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object(Timber\Post)#3742 (44) { ["ImageClass"]=> string(12) "Timber\Image" ["PostClass"]=> string(11) "Timber\Post" ["TermClass"]=> string(11) "Timber\Term" ["object_type"]=> string(4) "post" ["custom"]=> array(5) { ["_wp_attached_file"]=> string(15) "OP_1204MBOP.pdf" ["wpmf_size"]=> string(6) "495142" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(73817) "Occasional Papers Local Budgets and Tax Policies in California and U.S. Cities: Surveys of City Officials Mark Baldassare Christopher Hoene Presented at the National League of Cities Congress of Cities and Exposition, Session on Taxing Choices: Local and State Responses to Tax and Spending Limits Indianapolis, Indiana December 3, 2004 Public Policy Institute of California The Public Policy Institute of California (PPIC) is a private operating foundation established in 1994 with an endowment from William R. Hewlett. The Institute is dedicated to improving public policy in California through independent, objective, nonpartisan research. PPIC's research agenda focuses on three program areas: population, economy, and governance and public finance. Studies within these programs are examining the underlying forces shaping California’s future, cutting across a wide range of public policy concerns, including education, health care, immigration, income distribution, welfare, urban growth, and state and local finance. PPIC was created because three concerned citizens – William R. Hewlett, Roger W. Heyns, and Arjay Miller – recognized the need for linking objective research to the realities of California public policy. Their goal was to help the state’s leaders better understand the intricacies and implications of contemporary issues and make informed public policy decisions when confronted with challenges in the future. David W. Lyon is founding President and Chief Executive Officer of PPIC. Cheryl White Mason is Chair of the Board of Directors. Copyright © 2004 by Public Policy Institute of California All rights reserved San Francisco, CA Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source and the above copyright notice is included. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. Contents Summary Introduction GENERAL FISCAL PERCEPTIONS City Conditions Fiscal Approval Ratings Federal Budget Deficit REVENUE AND SPENDING PRESSURES Spending Pressures Spending Cuts Revenue Increases Budget Gaps Long-Term Trends OPTIONS FOR REFORM Need for Change? Reform Options Tax and Spending Limits Sources of Opposition and Support Appendix A. Survey Methodology California Survey National Survey Appendix B. Survey Questionnaire – National Sample Appendix C. Survey Questionnaire – California Sample iii 1 3 3 4 5 7 7 8 9 10 11 13 13 13 14 15 17 17 18 21 29 -i- Summary This report compares and contrasts how city officials are confronting the challenges of local budget and tax policy in California and the rest of the United States. It offers a “snapshot in time” when city officials in California are coping with multiple fiscal issues: a sluggish economy that has yet to recover from the recession of 2001, multibillion dollar gaps between spending and revenues in the state budget, the latest round of tensions between state and local governments over the allocation of revenues and service responsibilities, and ballot measures that seek to remedy the fiscal situation. Throughout the United States, cities face fiscal challenges in the context of a federal budget deficit and of state and local finance systems constrained by declining intergovernmental revenues, long-term economic shifts, demographic changes, and political opposition to raising taxes. An analysis of city officials’ opinions in California and the rest of the United States should be very informative to policymakers as they consider the future directions of local public finance. The opinions expressed in these surveys should help identify local fiscal issues, perceived needs, and possible solutions. The results in the report are based on comprehensive surveys conducted from June to August 2004 by the National League of Cities, the League of California Cities, and the Public Policy Institute of California (PPIC). A direct mail survey was sent to city officials in all of California's 478 cities and to a random sample of 1,180 U.S. city officials outside of California. California city officials completed and returned a total of 241 surveys, a 50 percent response rate. U.S. city officials outside of California completed and returned a total of 372 surveys, a 32 percent response rate. These are the major findings from the surveys: • Although facing numerous fiscal challenges, relatively few city officials say their city’s fiscal conditions are in poor shape. However, California city officials are less likely than those in the rest of the United States to describe the city’s fiscal conditions as excellent or good. • A majority of city officials approve of how their city governments are handling budget and tax issues but disapprove of how their state legislatures are handling fiscal issues. A majority of city officials elsewhere in the United States also disapprove of the way their state governors handle fiscal issues. California goes the other way: A majority approve of Governor Schwarzenegger’s handling of fiscal affairs. • Most city officials say the federal budget deficit is at least somewhat of a problem for cities, and few city officials in California and elsewhere approve of the way President Bush and the U.S. Congress are handling budget and tax issues. • City officials generally agree that their spending pressures are increasing over time. However, California city officials are much less likely than those elsewhere to say city government could spend less and still provide the same level of services. • If spending cuts are needed, city officials are not inclined to support cuts in public safety programs or across-the-board cuts but most would favor cuts in general government. City officials in California are more inclined than others to be willing to make cuts in culture and leisure, social services, and streets and roads. - iii - • If more revenues are needed, most city officials in the United States and in California say they would prefer to generate those revenues via user fees rather than through new taxes. They are most likely to favor new taxes to maintain spending for public safety and streets and roads, rather than social services, culture and leisure, and general government. • Among the long-term trends affecting fiscal policy, city officials say intergovernmental challenges (unfunded mandates and cuts in aid) and political challenges (public pressure to limit taxes and lack of public trust in government) are of greatest concern. California city officials are more likely than others to express concern about federal and/or state preemption and special-interest pressures to limit taxes. • Most city officials say that the system of public finance needs to be changed. Among U.S. city officials, the top two options for reform are a return to federal General Revenue Sharing and state authorization of local tax authority. The top two options for California city officials are taxing goods sold over the Internet and reducing supermajority vote requirements for increasing taxes and fees. Most California city officials believe that tax and spending limits are a bad idea, while the majority of city officials elsewhere see limits as a good idea. • City officials see voters, businesses, and neighborhood groups as more likely to support than oppose fiscal reforms and see the state legislature and outside special interests groups as the groups most likely to oppose fiscal reform. Regarding governors, California once again bucks the trend: City officials in the U.S. say that their governors are likely to oppose fiscal reforms, but a majority of California city officials say that Governor Schwarzenegger is likely to support fiscal reforms. - iv - Introduction Local governments nationwide continue to confront fiscal challenges and new realities in budget and tax policy, even as a national economic recovery is underway. The federal budget deficit, along with sluggish economic growth in many of the nation’s regions, translates into slow growth in local and state revenues, ongoing budget gaps between spending and tax revenues in many state budgets, and state-local tensions over state support for localities. Moreover, cities have new responsibilities, such as homeland security needs, that require additional resources. In California, the current fiscal constraints are compounded by a complicated system of state and local public finance developed since the imposition of Proposition 13 tax limitations, by longer-term economic and demographic changes, and by a political climate in which voters’ distrust of government continues to shape fiscal policies. To gauge the perceptions and preferences of city governments, the National League of Cities, the League of California Cities, and the Public Policy Institute of California sent a survey to city officials in all 478 California cities and to a random sample of 1,180 city officials outside of California. A total of 241 California questionnaires were returned from June to August 2004, for a 50 percent response rate; a total of 372 questionnaires were returned from U.S. city officials outside of California, for a 32 percent response rate. In the patterns of responses, the survey sought answers to the following questions: • How do city officials perceive their city’s fiscal conditions? How do city officials view local, state, and federal budget and tax policy? • How much are spending pressures confronting city officials today? What types of spending cuts and revenue increases are most preferred? What types of services generate the most support for tax increases to maintain current funding? • To what extent are fiscal reforms seen as a solution? What are city officials’ perceptions of specific reform options? Which groups or individuals are seen as likely to support or oppose fiscal reforms? • In what domains, if any, do California city officials responses vary dramatically from the responses of their counterparts in the rest of the United States? • Do the city officials’ responses outside of California vary across the Northeast, Midwest, South, and West and among small, medium, and large cities? -1- General Fiscal Perceptions City Conditions Although facing problems with budgets, spending, and revenues, few city officials in California and elsewhere say that their city faces a fiscal crisis. Nearly half of California city officials say that their cities’ fiscal conditions are excellent (12%) or good (33%). City officials elsewhere are even more bullish: Six in 10 say they have excellent (22%) or good (40%) fiscal conditions. In California and elsewhere, relatively few city officials say that their city’s fiscal conditions are poor (15% in California, 11% in the United States). City officials in all regions of the country were more likely to report excellent or good fiscal conditions (65% in the South, 64% in the Northeast, 61% in the West, and 59% in the Midwest ) than city officials in California (45%). City officials in California (12%) and elsewhere in the West (13%) were less likely than others to say their fiscal conditions are excellent. It is worth noting that officials in the Midwest (15%) were as likely as those in California (15%) to give their