McGeorge School of Law

Proposition 65

Proposition 65:
Local Government Funds.

By Stephen A. Strain

Copyright © 2004 by University of the McGeorge School of Law

JD, McGeorge School of Law, University of the Pacific
to be conferred May 2005
B.A., History, University of California Santa Barbara, 1996

 

Table of Contents

I. Executive Summary
II. The Law
III. Drafting Issues
IV. Constitutional Issues
V. Public Policy Considerations
VI. Conclusion

I. Executive Summary

Proposition 65, the Local Taxpayers and Public Safety Protection Act, was placed on the ballot by a coalition of cities, counties, and special districts to amend the state constitution in a manner that would significantly reduce the state legislature’s power over local government revenues generated by property tax, sales tax, and the Vehicle License Fee [hereinafter VLF]. Yes on 1A Californians to Protect Local Taxpayers and Public Safety, The Facts about Proposition 1A http://www.yeson1a.com/facts.php (accessed Sept. 10, 2004). Proposition 65 would require statewide voter approval of any law that shifts property taxes from local governments to schools and community colleges, changes how sales taxes are distributed among cities and counties, exchanges city sales taxes for increased property taxes, or revises the formulas used to distribute property taxes among local governments. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003). Any law enacted after November 1, 2003, that would have been subject to voter approval had Proposition 65 been in effect would be suspended pending voter approval at the next statewide election. Id. The two exceptions to the voter approval requirement would be for laws that shift property taxes among consenting local governments or replace VLF revenue with alternative funds. Id.

Proposition 65 would also allow local governments to choose not to comply with state mandates to implement new programs or provide a higher level of service in regard to existing programs if the state does not make a timely reimbursement of the costs. Id. The definition of state mandate would be expanded to include situations where the state shifts additional financial responsibility for an existing program to the local government as well as when the state requires local governments to implement a new program or increase the level of service in an existing program. Id.

Subsequent to the placing of Proposition 65 on the ballot, Proposition 1A was developed through negotiations of local governments, the state legislature, and Governor Arnold Schwarzenegger to address the same issues as Proposition 65. California Budget Project, What would Proposition 1A mean for State and Local Government Finance http://www.cbp.org/2004/

0409prop1A.pdf (Sept. 2004). Proposition 1A explicitly states that if it receives more votes than Proposition 65 it will completely supercede Proposition 65 and no portion of 65 will be enacted even if both measures pass. Cal. Res. SCA4, 2003-2004 Session, (July 27, 2004). Currently all officials supporters of Proposition 65 have withdrawn their support and are urging adoption of Proposition 1A and not Proposition 65. California Secretary of the State, California Official Voter Information Guide, Argument Against Proposition 65 (2004).

II. The Law

A. Existing Law

Property tax, the uniform local sales tax, and the VLF play major roles in the ability of California cities, counties, and special districts to provide many services. Legislative Analyst’s Office, Proposition 1A, Local Government Finance. State Constitutional Amendment, http://www.lao.ca.gov/ballot/2004/1A_11_2004.htm (accessed Aug. 2004). These services include fire protection, law enforcement, water, libraries, parks and recreation, and, in recent years, additional services that have been imposed on local governments as a result of state. Id. An example of a state mandate that is very much in the public eye is the requirements of local law enforcement under “Megan’s Law” to register convicted sex offenders and make reports to the Department of Justice concerning registered sex offenders. State of CA Comm. on State Mandates Rpt. To the Leg.: State Mandates, June 1, 2002-January 31, 2003 (2003).

1. Property Tax

A one percent property tax is levied on real property and provides general-purpose revenues for local governments and revenues for schools and community colleges. Cal. Const. art. XIIIA, § 1. These revenues were approximately $15 billion for local governments and $16 billion for schools and community colleges during the 2003-04 fiscal year. Legislative Analyst’s Office, Proposition 1A, Local Government Finance. State Constitutional Amendment http://www.lao.ca.gov/ballot/2004/1A_11_2004.htm (accessed Aug. 2004). The amount of these revenues received by individual local governments varies greatly because allocation is based on the property tax rates charged by the local governments during the mid-1970s. Id.

