars should be spent through advisory measures;
- Establish new standards for how fees and charges are paid by industries and corporations that use of local and state government property for their business, potentially restricting the amount oil, gas, trash collection, and cable companies pay for the use of local public property;
- Modify the definition of "actual cost" used to determine local fees and charges to a higher threshold;
- Restrict the ability of local governments to assess fines and penalties on corporations or property-owners that violate state and local laws; and,
- Restrict local tax authority to provide local services.
 
City of La Habra FIscal Year 2021-22 Legislative Platform
On April 19, 2021, the City Council considered and adopted the City's Fiscal Year 2021-22 Legislative Platform (Legislative Platform, see Attachment 2).  The Legislative Platform confirms the City Council's position on issues that directly or indirectly affect City operations and provides guiding principles staff shall consider when monitoring legislative matters at the federal and state levels of government.

The concept of local control is the bedrock element of the City's Legislative Platform.  If proclaims that the City believes in the ability and authority of locally elected bodies to make policy decisions that address the needs of its residents and businesses within its jurisdiction.  Local control also implies that local policymaking bodies should retain the ability to use appropriate tools and resources to carry out approved policies without the threat of preemption, proscription, or unnecessary regulation by the Federal, State, or other governmental/regulatory body, and that, in general, the City of La Habra will oppose legislation that erodes local control and will support legislation that affirms or strengthens local control. 

In addition, the City's Legislative Platform also includes a statement that the City believes in the practice of fiscal responsibility by municipal bodies, with an emphasis on flexibility to meet its fiduciary responsibility to the community.  Therefore, the City would also oppose legislation that hinders its ability to create and implement reasonable fiscal policy.

For these reasons, staff recommends the City Council consider and adopt the attached resolution in opposition to Initiative No. 21-0042A1 (Attachment 3), and direct staff to provide a copy of the resolution to the League for its use in legislative advocacy efforts.