cities poor fiscal ratings. Outside of California, city population size and ratings of a city’s fiscal conditions were related. In cities of 100,000 or more, city officials were less likely to report excellent fiscal conditions (10%) than in cities with smaller populations (17% in cities under 10,000, 26% in cities between 10,000 and 49,999, and 23% in cities between 50,000 and 99,999). In California, the city’s population size was unrelated to reports of city fiscal conditions. Table 1 "How would you rate fiscal conditions in your city today?” Excellent Good Fair Poor Don’t know U.S. 22% 40 26 11 1 CA 12% 33 39 15 1 Northeast 25% 39 23 11 2 Region Midwest South 19% 27% 40 38 26 27 15 5 03 West 13% 48 28 11 0 -3- Fiscal Approval Ratings As another indication that city officials believe that their cities are coping with current fiscal circumstances, the vast majority of city officials in California (95%) and in the rest of the United States (84%) say they approve of the way that their city governments have handled budget and tax issues. Although this approval is highest in California and elsewhere in the West (91%), the percentages are high for all other regions as well (86% Midwest, 82% South, and 79% Northeast). These high ratings stand in stark contrast to city officials’ rating of state legislatures. City officials do not approve of the handling of budget and tax issues by state legislatures. In the rest of the United States, only 19 percent say they approve of the legislatures’ handling of these matters—and that drops to 3 percent in California. When it comes to the governor’s handling of state budget and tax issues, California city officials go the other way: Only 33 percent of U.S. city officials say they approve of their governor’s performance, but 56 percent of California city officials give Governor Arnold Schwarzenegger a thumbs up. Moreover, that rating is significantly higher than the ratings given governors in all other regions (39% West, 36% South, 32% Northeast, and 30% Midwest). This result is, of course, in the context of Governor Schwarzenegger’s having reached agreement with city officials on ways to provide greater protection of local governments from future reductions in state funding. Outside of California, officials in cities with a population of 100,000 or more are more likely to say they approve of the governor’s handling of budget and tax issues (48%) than city officials in smaller cities (33% under 10,000, 33% for 10,000 to 49,999, and 26% for 50,000 to 99,999). City size makes no difference in ratings in California. In California, only one in five city officials say that they approve of the way that the president is handling fiscal issues, compared with one in three officials elsewhere in the United States. City officials in the South and West give higher ratings to the president than in the Northeast and Midwest. City officials give the U.S. Congress even lower approval ratings on fiscal issues. -4- Table 2 "Do you approve or disapprove of the way that governments are handling budget and tax issues?” (% responding “approve”) Your city government Governor State Legislature President Bush U.S. Congress U.S. 84% 33 19 31 15 CA 95% 56 3 20 9 Northeast 79% 32 13 23 13 Region Midwest South 86% 82% 30 36 16 22 28 36 18 12 West 91% 39 24 37 13 Federal Budget Deficit Since the economic recession of 2001, the federal government has run significant annual deficits. The Congressional Budget Office projects that the federal deficit for 2004 will be $477 billion. In our surveys, city officials are quite concerned about the size of the federal budget deficit and city dependence upon the federal government for funding city programs. Nearly all city officials say that the federal budget deficit presents at least somewhat of a problem for them (86% in California, 82% elsewhere). City officials in California (33%) are less likely than city officials elsewhere (47%) to see the federal budget deficit as a big problem and particularly less likely than city officials elsewhere in the West (61%). Outside of California, the perception that the federal deficit presents a big problem is greater in cities with a population of 100,000 or more (57%) and with a population between 50,000 and 99,999 (58%) than in less populated cities (10,000-49,999, 44%; less than 10,000, 45%). Again, there is no such correlation across cities of different population sizes in California. Table 3 "How much do you think the federal deficit is a problem for cities?” Big problem Somewhat of a problem Not a problem Don’t know U.S. 47% 35 12 6 CA 33% 53 8 6 Northeast 48% 34 9 9 Region Midwest South 45% 44% 37 33 13 15 58 West 61% 33 2 4 -5- Revenue and Spending Pressures Spending Pressures Although city officials remain upbeat about their local budgets, their cities confronted a variety of fiscal challenges as revenue collections slowed while spending pressures persisted. Moreover, cities are confronting a host of added commitments, such as local homeland security. Looking at the past five years, four in five city officials in the rest of the United States (81%) and California (85%) say their city’s range of responsibilities has increased. Moreover, four in five expect their commitments to increase further over the next five years (82% in California, 81% elsewhere). No appreciable differences are evident by city size, region, or tax structure. Despite city officials’ perceptions of increasing commitments and responsibilities, the public’s perception is often that, by cutting the waste in spending, their governments could spend less public money and maintain the same level of services. That is the opinion of many California residents, for example, in the PPIC Statewide Surveys. When asked if they think their city government could spend less and still maintain the same level of services, only one in three city officials in California think it would be possible. Although a slim majority of city officials elsewhere say they can spend less and still provide the same level of services, 41 percent say they cannot. Table 4 “How has the range of your city’s responsibilities and commitments changed over the past five years? How do you think those responsibilities and commitments will change over the next five years?” Increased in past five years Increase in next five years U.S. Cities 81% 81 CA Cities 85% 82 Table 5 “Do you think that your city government could spend less and still provide the same level of services?” Yes No Don’t know U.S. Cities 52% 41 7 CA Cities 33% 66 1 -7- Spending Cuts Which types of local spending cuts would be most acceptable, and which areas of the budget should be protected? For city government officials faced with fiscal constraints, the choices they make in this arena can have important consequences for their constituents. Even though city officials in California are more likely than others to believe that they cannot provide the same level of services with less money, they are more willing to make local spending cuts. California city officials are more willing than those elsewhere in the United States to makes cuts in general government (74% to 58%), culture and leisure activities such as parks and recreation (70% to 46%), social services (67% to 37%), streets and roads (58% to 26%), and public safety (38% to 14%). However, they are less willing than those elsewhere to make across-theboard cuts (23% to 32%). The greater willingness to cut spending among California city officials reflects a fiscal pattern that is consistent in the West. City officials in the West are more likely than city officials in other regions to say they would make cuts in general administration (70%), culture and leisure (67%), social services (48%), and streets and roads (39%). Similar to their California counterparts, city officials in the West are also less likely to be willing to make across-the-board cuts (24%) than their counterparts in the Northeast (36%), Midwest (35%), and South (30%). Table 6 “If your city is faced with making future cuts in spending, would you make cuts in the following areas?” (% saying “yes”) Region U.S. CA Northeast Midwest South West General government 58% 74% 46% 62% 55% 70% Culture and leisure 46 70 36 46 41 67 Social services 37 67 34 37 35 48 Streets, roads 26 58 20 28 21 39 Public safety 14 38 11 19 12 11 Across-the-board 32 23 36 35 30 24 Note: See Appendix A for a detailed description of each category of expenditures. -8- Revenue Increases Cities are also facing fiscal pressures from the sluggish economy and the slow growth or declines in tax revenues resulting from that. Their revenue streams can also be reduced by state and federal actions as those levels of government try to cope with their own budget pressures. What would city officials prefer to do if they had to increase local revenues? Once again, this is an important issue for city governments from a fiscal, economic, and political standpoint. If their cities need general additional revenues to cover service needs, a large majority of city officials in California (82%) and the rest of the United States (73%) say they would prefer to raise or impose user fees. Relatively few express a willingness to raise taxes. One in three city officials in California and elsewhere in the country would consider a sales tax increase. City officials elsewhere (37%) are more likely to say they would be willing to raise property tax rates than city officials in California (22%), perhaps reflecting the constraints on local property taxes in California under Proposition 13. California city officials (44%) are more willing to raise other taxes than city officials elsewhere in the nation (30%). Few city officials say they would consider a local income tax. It is important to note that there are regional variations in the ability to increase revenues—for instance, whether or not states in certain regions are likely to allow a local sales tax. Regionally, city officials in the Northeast (52%) are more likely to say they would raise property tax rates than city officials in the Midwest (31%), South (34%) and West (41%). Northeastern city officials (14%) are less likely to say they would raise sales tax rates than city officials in the Midwest (32%), South (30%), and West (39%). Similar to trends in California, city officials elsewhere in the West (85%) are more willing to raise fee rates or impose new fees than city officials in other regions. Table 7 “If your city needs to generate additional revenue in the future, would you be willing to raise tax and/or fee rates, or impose new taxes and/or fees to generate those revenues?” (% saying “yes”) Region U.S. CA Northeast Midwest South West Property tax 37% 22% 52% 31% 34% 41% Sales tax 30 35 14 32 30 39 Income tax 14 5 13 20 5 17 Other tax(es) 30 44 34 28 27 39 User fees 73 82 73 73 72 85 Notes: Levying local income taxes would have to first be authorized by the state government. See Appendix A for a detailed description of each category of revenues. -9- Budget Gaps The spending and revenue pressures of the last several years are forcing many cities to deal with a structural deficit—that is, a persistent gap between expenditures and revenues. Because, in most states, cities are required by law to balance their budgets, these budget gaps must be covered through tax and fee rate increases, spending cuts, borrowing, or some combination of these alternatives. Most city officials in California (69%) and elsewhere (61%) prefer to use a mix of spending