In addition to cities, counties, special districts, schools, and community colleges, Redevelopment Agencies also receive funding from property taxes. Cal. Const. Art. XVI, § 16. The California Constitution allows them to retain the difference between property tax revenue produced by a piece of property prior to their redevelopment efforts and the increased property tax revenue produced by a piece of property after their redevelopment efforts. Id. The California Constitution states that it is generally within the discretion of the state Legislature to determine whether or not this revenue will be protected from reallocation to other areas of government. Id.

The passage of Proposition 13 in 1978 greatly reduced the amount of property tax revenue received by local governments by capping property tax rates at one percent. Cal. Const. Art. XIIIA, § 1. Also contributing to the reduction in revenue was that the property tax would be levied each year based on the property’s value in 1975 and would only be reevaluated in the event of a change of ownership or new construction on the property. Cal. Const. Art. XIIIA, § 2. To mitigate the need for local governments to discontinue programs and services because of a lack of funds, in 1979 the state shifted property tax revenues received by schools and community colleges to local governments and backfilled the resulting loss in revenues to schools and community colleges with other state funds. California Budget Project, What would Proposition 1A mean for State and Local Government Finance http://www.cbp.org/2004/0409prop1A.pdf (Sept. 2004).

In 1988, Proposition 98 passed and established a guaranteed level of funding for schools and community colleges from a combination of state and local funds. Id. In 1992 and 1993, to lessen the state’s burden to satisfy its obligations to schools and community colleges under Proposition 98, the legislature shifted some of the property tax revenues given to local governments in 1979 back to schools and community colleges. Id. Proposition 172, passed in 1993, partially backfilled the lost property tax revenues to cities and counties through a ½ cent sales tax increase. Id.

The 2004-05 State Budget included shifts of property tax revenues totaling $1.3 billion ($350 million in property tax revenues each from cities, from counties and from special districts and $250 million from redevelopment agencies) to schools and community colleges in both 2004-05 and 2005-06. Id. This shift was not accompanied by any provision to backfill the $2.6 billion in revenues lost to local governments. Id. As a result, a coalition of cities, counties, and special districts placed Proposition 65 on the upcoming ballot. Id. Proposition 65 would require, among other provisions, a majority vote of the electorate to approve the $2.6 billion dollar shift of property tax revenue. Id. Because of uncertainty by the Proponents of Proposition 65 as to whether or not it would be adopted and the budget gap that would face the state if the shift of property taxes did not take place, the coalition of cities, counties, and special districts and Governor Schwarzenegger developed Proposition 1A. Proposition 1A would allow the property tax shift in 2004-05 and 2005-06 while providing protections for local governments against similar future shifts of property tax revenues. Gary Scott, Measure offers protection of local revenues from the state, Pasadena Star News (July 28, 2004). Both Proposition 1A and Proposition 65 will appear on the November ballot.

2. Vehicle License Fee (VLF)

The VLF is a tax that is levied annually on the value of vehicles registered in the state. Legislative Analyst’s Office, Proposition 1A, Local Government Finance. State Constitutional Amendment http://www.lao.ca.gov/ballot/2004/1A_11_2004.htm (accessed Aug. 2004). For most of the century the tax was two percent of the value of the vehicle but in 1999 the state began reducing the percentage charged and backfilling the revenues that were lost by the cities and counties. Id. Currently, the VLF is set at .65 percent of the value of the vehicle and the revenues are primarily allocated to county governments for health and social services programs although some are allocated to cities for general purposes. Id.