cuts, tax increases, and fee increases when faced with a budget gap. Far fewer say that they prefer spending cuts alone (30% elsewhere, 19% in California), nor do many prefer tax increases alone, fee increases alone, or borrowing money to cover budget gaps. The responses of city officials outside of California are consistent across regions of the country and small, medium, and large cities. A major issue for city officials is determining what warrants an increase in local taxes. A majority in California (72%) and elsewhere in the United States (76%) say they would consider raising taxes to maintain current funding for public safety. By a smaller majority, they would support raising local taxes for streets, roads, and transportation (60% in California, 58% elsewhere). Far fewer would be willing to raise taxes for culture and leisure activities (34% in California, 27% elsewhere), social services (25% in California, 29% elsewhere), or general government (20% California, 24% elsewhere). Outside of California, city officials in larger cities are less likely than those in smaller cities to favor raising taxes for streets, roads, and transportation. In California, city officials in larger cities are more likely than those in smaller cities to say they would raise taxes to maintain the current funding for social services. Table 8 “Would you be willing to consider raising additional revenues via taxes in order to maintain current funding for the following local services in the future?” (% saying “yes) Public safety Streets, roads, transportation Social services Culture and leisure activities General government U.S. 76% 58 29 27 24 Population CA 100,000 72% 71% 78% 79% 81% 60 59 62 47 43 25 28 32 21 29 34 25 31 16 19 20 22 30 7 19 - 10 - Long-Term Trends There are also major national trends that affect local fiscal conditions and that are outside the jurisdiction and control of city governments. In other words, these are circumstances that are not directly tied to local budgets and tax policies. Some of these longterm trends are shifts in the composition of the economy and the related effects for the tax system, demographic changes, ongoing changes in the intergovernmental system, and political challenges such as distrust in government. Over the next five years, city officials in California and throughout the United States think that the largest challenges will come from changes in the intergovernmental system, including cuts in federal or state support for cities (88% in California, 81% elsewhere) and federal or state mandates (82% in California and 87% elsewhere). However, city officials in California are more likely to identify federal or state preemption of local authority as a large challenge (89% in California, 69% elsewhere). Their level of concern on this issue is closer to the level of concern of other city officials in the West (80%) than of those in the Northeast (64%), Midwest (69%), or South (67%). California city officials are also more likely to be concerned about devolution of responsibility to local governments (75% in California, 65% elsewhere). Officials across the country believe that political challenges loom large on the horizon. Seven in ten think that public and voter pressure to limit taxation (77% in California, 69% elsewhere) and public perceptions of waste in government (75% in California, 73% elsewhere) pose significant challenges over the next five years. However, city officials in California are more concerned than their counterparts elsewhere about other political challenges. These include special interest pressure to limit taxation (69% to 46%), lack of public trust in government (70% to 60%), and lack of civic ties between government and the people (60% to 53%). California city officials are particularly more likely to see lack of civic ties as a problem than their counterparts elsewhere in the West (40%). A majority of city officials in California and the rest of the country also see economic challenges and demographic changes as important concerns, particularly competition for economic growth among jurisdictions (70% in California and elsewhere) and increases in the aging population (69% in California, 67% elsewhere). - 11 - Table 9 "How large of a challenge do you consider each of the following trends and challenges for your city over the next five years?" (% responding “somewhat” or “large”) Economic Shifts Increasing mobility of business, capital, and people Pressures from industry groups with special needs Shift from manufacturing to services economy Competition for economic growth among jurisdictions Demographic Changes Increase in aging population Increase in school-age population Increase in immigrant populations Changing composition of households Rapid growth, development, and “sprawl” Changes in the Intergovernmental System Federal and/or state unfunded mandates Federal and/or state preemption of local authority Cuts/limits in state and/or federal support Devolution of responsibility to local governments Changes in federal and/or state tax systems Political Challenges Public/voter pressure to limit taxation Special interest pressure to limit taxation Public perception that government is wasteful Lack of civic ties between government and people Lack of public trust in government U.S. Cities 65% 40 56 70 67% 48 51 47 52 82% 69 81 65 64 69% 46 73 53 60 CA Cities 58% 42 57 70 69% 48 52 39 57 82% 89 87 75 63 77% 69 75 60 70 - 12 - Options for Reform Need for Change? Most city officials claim that their city’s financial conditions are sound today, but they are concerned about the spending pressures that they have been facing and the long-term issues that will present fiscal challenges. Do these pressures and issues indicate that the cities’ system of public finance is in need of change? Three in four city officials in the United States (74%) and nearly nine in ten in California (87%) say yes. However, California city officials are considerably more likely to say that major changes are needed (56% in California, 22% elsewhere). Only 16 percent of city officials elsewhere and 9 percent in California say that no change is needed. In cities outside of California, there are no appreciable differences by region, city size, or tax structure. However, support for major changes increases with population size in California. Fewer than half (44%) of city officials in cities under 10,000 in population say that major changes are needed, compared to 56 percent in cities with populations of 10,000 to 49,999, 61 percent in cities of 50,000 to 99,999, and 66 percent in cities over 100,000. Table 10 “In general, does the system of public finance, which includes your city’s finances, need to be changed?’ If yes, “Are major or minor changes needed?” U.S. CA Cities Cities Yes, major changes 22% 56% Yes, minor changes 52 31 No changes 16 9 Don’t know 10 4 Reform Options The surveys presented city officials with a variety of options for fiscal reform and asked them to indicate whether they think each option is a good or a bad idea. Property tax-related reforms include strengthening the property tax by reducing or eliminating limits on local property tax rates and assessments, taxing commercial property at higher rates than residential properties, or shifting to a land value tax, which would exclude the value of structures and improvements on the land. Options that relate to sales tax include taxing goods sold over the Internet and extending the sales tax to services. City officials were also asked about a local commuter income tax, which would tax incomes of nonresidents that commute into their cities. Other options included reducing or eliminating tax exemptions, reducing super-majority vote requirements for increasing local taxes and fees, establishing a federal program like the General Revenue Sharing program that existed from 1970-1986, and state authorization for use of additional tax sources by local governments. - 13 - The most-favored reform option for both California and other U.S. city officials is reinstituting some form of federal general revenue sharing (69% in California, 73% elsewhere). This is a reform that would provide both more federal resources and flexibility in local spending. California city officials are more likely than their counterparts elsewhere to support the options of taxing goods sold over the Internet (84% to 57%), reducing super-majority vote requirements (81% to 31%), reducing or eliminating tax exemptions (64% to 42%), extending sales taxes to services (64% to 37%), and strengthening the local property tax (60% to 40%). Two fiscal options with little support from California and other U.S. city officials are a commuter income tax (23% in California, 33% elsewhere) and a land value tax (27% in California, 27% elsewhere). Table 11 Reform Options (% responding “good idea”) U.S. CA Cities Cities General revenue sharing 73% 69% State authorize other tax sources 63 71 Tax goods sold over the Internet 57 84 Reduce/eliminate tax exemptions 42 64 Strengthen local property tax 40 60 Higher commercial property tax rates 39 42 Extend sales tax to services 37 64 Commuter income tax 33 23 Reduce super-majority vote requirement 31 81 Land value tax 27 27 Tax and Spending Limits The local tax and spending limit is one type of fiscal reform that has been implemented in recent decades. These limits can constrain local governments’ ability to implement other fiscal reforms—especially those that might generate tax revenues. For instance, Proposition 13 in California lowered property tax rates, placed limits on annual increases, and required a supermajority vote to pass special local taxes. Other states have local spending and tax limits, and many voters and special interest groups continue to support this type of fiscal reform. To what extent do city officials believe these limits are a good idea? In light of the history of Proposition 13, it is noteworthy how much city officials in California differ from city officials elsewhere in attitudes toward tax and spending limits. The majority of California city officials (52%) say they think the limits are sometimes (30%) or always a bad idea (22%). In contrast, slightly more than half of city officials elsewhere (52%) think tax and expenditure limits are a good idea. Only one in three (37%) believes that these limits are sometimes (22%) or always (15%) a bad idea. - 14 - However, city officials in the West are slightly more negative than California officials and much more negative than officials in other regions. Sixty-three percent of officials in the West say that tax and spending limits are a bad idea, compared to 39 percent in the South, 36 percent in the Midwest, and 20 percent in the Northeast. These differences in attitude may be related to the fact that tax and expenditure limits are often imposed via voter initiatives, and referenda and such direct-democracy mechanisms are more common in Western states than elsewhere. In the rest of the country, city officials in cities with populations of 100,000 or more (47%) and populations between 50,000 and 99,999 (49%) are more likely to say that tax and expenditure limits are a bad idea than city officials in cities of 10,000 (29%) and those with populations between 10,000 and 49,999 (40%). Table 12 “In general, what do you think about tax and spending limits (for example, a property tax restriction or annual limits on revenue and spending levels)?” Always a bad idea Sometimes a bad idea Sometimes a good idea Always a good idea Don’t know U.S. 15% 22 45 7 11 CA 22% 30 40 2 6 Northeast 11% 9 52 16 12 Region Midwest South 13% 18% 23 21 48 44 74 9 13 West 26% 37 30 2 5 Sources of Opposition and Support Whatever concerns they might have about voter distrust, seven in 10 city officials in California, and six in 10 city officials elsewhere, believe voters and neighborhood groups are among those most likely to support fiscal reforms. They believe support is also forthcoming from their colleagues in City Hall (78% in California, 70% elsewhere) and from businesses (65% in California, 60% elsewhere). City officials also believe that their state governors are more likely to support than to oppose fiscal reform. However, California officials are much more likely to believe their governor will support reform (71% in California, 45% elsewhere). While much of this difference may have to do with Governor Arnold Schwarzenegger’s considerable popularity, city officials elsewhere in the West are generally more likely (63%) than those in the Northeast (34%), Midwest (41%), and South (50%) to have that view of governors. Who is seen as opposing fiscal reform? In California and elsewhere, the majority of city officials believe that special interests are more likely to oppose than support fiscal reforms (55% in California, 50% elsewhere). They believe the same of state legislatures, but the feeling is stronger in California (65%) than elsewhere (41%). Again, this reflects differences among regions. Fifty-seven percent of city officials in the West say that their state legislatures are likely - 15 - to oppose fiscal reforms, compared to one in three city officials in the Northeast (32%), Midwest (35%), and South (35%). Table 13 “Do you think the following groups are more likely to support or oppose fiscal reforms?” Business Oppose Support Don’t know Neighborhoods Oppose Support Don’t know Special Interests Oppose Support Don’t know Voters/Residents Oppose Support Don’t know Governor Oppose Support Don’t know State Legislature Oppose Support Don’t know City Hall Oppose Support Don’t know U.S. Cities CA Cities 25% 60 15 24% 65 11 22% 60 18 18% 70 12 50% 24 26 55% 19 26 25% 61 14 14% 69 17 29% 45 26 11% 71 18 41% 35 24 65% 21 14 13% 70 17 8% 78 14 - 16 - Appendix A. Survey Methodology The results presented here are from the Future of Public Finance Survey conducted by the National League of Cities, League of California Cities, and the Public Policy Institute of California. Survey efforts were overseen by Chris Hoene, research manager at the National League of Cities. The findings in this report are based on a direct mail survey of city officials in all 478 cities in California and in 1,180 other cities in the rest of the United States, conducted from June to August 2004. Questionnaires were completed via an Internet survey protocol using secure passwords provided to each city or were returned to the National League of Cities, where they were compiled and coded. The survey data were analyzed at the Public Policy Institute of California and the National League of Cities. California Survey This survey was sent to city officials in all 478 cities in California. Most of the respondents (95%) were nonelected officials such as city managers. The number of usable responses totaled 241, for a response rate of 50 percent. The survey is representative of the responses of city officials in cities across California. The survey responses are closely comparable to the distribution of cities across the state by population size and region. The findings do not change significantly when we use statistical weighting to correct for a slight overrepresentation of cities of between 50,000 and 99,000 in population and a slight underrepresentation of cities of 10,000 or less. Table 14 City population 100,000 % of 478 cities statewide 26 44 18 12 % of 241 survey responses 22 43 22 13 Table 15 Region Central Valley San Francisco Bay Area Los Angeles Other Southern California Other % of 478 cities statewide 19 21 19 23 18 % of 241 survey responses 21 21 19 22 17 - 17 - National Survey Using established sampling techniques, the survey was sent to a random sample of 1,180 U.S. cities. The survey was sent to elected officials, who were asked to direct the survey to the primary city staff member in charge of city finances. The number of usable responses was 372, for a response rate of 32 percent. The survey is not fully representative of the responses of city officials nationwide, although it does offer a good cross-section of responses from a large number of city officials. The preponderance of small cities in the national distribution of cities led to sampling techniques designed to ensure an adequate number of responses from larger cities. Because of the separation and oversampling of California cities for the purposes of this analysis, the number of responses from cities in the west is lower than it would be normally. Table 15 Population size 100,000 Response Rate (%) 32.5 49.7 11.8 5.9 Region Northeast Midwest South West Response Rate (%) 15.3 40.3 30.4 12.6 Throughout the report, we refer to cities of different population sizes—less than 10,000; 10,000 to 49,999; 50,000 to 99,999; and 100,000 or more. We also draw comparisons among regions defined by the U.S. Census—Northeast, Midwest, South, and West—which include cities in the following states: Table 16 Northeast Connecticut Maine Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont Midwest Illinois Indiana Iowa Kansas Michigan Minnesota Missouri Nebraska North Dakota Ohio South Dakota Wisconsin South Alabama Arkansas Delaware District of Columbia Florida Georgia Kentucky Louisiana Maryland Mississippi North Carolina Oklahoma South Carolina Tennessee Texas Virginia West Virginia West Alaska Arizona California Colorado Hawaii Idaho Montana Nevada New Mexico Oregon Utah Washington Wyoming - 18 - At various points in the paper, we refer to categories of expenditures and revenues. Expenditure categories include public safety (police, fire, emergency services), streets, roads, and transportation (as well as planning functions), social services (including human services and community development), culture and leisure activities (parks and recreation, libraries), and general government (administration, personnel). Revenue categories include local property tax, local sales taxes, income taxes (not levied locally; levying local incomes taxes would require state authorization), other taxes (including utility user’s taxes, business taxes, and touristrelated taxes for lodging, restaurants, and amusements), and user fees. - 19 - Appendix B. Survey Questionnaire – National Sample NATIONAL LEAGUE OF CITIES LEAGUE OF CALIFORNIA CITIES PUBLIC POLICY INSTITUTE OF CALIFORNIA Future of Public Finance Survey [Note: Responses from 372 U.S. city officials from June-August 2004] 1. How would you characterize your city in terms of location within your region? (Circle one) 22% Central city 46% Suburban 32% Rural/Non-metropolitan 2. Which source of revenue makes up the largest share of your city budget? (Circle one) 58% Property tax 20% Sales tax 8% Income tax 5% User fees/Charges 3% State revenues 0% Federal revenues 6% Other_____________________ 3. Does your municipality have fiscal responsibility/authority over local schools/school districts? (Circle one) 11%Yes 86% No 3% Don’t know 4. Which source of revenue makes up the second largest share of your city budget? (Circle one) 23% Property tax 20% Sales tax 6% Income tax 17% User fees/Charges 21% State revenues 1% Federal revenues 12% Other _____________________ 5. How would you rate fiscal conditions in your city today? (Circle one per line) 22% Excellent 40% Good 26% Fair 11% Poor 1% Don’t know 6. Would you consider yourself to be politically (regardless of whether city elections are partisan or nonpartisan)… (Circle one) 2% Very liberal1 8% Somewhat liberal 36% Somewhat conservative 11% Very conservative 32% Middle-of-the-road 1% Other 7. Do you think of yourself as closer to the Republican Party or Democratic Party (regardless of whether city elections are partisan or nonpartisan)? (Circle one) 42% Republican Party 37% Democratic Party 20% Neither 1% Other/Don’t know 8. Is your municipality currently constrained by a tax and/or spending limit (for example, a property tax restriction or annual limits on revenue and/or spending levels)? (Circle one) 44% Yes 49% No 7% Don’t know - 21 - SPENDING AND TAX PRESSURES Over the past several years, many cities have experienced declining fiscal conditions. The following questions seek to gauge your views on how fiscal stress should be dealt with in your city. 9. How has the range of your city’s responsibilities and commitments changed over the past five years? How do you think those responsibilities will change over the next five years? (Circle one per line) A.Past 5 years? 81% Increased 4% Decreased 12% No change 3% Don’t know B.Next 5 years? 81% Increase 4% Decrease 8% No change 7% Don’t know 10. How would you prefer to deal with situations when expenditures exceed revenues in your city? (Circle one) 30% Mostly through spending cuts 1% Mostly through tax increases 1% Mostly through fee increases 61% Mixture of spending cuts, tax increases, and fee increases 0% Borrow money to cover short-term shortfalls 7% Other___________ 1% Don’t know 11. If your city is faced with making future cuts in spending, would you make cuts in the following areas? (Circle one per line) Yes No Maybe Don’t know A. Public safety (police, fire, EMS) 14% 60% 20% 6% B. Streets, roads, transportation and/or planning 26% 31% 36% 7% C. Social services (human and/or community development) 37% 22% 33% 8% D. Culture and leisure activities (parks, libraries) 46% 13% 34% 7% E. General government (administration, personnel) 58% 12% 23% 7% F. Across the board cuts 32% 28% 29% 11% 12. If your city needs to generate additional revenues in the future, would you be willing to raise tax and/or fee rates, or impose new taxes and/or fees to generate those revenues? (Circle one per line) A. Property tax B. Sales tax C. Income tax D. Other tax(es) E. User fees Yes 37% 30% 14% 30% 73% No 30% 24% 33% 14% 6% Maybe 26% 16% 12% 35% 17% NA 7% 30% 41% 21% 4% - 22 - 13. Would you be willing to consider raising additional revenues via taxes in order to maintain current funding for the following local services in the future? (Circle one per line) A. Public safety (police, fire, EMS) B. Streets, roads, transportation and/or planning C. Social/human services and/or community development D. Culture and leisure activities (parks, libraries) E. General government (administration, personnel) F. K-12 education spending Yes No Don’t Know 76% 13% 8% 58% 25% 14% 29% 45% 19% 27% 50% 16% 24% 55% 15% 20% 17% 7% NA 3% 3% 7% 7% 6% 56% 14. Do you think that your city government could spend less and still provide the same level of services? (Circle one) 6% Yes, a lot less 46% Yes, a little less 41% No, could not spend less 7% Don’t know 15. Do you approve or disapprove of the way that governments are handling budget and tax issues? (Circle one per line) a. Your city government 84% Approve b. Your governor 33% Approve c. Your state legislature 19% Approve d. President George W. Bush 31% Approve e. The U.S. Congress 15% Approve 13% Disapprove 59% Disapprove 75% Disapprove 57% Disapprove 72% Disapprove 3% Don’t know 12% Don’t know 6% Don’t know 12% Don’t know 13% Don’t know 16. In general, what do you think about tax and spending limits (for