In June 2003, then Governor Gray Davis reinstituted the full VLF of two percent of the value of the vehicle. Institute of Governmental Studies-University of California, California Vehicle License Fee-Introduction http://www.igs.berkeley.edu/library/ htCAVehicleLicense2003.html (last updated Nov. 2003). When Davis was recalled in October 2003, new Governor Arnold Schwarzenegger revoked the fee increase by executive order and restored the VLF at .65 percent of the value of the vehicle. Id. The increase in the VLF rate made by former Governor Davis was expected to produce approximately $4.1 billion in additional revenue that would go to local governments and reduce the amount the state would have to backfill. Id. This $4.1 billion in anticipated revenue was lost when Governor Schwarzenegger returned the VLF rate to its previous level. Id. For 2004, this lost revenue will be replaced with property tax revenue shifted from schools and community colleges. Legislative Analyst’s Office, Proposition 1A, Local Government Finance. State Constitutional Amendment http://www.lao.ca.gov/ballot/ 2004/1A_11_2004.htm (accessed Aug. 2004). This shift does not reduce the financial burden on the state, however, because Proposition 98 of 1988 guarantees the level of funding of schools and community colleges that comes from property taxes and state funds. To meet the requirements of Proposition 98 of 1988, the state must now provide funds to schools and community colleges to take the place of the property tax funds shifted to local governments to alleviate the loss of VLF revenues. This funding gap will be at least partially addressed by the revenue produced by the issuing of the bonds under the Economic Bond Recovery Act of 2004. California Secretary of the State, California Official Voter Information Guide, Proposition 1A (2004).

3. Local Sales Tax

Cities and counties receive revenues from a uniform local sales tax levied on the purchase of most goods. Id. This tax was levied at a rate of 1.25 percent during 2003-04 and produced approximately $5.9 billion in revenue. Id. Currently eighty percent of the revenue generated from this tax is allocated to the local government where the sale occurs and the remaining twenty percent is allocated to counties to fund transportation. Id. The Economic Recovery Bond Act of 2004 has pledged some of the revenue generated from the uniform local sales tax to pay the debt service on state-deficit related bonds issued under the act. Id. The revenue lost to local governments as a result is being backfilled with additional property tax revenue. Id.

Cities and counties can also impose some additional sales taxes for local purposes. Id.

During 2003-04 forty jurisdictions levied optional sales taxes and generated approximately $3.1 billion that was used primarily for transportation. Id.

4. State Mandates

The California Constitution provides that whenever the state legislature or a state agency

mandates a local government to implement a new program or provide a higher level of service in regard to an existing program the state must reimburse the local government. Cal. Const. art. XIIIB, § 6. The California Constitution does not, however, provide a mechanism for local governments to obtain relief in the event the state government fails to reimburse them. Id. The state deferred payments to local governments for mandates in 2002, 2003, and 2004 and is approximately $2 billion behind in reimbursements for mandates from prior years. California Budget Project, What would Proposition 1A mean for State and Local Government Finance http://www.cbp.org/2004/0409prop1A.pdf (Sept. 2004). In some cases the state has suspended mandates in order to eliminate the need for the state to pay and, consequently, the need for the local government to comply. Legislative Analyst’s Office, Proposition 1A, Local Government Finance. State Constitutional Amendment http://www.lao.ca.gov/ballot/ 2004/1A_11_2004.htm (accessed Aug. 2004).

B. The Effects of Proposition 65

Proposition 65, if adopted, would create a variety of limitations on the state’s control over local revenues that are used by cities, counties, special districts, and redevelopment agencies. Proposition 65 would require voter approval for many state actions concerning local revenues that are currently unrestricted. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003). Generally, Proposition 65 would require voter approval for any legislative action that would reduce local government revenues below the amount or share that local governments received under the laws in effect on January 1, 2003. Id. Some of the specific changes made by Proposition 65 follow.

Currently the VLF Rate is statutorily set at two percent of the market value of any vehicle registered in California although the state has voluntarily reduced it to .65 percent and backfilled the difference in revenue between .65 percent and two percent. League of California Cities, Proposed Local Government Agreement http://www.cacities.org/index.jsp (last updated July 29, 2004). The state retains the power to adjust the VLF rate within the statutorily prescribed two percent of market value rate, to modify the allocation of VLF revenue, and to reduce the amount of funds used to backfill the difference in revenues between the .65 percent rate and the 2 percent rate. Id. Proposition 65 would amend the state constitution to require a vote of the electorate to approve any action by the state that would adjust the VLF rate, the allocation of VLF revenue, or the backfill of lost revenues. The state would, however, retain the power to replace VLF revenues with an equal amount of alternative funds without voter approval. Id.