example, a property tax restriction or annual limits on revenue and spending levels)? (Circle one) 15% Always a bad idea 22% Sometimes a bad idea 7% Always a good idea 1% Don’t know 45% Sometimes a good idea 17. When it comes to changing the way your city taxes and spends money, which approach do you most prefer? (Circle one) 51% Mayor and/or council should decide 0% State government (governor and/or state legislature) should decide 11% Voters should decide at the ballot box 35% City should engage in a large-scale citizen engagement process; then mayor and/or council make decision 1% Other________________________ 2% Don’t know - 23 - PRINCIPLES OF PUBLIC FINANCE 18. When making decisions about your city’s finances, how important are the following principles of public finance? (Circle one per line, on a scale from 1-not important to 4-very important) Not Very Don’t Important Important know A. Taxpayer equity: a fair distribution of tax and revenue burdens 2% 3% B. Intergovernmental equity: fair distribution of revenues and responsibilities across levels of government and jurisdictions 3% 9% C. Revenue Adequacy: adequate revenues to meet service needs 1% 3% D. Ease of Administration: costs of revenue collection 4% 10% E. Economic effects: how budget and tax decisions impact the behavior of individuals and firms 1% 9% F. Accountability: the ability of residents to understand the system 2% 7% G. Self-directed governance: local authority and autonomy 3% 9% H. Responsibility to the broader system: the impact of budget decisions on other jurisdictions and levels of government 7% 15% I. Other______________________________ 1% 2% 24% 68% 35% 49% 29% 63% 45% 37% 37% 48% 31% 57% 29% 54% 38% 29% 2% 6% 3% 4% 4% 4% 5% 3% 5% 11% 89% 19. Which of the following revenue sources do you think is most fair in terms of its ability to equitably distribute revenue and tax burdens? (Circle one) 18% Property tax 33% Sales tax 24% Income tax 17% User fees/charges 8% Don’t know 20. Which of the following revenue sources do you think is the most effective at providing adequate revenues to meet needs in your city? (Circle one) 47% Property tax 25% Sales tax 13% Income tax 5% User fees/charges 10% Don’t know 21. Which of the following revenue sources do you think has the least negative effect on economic behavior of individuals and firms in your city? (Circle one) 10% Property tax 31% Sales tax 17% Income tax 27% User fees/charges 15% Don’t know 22. Which of the following revenue sources is most desirable to have in terms of local authority? (Circle one) 41% Property tax 24% Sales tax 11% Income tax 13% User fees/charges 11% Don’t know 23. Taking this all into account (questions 29-33), which of the sources would you rate the highest? (Circle one) 38% Property tax 26% Sales tax 19% Income tax 8% User fees/charges 9% Don’t know - 24 - TRENDS AND CHALLENGES A number of trends and factors are impacting city fiscal conditions that are largely outside of city control. The questions below attempt to gauge your views on the challenges presented by these trends. 24. How large of a challenge to you consider each of the following trends and challenges for your city over the next 5 years? (Circle one per line, on a scale from 1–Little or no challenge to 4-Very large challenge) Little or Somewhat of Large Don’t no challenge a challenge challenge know A. Increasing mobility of business, capital, and people B. Increasing aging population C. Federal and/or state unfunded mandates D. Public/voter pressure to limit taxation E. Increasing pressure from industry groups F. Increasing school-age population G. Federal and/or state preemption of local authority H. Political pressure by special interest groups I. Shift from manufacturing-to services-economy J. Increasing immigrant populations K. Cuts or limits in state and/or federal fiscal support L. Public perceptions that government is wasteful M. Competition for economic growth across jurisdictions N. Changing composition of households O. Devolution of responsibilities to local governments P. Lack of strong civic ties between government/residents Q. Lack of public trust in government R. Rapid growth, development, and/or sprawl S. Changes in federal and/or state tax systems 27% 26% 11% 24% 53% 44% 23% 47% 36% 43% 12% 20% 23% 47% 27% 40% 33% 40% 27% 61% 4% 64% 3% 78% 4% 67% 2% 37% 3% 41% 7% 64% 5% 44% 2% 51% 5% 47% 4% 78% 3% 71% 2% 66% 4% 43% 4% 59% 6% 51% 2% 58% 2% 49% 3% 60% 4% 8% 10% 7% 7% 7% 8% 9% 7% 8% 6% 7% 7% 7% 6% 8% 7% 7% 8% 9% 25. Of the trends and challenges listed in question 35, which three do you think will have the largest fiscal and economic impact on your city over the next five years? (Enter the letters for the options listed in Question 35 in the blanks provided below. For example, “lack of public trust in government” would be entered as “Q.”) 44% C. 37% K. 18% R. OPTIONS FOR REFORM 26. In general, does the system of public finance, which includes your city’s finances, need to be changed? If yes, are major or minor changes needed? (Circle one) 22% Yes, major changes 52% Yes, minor changes 16% No, no changes 10% Don’t know - 25 - Thinking about your city’s finances, please indicate whether you think each of the following reform options is a good idea or a bad idea (regardless of whether you think each option is currently feasible). 27. Protecting and strengthening the local property tax by reducing or eliminating limits on property tax rates and assessments, and by minimizing impacts of future limits? (Circle one) 40% Good idea 37% Bad idea 23% Don’t know 28. Under the property tax, taxing commercial properties at higher rates than residential properties? (Circle one) 39% Good idea 44% Bad idea1 7% Don’t know 29. Utilizing a Land Value Tax—a tax on the value of land, excluding the value of structures and improvements on the land. It is similar to the property tax, but shifts the reliance to the value of land, rather than the value of buildings, in order to provide incentives (decrease disincentives) to improving the value of buildings? (Circle one) 27% Good idea 35% Bad idea 38% Don’t know 30. Taxing all goods sold over the Internet? (Circle one) 57% Good idea 24% Bad idea 19% Don’t know 31. Extending sales taxes to services not currently taxed, such as legal and accounting services, auto repairs, haircuts, etc.? (Circle one) 37% Good idea 43% Bad idea 20% Don’t know 32. Utilizing a local commuter income tax, taxing incomes of nonresidents that commute into your city and use city services? (Circle one) 33% Good idea 44% Bad idea 23% Don’t know 33. Broadening local tax bases by reducing and eliminating tax exemptions and abatements? (Circle one) 42% Good idea 35% Bad idea 23% Don’t know 34. Reducing super-majority voter requirements (more than 50%) for increases on local taxes and fees? (Circle one) 31% Good idea 42% Bad idea 27% Don’t know 35. The Federal Government should re-instate some form of General Revenue Sharing Program— providing federal funds to cities that are available for general use, or targeted for infrastructure investment? (Circle one) 73% Good idea 12% Bad idea 6% Don’t know - 26 - 36. State governments should authorize local governments to utilize other local tax sources not already authorized to use (such as a local option sales or income tax, currently not available in many states)? (Circle one) 63% Good idea 18% Bad idea 19% Don’t know 37. Would you be willing to forego local tax revenue authority in return for expanded revenue capacity (for example, by swapping local tax authority for a share/greater share of state revenues)? If yes, how much? (Circle one) 3% Yes, a lot 17% Yes, a fair amount 13% Yes, a little 51% No 16% Don’t know 38. Do you think the following groups are more likely to support or oppose fiscal reforms? (Circle one in each row) Strongly Strongly Don’t Oppose Oppose Support Support Know A. Business community/Chamber of Commerce B. Neighborhood groups/Civic organizations C. Outside special interests D. Voters/residents E. Governor F. State legislature G. Colleagues in City Hall (Mayor and/or council) H. Other (please list)________________________ 7% 18% 45% 4% 18% 49% 15% 35% 18% 5% 20% 48% 9% 20% 35% 12% 29% 29% 2% 11% 50% 1% 1% 1% 15% 15% 11% 18% 6% 26% 13% 14% 10% 26% 6% 24% 20% 17% 1% 96% 39. As you may know, the federal government expects to run a deficit of approximately $500 billion dollars in 2005. How much do you think the federal deficit is a problem for cities? 47% Big problem 35% Somewhat of a problem 12% Not a problem 6% Don’t know - 27 - Appendix C. Survey Questionnaire – California Sample NATIONAL LEAGUE OF CITIES LEAGUE OF CALIFORNIA CITIES PUBLIC POLICY INSTITUTE OF CALIFORNIA Future of Public Finance Survey [Note: Responses from 241 CA city officials from June-August 2004] 1. How would you characterize your city in terms of location within your region? (Circle one) 18% Central city 53% Suburban 29% Rural/non-metropolitan 2. Which source of revenue makes up the largest share of your city budget? (Circle one) 25% Property tax 56% Sales tax 0% Income tax 5% User fees/charges 2% State revenues 0% Federal revenues 12% Other _____________________ 3. Which source of revenue makes up the second largest share of your city budget? (Circle one) 36% Property tax 23% Sales tax 0% Income tax 11% User fees/charges 8% State revenues 0% Federal revenues 22% Other ________________________ 4. How would you rate fiscal conditions in your city today? (Circle one per line) 12% Excellent 33% Good 39% Fair 5% Poor 1% Don’t know 5. Would you consider yourself to be politically (regardless of whether city elections are partisan or nonpartisan)…(Circle one) 3% Very liberal 18% Somewhat liberal 36% Middle-of the-road 31% Somewhat conservative 7% Very conservative 5% Other 6. Do you think of yourself as closer to the Republican Party or Democratic Party (regardless of whether city elections are partisan or nonpartisan)? (Circle one) 34% Republican Party 34% Democratic Party 21% Neither 11% Other/Don’t know SPECIAL SECTION ON CALIFORNIA 7. As you may know, the California state government has an annual budget of around 100 billion dollars and currently faces a multi-billion dollar gap between state spending and revenue, which has been called a structural deficit. How much do you think this deficit is a problem for cities in California? (Circle one) 90% Big problem 8% Somewhat of a problem 0% Not a problem 2% Don’t know - 29 - 8. Governor Schwarzenegger proposed a budget plan for the next fiscal year that includes spending cuts in transportation and general government, defers spending increases for public education, bond financing, and local government property tax reductions for two years. In exchange for the local government property tax reductions, the governor has pledged support for a constitutional amendment to prevent future state reductions of local revenues. The plan includes no new taxes. In general, are you satisfied or dissatisfied with the governor’s budget plan? (Circle one) 65% Satisfied 29% Dissatisfied 6% Don’t know 9. Do you think that tax increases should have been included in the governor’s budget plan? (Circle one) 59% Yes 28% No 13% Don’t know 10. How concerned are you that the state’s budget deficit will cause severe cuts in funding for local government services such as parks and recreation, police and public safety, and roads and transportation in your city? (Circle one) 72% Very concerned 24% Somewhat concerned 3% Not very concerned 1% Not at all concerned 0% Don’t know 11. What if the state if it said it needed more money in order to maintain current funding for local government services—would you be willing to support higher taxes for this purpose? (Circle one) 63%Yes 22% No 15% Don’t know 12. A measure on the November ballot, the Local Taxpayers and Public Safety Protection Act, cosponsored by the League of California Cities, would require voter approval for any state legislation that reduces local government revenue. This measure would permit local governments to suspend performance of state mandates if the state fails to reimburse local governments providing those services. How much do you think that this measure will help protect city governments from state actions that reduce city revenues? (Circle one) 50% Great deal 38% A fair amount 8% Only a little 1% Not at all 3% Don’t know 13. A companion measure to the Local Taxpayers and Public Safety Protection Act, co-sponsored by the League of California Cities and Governor Schwarzenegger, also may be on the November ballot. It would prevent the state legislature from reducing local property tax, sales tax and vehicle license fee revenues and provide for the suspension of state mandates that are not reimbursed by the state in a timely way. If this measure is approved by the Legislature and placed on the November ballot, how much do you think it will help protect city governments from state actions that reduce city revenues? 