Currently the state can also allocate property tax revenue among local governments and agencies as it sees fit. League of California Cities, Proposed Local Government Agreement http://www.cacities.org/index.jsp (last updated July 29, 2004). The state also has power to change the rate of sales tax that may be levied by local governments as well as the method of distribution of sales tax revenues. Id. Proposition 65 would amend the constitution to require voter approval for any changes to the allocation of property tax or sales tax revenues as well as for any change in the rate of sales tax to be levied. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/ sa2003rf0067.pdf (Dec. 10, 2003). The state, however, could still shift property taxes among consenting local governments without voter approval. Id.

Additionally, Proposition 65 would amend the state constitution to require voter approval of any enactment that would affect the payment of deferred VLF revenue, approximately $1.2 billion, by 2006 or that affects the reestablishment of the sales tax rate at 1.25 percent after the retirement of the bonds issued under The Economic Recovery Bond Act of 2004. Id. Currently these two provisions are prescribed by statute and thus subject to being modified or repealed by the state legislature. League of California Cities, Proposed Local Government Agreement http://www.cacities.org/index.jsp (last updated July 29, 2004).

The voter approval requirements of Proposition 65 would be retroactive and apply to any laws enacted after November 1, 2003 that would have been subject to the voter approval provision had Proposition 65 been in effect when they were passed. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003). If Proposition 65 is adopted these laws would be suspended pending submission to the voters. Id. The most noteworthy laws that would be impacted by this provision of Proposition 65 would be those passed as part of the 2004-05 state budget shifting $2.6 billion in property taxes from local governments to the state in 2004-05 and 2005-06. This shift in revenues would be suspended pending approval by a majority of the electorate and if not approved would create a sizable gap in the state budget.

Finally, Proposition 65 would amend the California State Constitution in regard to state actions that mandate cities, counties, special districts, schools, and community colleges to implement new programs, increase the level of service in existing programs, or that shift the costs of existing programs. Id. Proposition 65 would give those local entities the option of suspending implementation of the state mandated action if the state fails to make a subvention of funds within 180 days of the issuing of the mandate or continue to implement the state mandated action subject to future reimbursement. Id. Currently constitutional and statutory law are silent as to the rights possessed by local governments in the event the state does not reimburse them for mandates of this kind and the definition of a mandate does not include the shift in cost from the state to a city, county, special districts, schools, or community colleges. Cal. Const. art. XIIIB, § 6.

The following mandates would not be included under this provision:

1. Mandates requested by the affected local agency

2. Legislation defining a new crime or changing an existing definition of a crime

3. Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975

4. Requirements to provide or recognize any procedural or substantive protection, right, benefit, or employment status of any local government employee or retiree, or of any local government employee organization, that arises from, affects, or directly relates to future, current, or past local government employee. California Attorney General, The Local Taxpayers and Public Safety Protection Ac, http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003).

B. Comparison with Proposition 1A

Proposition 1A and Proposition 65 both appear on the November ballot and are aimed at the protection of local government revenues from state control. It would be difficult to assess the true impact of either one without comparison to the other.

Proposition 65 does not prohibit the state from reducing revenues to local governments derived from property tax, local sales tax, or VLF funds, but it does make any such change subject to approval by a majority of the electorate. Id. Any such reduction in revenues approved by the voters would not be subject to repayment. Id. Also subject to voter approval would be any action that affects the reestablishment of the sales tax rate at 1.25 percent after the retirement of the bonds issued under The Economic Recovery Bond Act of 2004. Id.

In contrast, Proposition 1A does prohibit reductions in the amount of revenues from property tax, sales tax, and VLF funds received by local governments, but it is not a total prohibition as the state may still have access to local revenues under certain circumstances. Cal. Res. SCA4, 2003-2004 Session (July 27, 2004). Proposition 1A fixes the level of revenues local governments receive from VLF funds but allows the state to reduce this amount as long as it backfills any lost VLF funds with other funds. Id. Further, the state may shift a limited amount of property tax revenues from local governments in the event the governor declares it is necessary due to severe financial hardship and such declaration is approved by a 2/3 vote of the legislature. Id. Such a shift could only be done twice in any ten year period, could not be done in consecutive years, and would require the state to repay local governments with interest over three years. Id. Additionally, Proposition 1A would constitutionally prohibit any state action that would effect the backfill of lost sales tax revenue resulting from The Economic Recovery Bond Act of 2004 or the reinstatement of sales tax revenue once the bonds are retired. Id.

Essentially, it seems that Proposition 65 still allows the state access to local revenues but creates an onerous barrier to that access by requiring statewide voter approval. Proposition 1A creates a less onerous barrier for the state to overcome in gaining access to local revenues but limits the frequency and circumstances under which that access can be gained. Proposition 1A also places a complete prohibition on state interference with the backfill and eventual reinstatement of sales tax resulting from The Economic Recovery Bond Act of 2004 and requires the state to repay any local revenues it takes. Proposition 65 would allow the state to interfere with the backfill and eventual reinstatement of sales tax resulting from The Economic Recovery Bond Act of 2004 if it receives voter approval and Proposition 65 does not have any repayment provision if the state takes property tax revenue.

Another key difference between Proposition 65 and Proposition 1A is the date they would take effect. Proposition 65 would be retroactive to any law passed after November 1, 2003 while Proposition 1A would not be retroactive and only take effect on November 3, 2004. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003); Cal. Res. SCA4, 2003-2004 Session, (July 27, 2004). The most noteworthy impact of this difference is that the $2.6 billion shift in property taxes from local governments to the state under the 2004-05 state budget would not be impacted by Proposition 1A, but would be suspended pending voter approval under Proposition 65, thus putting the state at risk of a large budget gap.

Both Propositions aim to add teeth to the requirement of the California Constitution that the state reimburse local governments for mandated actions, but they differ in their approach. Proposition 65 applies to cities, counties, special districts, schools, and community colleges and gives them an option between suspending the mandated action if they do not receive reimbursement from the state or continuing the action subject to future reimbursement. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003). Proposition 1A does not apply to schools and community colleges and requires the state to suspend mandates to local governments if it does not allocate money for reimbursement. Cal. Res. SCA4, 2003-2004 Session (July 27, 2004).

In regard to state mandates, Proposition 65 seems to provide more protection to local governments while Proposition 1A seems to offer more protection for the state. If the state is unable to pay the local government for implementation of the mandated action, under Proposition 65 the local government has the option to continue to implement the mandate and continue to increase the state’s debt. Proposition 1A, on the other hand, suspends the state’s mandate thus eliminating both the local government’s need to comply and the state’s need to pay. Additionally, Proposition 1A does not apply to schools and community colleges, thus allowing the state to continue to issue mandates to those entities while deferring payment indefinitely.

Finally, while the provisions of Proposition 65 apply to redevelopment agencies as well as other local government entities, Proposition 1A does not. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003); Cal. Res. SCA4, 2003-2004 Session (July 27, 2004). The Proponents of Proposition 1A have defended this difference by relying on the protections given redevelopment agencies by California State Constitution Article XVI, §16. California Secretary of the State, California Official Voter Information Guide, Argument in Favor of Proposition 1A (2004). Although this section appears to give the state legislature discretion in whether or not property revenues are distributed to redevelopment agencies, the discretion is whether or not to allow redevelopment plans to include provisions for allocating property tax revenues to the redevelopment agency. Cal. Const. art. XVI, § 16. The distribution becomes effective once the ordinance implementing the redevelopment plan takes effect. Id. Essentially, it seems that this section of the state constitution provides protection for property taxes already allocated to redevelopment agencies through existing redevelopment plans but does not protect future redevelopment plans or property tax distributions. However, this may be a dubious protection because the fact that the legislature approved the division of property taxes to redevelopment agencies in the first place does not offer such distribution any constitutional protection and therefore may be subject to repeal by the state legislature. Proposition 65, on the other hand provides redevelopment agencies all the protections given to other local governments under the Proposition. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003).