47% Great deal 41% A fair amount 8% Only a little 1% Not at all 3% Don’t know - 30 - SPENDING AND TAX PRESSURES Over the past several years, many cities have experienced declining fiscal conditions. The following questions seek to gauge your views on how fiscal stress should be dealt with in your city. 14. How has the range of your city’s responsibilities and commitments changed over the past five years? How do you think those responsibilities will change over the next five years? (Circle one per line) A. Past 5 years? 85% Increased 5% Decreased 8% No change 2% Don’t know B. Next 5 years? 82% Increase 5% Decrease 7% No change 6% Don’t know 15. How would you prefer to deal with situations when expenditures exceed revenues in your city? (Circle one) 19% Mostly through spending cuts 2% Mostly through tax increases 2% Mostly through fee increases 69% Mixture of spending cuts, tax increases, and fee increases 7% Borrow money to cover short-term shortfalls 0% Other______________________ 1% Don’t know 16. If your city is faced with making future cuts in spending, would you make cuts in the following areas? (Circle one per line) Yes No Maybe Don’t know G. Public safety (police, fire, EMS) 38% 25% 33% 4% H. Streets, roads, transportation and/or planning 58% 16% 22% 4% I. Social services (human and/or community development) 67% 8% 19% 6% J. Culture and leisure activities (parks, libraries) 70% 7% 17% 6% K. General government (administration, personnel) 74% 4% 17% 5% L. Across the board cuts 23% 37% 23% 17% 17. If your city needs to generate additional revenues in the future, would you be willing to raise tax and/or fee rates, or impose new taxes and/or fees to generate those revenues? (Circle one per line) Yes No Maybe NA A. Property tax 22% 32% 13% 33% B. Sales tax 35% 23% 19% 23% C. Income Tax 5% 35% 8% 52% D. Other tax(es) 44% 13% 29% 14% E. User fees 82% 3% 10% 5% - 31 - 18. Would you be willing to consider raising additional revenues via taxes in order to maintain current funding for the following local services in the future? (Circle one per line) Yes No Don’t Know NA F. Public safety (police, fire, EMS) 72% 14% 7% 7% G. Streets, roads, transportation and/or planning 60% 22% 11% 7% H. Social/human services and/or community development 25% 46% 16% 13% I. Culture and leisure activities (parks, libraries) 34% 42% 15% 9% J. General government (administration, personnel) 20% 55% 15% 10% F. K-12 education spending 14% 18% 5% 63% 19. Do you think that your city government could spend less and still provide the same level of services? (Circle one) 2% Yes, a lot less 31% Yes, a little less 66% No, could not spend less 1% Don’t know 20. Do you approve or disapprove of the way that governments are handling budget and tax issues? (Circle one per line) a. Your city government b. Your governor c. Your state legislature d. President George W. Bush e. The U.S. Congress 95% Approve 56% Approve 3% Approve 20% Approve 9% Approve 3% Disapprove 33% Disapprove 92% Disapprove 64% Disapprove 75% Disapprove 2% Don’t know 11% Don’t know 5% Don’t know 16% Don’t know 16% Don’t know 21. In general, what do you think about tax and spending limits (for example, a property tax restriction or annual limits on revenue and spending levels)? (Circle one) 22% Always a bad idea 30% Sometimes a bad idea 40% Sometimes a good idea 2% Always a good idea 6% Don’t know 22. To what extent do you agree with the following statements? (Circle one per line) A. We need a more responsible public discussion in this country about government and taxes. 52% Strongly agree 43% Agree 3% Disagree 1% Strongly disagree 1% Don’t know B. Voters/residents want more services, but want to pay less. 50% Strongly agree 40% Agree 6% Disagree 1% Strongly disagree 3% Don’t know 23. When it comes to changing the way your city taxes and spends money, which approach do you most prefer? (Circle one) 45% Mayor and/or council should decide 0% State government (governor and/or state legislature) should decide 10% Voters should decide at the ballot box 41% City should engage in a large-scale citizen engagement process; then mayor and/or council make decision 3% Other_______________________ 1% Don’t know - 32 - PRINCIPLES OF PUBLIC FINANCE 24. When making decisions about your city’s finances, how important are the following principles of public finance? (Circle one per line, on a scale from 1-Not important to 4-Very important) Not Very Don’t Important Important know A. Taxpayer equity: a fair distribution of tax and revenue burdens 2% 3% 35% 60% 0% B. Intergovernmental equity: fair distribution of revenues and 4% 14% 43% 37% 2% responsibilities across levels of government and jurisdictions C. Revenue Adequacy: adequate revenues to meet service needs 0% 2% 19% 76% 3% D. Ease of Administration: costs of revenue collection 2% 14% 46% 35% 3% E. Economic effects: how budget and tax decisions impact 1% 8% 53% 35% 3% the behavior of individuals and firms F. Accountability: the ability of residents to understand the system 1% 4% 35% 58% 2% G. Self-directed governance: local authority and autonomy 0% 3% 22% 71% 4% H. Responsibility to the broader system: the impact of budget 3% 15% 48% 29% 5% decisions on other jurisdictions and levels of government I. Other______________ 1% 0% 2% 6% 91% 25. Which of the following revenue sources do you think is most fair in terms of its ability to equitably distribute revenue and tax burdens? (Circle one) 13% Property tax 23% Sales tax 27% Income tax 30% User fees/charges 7% Don’t know 26. Which of the following revenue sources do you think is the most effective at providing adequate revenues to meet needs in your city? (Circle one) 36% Property tax 42% Sales tax 4% Income tax 10% User fees/charges 8% Don’t know 27. Which of the following revenue sources do you think has the least negative effect on economic behavior of individuals and firms in your city? (Circle one) 17% Property tax 25% Sales tax 17% Income tax 32% User fees/charges 9% Don’t know 28. Which of the following revenue sources is most desirable to have in terms of local authority? (Circle one) 42% Property tax 31% Sales tax 4% Income tax 16% User fees/charges 7% Don’t know 29. Taking this all into account (questions 29-33), which of the sources would you rate the highest? (Circle one) 36% Property tax 41% Sales tax 6% Income tax 8% User fees/charges 9% Don’t know - 33 - TRENDS AND CHALLENGES A number of trends and factors are impacting city fiscal conditions that are largely outside of city control. The questions below attempt to gauge your views on the challenges presented by these trends. 30. How large of a challenge to you consider each of the following trends and challenges for your city over the next 5 years? (Circle one per line, on a scale from 1–Little or no challenge to 4-Very large challenge) Little or Somewhat of Large Don’t no challenge a challenge challenge Know A. Increasing mobility of business, capital and people B. Increasing aging population C. Federal and/or state unfunded mandates D. Public/voter pressure to limit taxation E. Increasing pressure from industry groups F. Increasing school-age population G. Federal and/or state preemption of local authority H. Political pressure by special interest groups I. Shift from manufacturing-to services-economy J. Increasing immigrant populations K. Cuts or limits in state and/or federal fiscal support L. Public perceptions that government is wasteful M. Competition for economic growth across jurisdictions N. Changing composition of households O. Devolution of responsibilities to local governments P. Lack of strong civic ties between government/residents Q. Lack of public trust in government R. Rapid growth, development, and/or sprawl S. Changes in federal and/or state tax systems 39% 29% 15% 19% 54% 49% 8% 28% 40% 45% 10% 22% 28% 58% 22% 36% 28% 40% 34% 53% 5% 3% 66% 3% 2% 81% 1% 3% 75% 2% 4% 39% 3% 3% 39% 9% 3% 86% 3% 3% 67% 2% 3% 51% 6% 3% 50% 2% 3% 86% 1% 3% 75% 0% 3% 68% 2% 2% 36% 3% 3% 70% 5% 3% 59% 1% 4% 70% 0% 2% 56% 1% 3% 55% 8% 3% 31. Of the trends and challenges listed in question 35, which three do you think will have the largest fiscal and economic impact on your city over the next five years? (Enter the letters for the options listed in Question 35 in the blanks provided below. For example, “lack of public trust in government” would be entered as “Q.”) 45% G 43% K 30% C OPTIONS FOR REFORM 32. In general, does the system of public finance, which includes your city’s finances, need to be changed? If yes, are major or minor changes needed? (Circle one) 56% Yes, major changes 31% Yes, minor changes 9% No, no changes 4% Don’t know - 34 - Thinking about your city’s finances, please indicate whether you think each of the following reform options is a good idea or a bad idea (regardless of whether you think each option is currently feasible). 