III. Drafting Issues

The only drafting issue of note is that Proposition 65 contains a severability clause stating that in the event any part of the proposition is found to be unconstitutional the remaining parts should still be enacted. The Supreme Court of California has stated that, “Although not conclusive, a severability clause normally calls for sustaining the valid part of the enactment,…” Calfarm Ins. Co. v. Deukmejian, 771 P.2d 1247 (Cal. 1989).

The California Supreme Court has articulated three criteria for severing an initiative and upholding the valid sections of a ballot measure despite the invalid sections. Legislature v. Eu, 54 Cal. 3d 492, 535 (Cal. 1991). The constitutional sections must be grammatically, functionally, and volitionally separable from the unconstitutional parts of the proposition. Id. Proposition 65 appears to have three distinct sections, one dealing with voter approval of the reallocation of local revenues, one dealing with the retroactive application of the voter approval provision, and one dealing with state mandates. Each could be severed grammatically without affecting the understanding of the other provisions and functionally without impeding the function of the other provisions with one exception. If the section addressing voter approval of the reallocation of local revenues were to be invalidated then the provision making it applicable retroactively could not stand alone as it would be retroactively applying an unconstitutional provision. The converse would not be true. If the section concerning retroactive application is found unconstitutional it would not affect the exercise of either of the other provisions.

Proposition 65 also seems to meet the test for volitional severability. In Legislature v. Eu, the California Supreme Court articulated the volitional test as whether or not “the framers and voters undoubtedly would have adopted the remaining provisions had they foreseen the success of petitioners' challenge.” Legislature v. Eu, 54 Cal. 3d 492, 535 (Cal. 1991). The severability clause of Proposition 65 is strong evidence that if any part were invalidated the framers would want the remaining provisions to be adopted. Determining the desire of the voters is a more difficult task. If the proposition were presented to the voters as a comprehensive, interrelated package then it might not be clear that they would desire the other portions to be adopted if one was invalidated. This is unlikely to be the case here because Proposition 65 has no official supporters is not being presented to the voters in any context other than its appearance on the ballot . California Secretary of the State, California Official Voter Information Guide, Argument Against Proposition 65 (2004). Proposition 65 would likely be determined to be volitionally severable because the only message being presented to the public is the measure itself which contains an express severability clause and the voters would likely be found to be voting for it as well as the rest of the proposition. The different sections of Proposition 65 would likely be severable and capable of enactment even if one of them is determined to be unconstitutional.

IV. Constitutional Issues

A. Federal Constitution
Proposition 1A does not raise any federal constitutional issues.

B. State Constitution
While Proposition 1A contains an explicit statement that it should completely supercede Proposition 65 if both receive enough votes to be adopted, Proposition 65 contains no such statement. The question of what will result if Proposition 65 receives more votes than Proposition 1A but both receive enough votes to pass raises issues involving the California State Constitution. Article II, § 10(b) of the California State Constitution states, “If provisions of 2 or more measures approved at the same election conflict, those of the measure receiving the highest affirmative vote shall prevail.” Cal. Const. art. II, § 10. This calls for a determination of whether or not Proposition 1A and Proposition 65 are competing. If they are determined to be supplementary or complimentary rather than competing then the provisions of the proposition receiving fewer votes that do not conflict with the proposition receiving a greater number of votes would be merged with the proposition receiving a greater number of votes. Gerken v. FPPC, 6 Cal.4th 707, 720 (Cal. 1993). In Gerken v. FPPC, the California Supreme Court stated that a determination as to whether ballot measures dealing with the same subject matter are complimentary, supplementary, or competing depends on how the propositions are presented to the public. Id. Proposition 1A and Proposition 65 appear to be competing initiatives. In addition to the explicit language of Proposition 1A stating it is intended to completely supercede Proposition 65 if both receive enough votes to be adopted, all the official supporters of Proposition 65 have shifted their support to Proposition 1A and are urging the voters to adopt 1A and not Proposition 65. California Secretary of the State, California Official Voter Information Guide, Argument Against Proposition 65 (2004). It seems that the two propositions are being presented to the public as necessitating that voters choose one or the other. This would make them appear as competing propositions and therefore, if Proposition 65 were to receive more votes than Proposition 1A it would likely completely supercede Proposition 1A even if both receive enough votes to be adopted.

V. Public Policy Considerations

A. Proponents
Proposition 65 was submitted by a coalition of cities, counties and special districts called Leave Our Community Assets Local [hereinafter LOCAL] and the Proponents listed on the petition submitted to the California Secretary of State were Chris McKenzie, Executive Director of the League of California Cities, Catherine Smith, Executive Director of the California Special Districts Association, and Steven Szalay, Executive Director of the California State Association of Counties. Yes on 1A Californians to Protect Local Taxpayers and Public Safety, The Facts about Proposition 1A http://www.yeson1a.com/facts.php (accessed Sept. 10, 2004). All three, as well as all the other official supporters of Proposition 65, have publicly withdrawn their support of Proposition 65 in favor of Proposition 1A. California Secretary of the State, California Official Voter Information Guide, Argument Against Proposition 65 (2004). Currently there are no official supporters of Proposition 65. Id.

B. Opponents
As stated above there are currently no Proponents of Proposition 65 as all its official supporters have withdrawn their support on the grounds that Proposition 65 is neither as effective nor as flexible a solution for the protection of local revenues as Proposition 1A. Id.

The supporters of Proposition 1A, who are also the Opponents of Proposition 65, assert that Proposition 1A offers the same protections for local governments sought by Proposition 65 while allowing flexibility for the state government to address its financial concerns that is not allowed under Proposition 65. California Secretary of the State, California Official Voter Information Guide, Argument in Favor of Proposition 1A (2004). The Opponents of Proposition 65 assert that Proposition 65 simply shifts the financial hardship from local governments to the state where Proposition 1A is flexible enough to accommodate the needs of the both the state and local governments. Id. This flexibility comes from the fact that the state will still have access to local revenues in the case of severe financial hardship declared by the governor and affirmed by a 2/3 vote of the Legislature, while still protecting local governments by limiting the amount of local revenues that can be raided, limiting the frequency with which the state can raid local revenues, and requiring timely repayment. Id. Proposition 65 would only allow the state access to local revenues if approved by a majority vote of the state electorate. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003). Instituting this vote would be a much more difficult threshold for the state to meet than those outlined in Proposition 1A thus making it more difficult for the state to deal with its financial concerns. Additionally, if a state shift in local revenue was approved by the voters there is no repayment provision that would ensure that local governments would not lose the funds permanently as Proposition 1A does. Id.

VI. Conclusion
Proposition 65, The Local Taxpayers and Public Safety Protection Act, amends the state constitution in a variety of ways that would reduce the state’s power over the allocation of local revenues through the levying of property tax, sales tax, and the VLF. California Attorney General, The Local Taxpayers and Public Safety Protection Act http://www.caag.state.ca.us/

initiatives/pdf/sa2003rf0067.pdf (Dec. 10, 2003). Proposition 65 would require the approval of the voters for many budgetary actions and would give the state the option to suspend performance of state mandates for which they are not reimbursed. Id. While Proposition 65 is still on the ballot it is virtually bereft of support as all its official Proponents, including those who were instrumental in getting it placed on the ballot have withdrawn their support in favor of Proposition 1A, a competing measure that claims to offer the same protections for local revenues while creating a system that is more flexible than the changes proposed in Proposition 65 and more capable of addressing the needs of both local governments and of the state. California Secretary of the State, California Official Voter Information Guide, Argument in Favor of Proposition 1A (2004).