33. Protecting and strengthening the local property tax by reducing or eliminating limits on property tax rates and assessments and by minimizing impacts of future limits? (Circle one) 60% Good idea 28% Bad idea 12% Don’t know 34. Under the property tax, taxing commercial properties at higher rates than residential properties? (Circle one) 42% Good idea 40% Bad idea 18% Don’t know 35. Utilizing a Land Value Tax—a tax on the value of land, excluding the value of structures and improvements on the land. It is similar to the property tax, but shifts the reliance to the value of land, rather than the value of buildings, in order to provide incentives (decrease disincentives) to improving the value of buildings? (Circle one) 27% Good idea 35% Bad idea 38% Don’t know 36. Taxing all goods sold over the Internet? (Circle one) 84% Good idea 9% Bad idea 7% Don’t know 37. Extending sales taxes to services not currently taxed, such as legal and accounting services, auto repairs, haircuts, etc.? (Circle one) 64% Good idea 26% Bad idea 10% Don’t know 38. Utilizing a local commuter income tax, taxing incomes of nonresidents that commute into your city and use city services? (Circle one) 23% Good idea 59% Bad idea 18% Don’t know 39. Broadening local tax bases by reducing and eliminating tax exemptions and abatements? (Circle one) 64% Good idea 17% Bad idea 19% Don’t know 40. Reducing super-majority voter requirements (more than 50%) for increases on local taxes and fees? (Circle one) 81% Good idea 14% Bad idea 5% Don’t know 41. The federal government should reinstate some form of General Revenue Sharing program— providing federal funds to cities that are available for general use or targeted for infrastructure investment? (Circle one) 69% Good idea 14% Bad idea 17% Don’t know - 35 - 42. State governments should authorize local governments to utilize other local tax sources not already authorized to use (such as a local option sales or income tax, currently not available in many states)? (Circle one) 71% Good idea 11% Bad idea 18% Don’t know 43. Would you be willing to forego local tax revenue authority in return for expanded revenue capacity (for example, by swapping local tax authority for a share/greater share of state revenues)? If yes, how much? (Circle one) 3% Yes, a lot 11% Yes, a fair amount 11% Yes, a little 57% No 18% Don’t know 44. Do you think the following groups are more likely to support or oppose fiscal reforms? (Circle one in each row) Strongly Strongly Don’t Oppose Oppose Support Support Know I. Business community/Chamber of Commerce 6% 18% 45% 20% 11% J. Neighborhood groups/Civic organizations 2% 16% 57% 13% 12% K. Outside special interests 13% 42% 16% 3% 26% L. Voters/residents 2% 12% 57% 12% 17% M. Governor 2% 9% 52% 19% 18% N. State legislature 26% 39% 18% 3% 14% O. Colleagues in City Hall (Mayor and/or council) 3% 5% 50% 28% 14% P. Other (please list)________________________ 1% 2% 0% 6% 91% 45. As you may know, the federal government expects to run a deficit of approximately $500 billion in 2005. How much do you think the federal deficit is a problem for cities in California? 33% Big problem 53% Somewhat of a problem 8% Not a problem 6% Don’t know - 36 - PUBLIC POLICY INSTITUTE OF CALIFORNIA Board of Directors Cheryl White Mason, Chair Chief, Civil Liability Management Los Angeles City Attorney’s Office Edward K. Hamilton Chairman Hamilton, Rabinovitz & Alschuler, Inc. Gary K. Hart Founder Institute for Education Reform California State University, Sacramento Arjay Miller Dean Emeritus Graduate School of Business Stanford University Ki Suh Park Design and Managing Partner Gruen Associates Constance L. Rice Co-Director The Advancement Project Walter B. Hewlett Director Center for Computer Assisted Research in the Humanities David W. Lyon President and CEO Public Policy Institute of California Thomas C. Sutton Chairman & CEO Pacific Life Insurance Company Raymond L. Watson Vice Chairman of the Board Emeritus The Irvine Company Carol Whiteside President Great Valley Center Advisory Council Mary C. Daly Research Advisor Federal Reserve Bank of San Francisco Clifford W. Graves General Manager Department of Community Development City of Los Angeles Daniel A. Mazmanian C. Erwin and Ione Piper Dean and Professor School of Policy, Planning, and Development University of Southern California Dean Misczynski Director California Research Bureau Elizabeth G. Hill Legislative Analyst State of California Rudolf Nothenberg Chief Administrative Officer (Retired) City and County of San Francisco Hilary W. Hoynes Associate Professor Department of Economics University of California, Davis Andrés E. Jiménez Director California Policy Research Center University of California Office of the President Norman R. King Executive Director San Bernardino Associated Governments Manuel Pastor Professor, Latin American & Latino Studies University of California, Santa Cruz Peter Schrag Contributing Editor The Sacramento Bee James P. Smith Senior Economist RAND Corporation PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 800 O San Francisco, California 94111 Phone: (415) 291-4400 O Fax: (415) 291-4401 www.ppic.org O info@ppic.org" } ["___content":protected]=> string(108) "

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" ["_permalink":protected]=> string(131) "https://www.ppic.org/publication/local-budgets-and-tax-policies-in-california-and-u-s-cities-surveys-of-city-officials/op_1204mbop/" ["_next":protected]=> array(0) { } ["_prev":protected]=> array(0) { } ["_css_class":protected]=> NULL ["id"]=> int(8451) ["ID"]=> int(8451) ["post_author"]=> string(1) "1" ["post_content"]=> string(0) "" ["post_date"]=> string(19) "2017-05-20 02:37:42" ["post_excerpt"]=> string(0) "" ["post_parent"]=> int(3652) ["post_status"]=> string(7) "inherit" ["post_title"]=> string(11) "OP 1204MBOP" ["post_type"]=> string(10) "attachment" ["slug"]=> string(11) "op_1204mbop" ["__type":protected]=> NULL ["_wp_attached_file"]=> string(15) "OP_1204MBOP.pdf" ["wpmf_size"]=> string(6) "495142" ["wpmf_filetype"]=> string(3) "pdf" ["wpmf_order"]=> string(1) "0" ["searchwp_content"]=> string(73817) "Occasional Papers Local Budgets and Tax Policies in California and U.S. Cities: Surveys of City Officials Mark Baldassare Christopher Hoene Presented at the National League of Cities Congress of Cities and Exposition, Session on Taxing Choices: Local and State Responses to Tax and Spending Limits Indianapolis, Indiana December 3, 2004 Public Policy Institute of California The Public Policy Institute of California (PPIC) is a private operating foundation established in 1994 with an endowment from William R. Hewlett. The Institute is dedicated to improving public policy in California through independent, objective, nonpartisan research. PPIC's research agenda focuses on three program areas: population, economy, and governance and public finance. Studies within these programs are examining the underlying forces shaping California’s future, cutting across a wide range of public policy concerns, including education, health care, immigration, income distribution, welfare, urban growth, and state and local finance. PPIC was created because three concerned citizens – William R. Hewlett, Roger W. Heyns, and Arjay Miller – recognized the need for linking objective research to the realities of California public policy. Their goal was to help the state’s leaders better understand the intricacies and implications of contemporary issues and make informed public policy decisions when confronted with challenges in the future. David W. Lyon is founding President and Chief Executive Officer of PPIC. Cheryl White Mason is Chair of the Board of Directors. Copyright © 2004 by Public Policy Institute of California All rights reserved San Francisco, CA Short sections of text, not to exceed three paragraphs, may be quoted without written permission provided that full attribution is given to the source and the above copyright notice is included. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office. Research publications reflect the views of the authors and do not necessarily reflect the views of the staff, officers, or Board of Directors of the Public Policy Institute of California. Contents Summary Introduction GENERAL FISCAL PERCEPTIONS City Conditions Fiscal Approval Ratings Federal Budget Deficit REVENUE AND SPENDING PRESSURES Spending Pressures Spending Cuts Revenue Increases Budget Gaps Long-Term Trends OPTIONS FOR REFORM Need for Change? Reform Options Tax and Spending Limits Sources of Opposition and Support Appendix A. Survey Methodology California Survey National Survey Appendix B. Survey Questionnaire – National Sample Appendix C. Survey Questionnaire – California Sample iii 1 3 3 4 5 7 7 8 9 10 11 13 13 13 14 15 17 17 18 21 29 -i- Summary This report compares and contrasts how city officials are confronting the challenges of local budget and tax policy in California and the rest of the United States. It offers a “snapshot in time” when city officials in California are coping with multiple fiscal issues: a sluggish economy that has yet to recover from the recession of 2001, multibillion dollar gaps between spending and revenues in the state budget, the latest round of tensions between state and local governments over the allocation of revenues and service responsibilities, and ballot measures that seek to remedy the fiscal situation. Throughout the United States, cities face fiscal challenges in the context of a federal budget deficit and of state and local finance systems constrained by declining intergovernmental revenues, long-term economic shifts, demographic changes, and political opposition to raising taxes. An analysis of city officials’ opinions in California and the rest of the United States should be very informative to policymakers as they consider the future directions of local public finance. The opinions expressed in these surveys should help identify local fiscal issues, perceived needs, and possible solutions. The results in the report are based on comprehensive surveys conducted from June to August 2004 by the National League of Cities, the League of California Cities, and the Public Policy Institute of California (PPIC). A direct mail survey was sent to city officials in all of California's 478 cities and to a random sample of 1,180 U.S. city officials outside of California. California city officials completed and returned a total of 241 surveys, a 50 percent response rate. U.S. city officials outside of California completed and returned a total of 372 surveys, a 32 percent response rate. These are the major findings from the surveys: • Although facing numerous fiscal challenges, relatively few city officials say their city’s fiscal conditions are in poor shape. However, California city officials are less likely than those in the rest of the United States to describe the city’s fiscal conditions as excellent or good. • A majority of city officials approve of how their city governments are handling budget and tax issues but disapprove of how their state legislatures are handling fiscal issues. A majority of city officials elsewhere in the United States also disapprove of the way their state governors handle fiscal issues. California goes the other way: A majority approve of Governor Schwarzenegger’s handling of fiscal affairs. • Most city officials say the federal budget deficit is at least somewhat of a problem for cities, and few city officials in California and elsewhere approve of the way President Bush and the U.S. Congress are handling budget and tax issues. • City officials generally agree that their spending pressures are increasing over time. However, California city officials are much less likely than those elsewhere to say city government could spend less and still provide the same level of services. • If spending cuts are needed, city officials are not inclined to support cuts in public safety programs or across-the-board cuts but most would favor cuts in general government. City officials in California are more inclined than others to be willing to make cuts in culture and leisure, social services, and streets and roads. - iii - • If more revenues are needed, most city officials in the United States and in California say they would prefer to generate those revenues via user fees rather than through new taxes. They are most likely to favor new taxes to maintain spending for public safety and streets and roads, rather than social services, culture and leisure, and general government. • Among the long-term trends affecting fiscal policy, city officials say intergovernmental challenges (unfunded mandates and cuts in aid) and political challenges (public pressure to limit taxes and lack of public trust in government) are of greatest concern. California city officials are more likely than others to express concern about federal and/or state preemption and special-interest pressures to limit taxes. • Most city officials say that the system of public finance needs to be changed. Among U.S. city officials, the top two options for reform are a return to federal General Revenue Sharing and state authorization of local tax authority. The top two options for California city officials are taxing goods sold over the Internet and reducing supermajority vote requirements for increasing taxes and fees. Most California city officials believe that tax and spending limits are a bad idea, while the majority of city officials elsewhere see limits as a good idea. • City officials see voters, businesses, and neighborhood groups as more likely to support than oppose fiscal reforms and see the state legislature and outside special interests groups as the groups most likely to oppose fiscal reform. Regarding governors, California once again bucks the trend: City officials in the U.S. say that their governors are likely to oppose fiscal reforms, but a majority of California city officials say that Governor Schwarzenegger is likely to support fiscal reforms. - iv - Introduction Local governments nationwide continue to confront fiscal challenges and new realities in budget and tax policy, even as a national economic recovery is underway. The federal budget deficit, along with sluggish economic growth in many of the nation’s regions, translates into slow growth in local and state revenues, ongoing budget gaps between spending and tax revenues in many state budgets, and state-local tensions over state support for localities. Moreover, cities have new responsibilities, such as homeland security needs, that require additional resources. In California, the current fiscal constraints are compounded by a complicated system of state and local public finance developed since the imposition of Proposition 13 tax limitations, by longer-term economic and demographic changes, and by a political climate in which voters’ distrust of government continues to shape fiscal policies. To gauge the perceptions and preferences of city governments, the National League of Cities, the League of California Cities, and the Public Policy Institute of California sent a survey to city officials in all 478 California cities and to a random sample of 1,180 city officials outside of California. A total of 241 California questionnaires were returned from June to August 2004, for a 50 percent response rate; a total of 372 questionnaires were returned from U.S. city officials outside of California, for a 32 percent response rate. In the patterns of responses, the survey sought answers to the following questions: • How do city officials perceive their city’s fiscal conditions? How do city officials view local, state, and federal budget and tax policy? • How much are spending pressures confronting city officials today? What types of spending cuts and revenue increases are most preferred? What types of services generate the most support for tax increases to maintain current funding? • To what extent are fiscal reforms seen as a solution? What are city officials’ perceptions of specific reform options? Which groups or individuals are seen as likely to support or oppose fiscal reforms? • In what domains, if any, do California city officials responses vary dramatically from the responses of their counterparts in the rest of the United States? • Do the city officials’ responses outside of California vary across the Northeast, Midwest, South, and West and among small, medium, and large cities? -1- General Fiscal Perceptions City Conditions Although facing problems with budgets, spending, and revenues, few city officials in California and elsewhere say that their city faces a fiscal crisis. Nearly half of California city officials say that their cities’ fiscal conditions are excellent (12%) or good (33%). City officials elsewhere are even more bullish: Six in 10 say they have excellent (22%) or good (40%) fiscal conditions. In California and elsewhere, relatively few city officials say that their city’s fiscal conditions are poor (15% in California, 11% in the United States). City officials in all regions of the country were more likely to report excellent or good fiscal conditions (65% in the South, 64% in the Northeast, 61% in the West, and 59% in the Midwest ) than city officials in California (45%). City officials in California (12%) and elsewhere in the West (13%) were less likely than others to say their fiscal conditions are excellent. It is worth noting that officials in the Midwest (15%) were as likely as those in California (15%) to give their cities poor fiscal ratings. Outside of California, city population size and ratings of a city’s fiscal conditions were related. In cities of 100,000 or more, city officials were less likely to report excellent fiscal conditions (10%) than in cities with smaller populations (17% in cities under 10,000, 26% in cities between 10,000 and 49,999, and 23% in cities between 50,000 and 99,999). In California, the city’s population size was unrelated to reports of city fiscal conditions. Table 1 "How would you rate fiscal conditions in your city today?” Excellent Good Fair Poor Don’t know U.S. 22% 40 26 11 1 CA 12% 33 39 15 1 Northeast 25% 39 23 11 2 Region Midwest South 19% 27% 40 38 26 27 15 5 03 West 13% 48 28 11 0 -3- Fiscal Approval Ratings As another indication that city officials believe that their cities are coping with current fiscal circumstances, the vast majority of city officials in California (95%) and in the rest of the United States (84%) say they approve of the way that their city governments have handled budget and tax issues. Although this approval is highest in California and elsewhere in the West (91%), the percentages are high for all other regions as well (86% Midwest, 82% South, and 79% Northeast). These high ratings stand in stark contrast to city officials’ rating of state legislatures. City officials do not approve of the handling of budget and tax issues by state legislatures. In the rest of the United States, only 19 percent say they approve of the legislatures’ handling of these matters—and that drops to 3 percent in California. When it comes to the governor’s handling of state budget and tax issues, California city officials go the other way: Only 33 percent of U.S. city officials say they approve of their governor’s performance, but 56 percent of California city officials give Governor Arnold Schwarzenegger a thumbs up. Moreover, that rating is significantly higher than the ratings given governors in all other regions (39% West, 36% South, 32% Northeast, and 30% Midwest). This result is, of course, in the context of Governor Schwarzenegger’s having reached agreement with city officials on ways to provide greater protection of local governments from future reductions in state funding. Outside of California, officials in cities with a population of 100,000 or more are more likely to say they approve of the governor’s handling of budget and tax issues (48%) than city officials in smaller cities (33% under 10,000, 33% for 10,000 to 49,999, and 26% for 50,000 to 99,999). City size makes no difference in ratings in California. In California, only one in five city officials say that they approve of the way that the president is handling fiscal issues, compared with one in three officials elsewhere in the United States. City officials in the South and West give higher ratings to the president than in the Northeast and Midwest. City officials give the U.S. Congress even lower approval ratings on fiscal issues. -4- Table 2 "Do you approve or disapprove of the way that governments are handling budget and tax issues?” (% responding “approve”) Your city government Governor State Legislature President Bush U.S. Congress U.S. 84% 33 19 31 15 CA 95% 56 3 20 9 Northeast 79% 32 13 23 13 Region Midwest South 86% 82% 30 36 16 22 28 36 18 12 West 91% 39 24 37 13 Federal Budget Deficit Since the economic recession of 2001, the federal government has run significant annual deficits. The Congressional Budget Office projects that the federal deficit for 2004 will be $477 billion. In our surveys, city officials are quite concerned about the size of the federal budget deficit and city dependence upon the federal government for funding city programs. Nearly all city officials say that the federal budget deficit presents at least somewhat of a problem for them (86% in California, 82% elsewhere). City officials in California (33%) are less likely than city officials elsewhere (47%) to see the federal budget deficit as a big problem and particularly less likely than city officials elsewhere in the West (61%). Outside of California, the perception that the federal deficit presents a big problem is greater in cities with a population of 100,000 or more (57%) and with a population between 50,000 and 99,999 (58%) than in less populated cities (10,000-49,999, 44%; less than 10,000, 45%). Again, there is no such correlation across cities of different population sizes in California. Table 3 "How much do you think the federal deficit is a problem for cities?” Big problem Somewhat of a problem Not a problem Don’t know U.S. 47% 35 12 6 CA 33% 53 8 6 Northeast 48% 34 9 9 Region Midwest South 45% 44% 37 33 13 15 58 West 61% 33 2 4 -5- Revenue and Spending Pressures Spending Pressures Although city officials remain upbeat about their local budgets, their cities confronted a variety of fiscal challenges as revenue collections slowed while spending pressures persisted. Moreover, cities are confronting a host of added commitments, such as local homeland security. Looking at the past five years, four in five city officials in the rest of the United States (81%) and California (85%) say their city’s range of responsibilities has increased. Moreover, four in five expect their commitments to increase further over the next five years (82% in California, 81% elsewhere). No appreciable differences are evident by city size, region, or tax structure. Despite city officials’ perceptions of increasing commitments and responsibilities, the public’s perception is often that, by cutting the waste in spending, their governments could spend less public money and maintain the same level of services. That is the opinion of many California residents, for example, in the PPIC Statewide Surveys. When asked if they think their city government could spend less and still maintain the same level of services, only one in three city officials in California think it would be possible. Although a slim majority of city officials elsewhere say they can spend less and still provide the same level of services, 41 percent say they cannot. Table 4 “How has the range of your city’s responsibilities and commitments changed over the past five years? How do you think those responsibilities and commitments will change over the next five years?” Increased in past five years Increase in next five years U.S. Cities 81% 81 CA Cities 85% 82 Table 5 “Do you think that your city government could spend less and still provide the same level of services?” Yes No Don’t know U.S. Cities 52% 41 7 CA Cities 33% 66 1 -7- Spending Cuts Which types of local spending cuts would be most acceptable, and which areas of the budget should be protected? For city government officials faced with fiscal constraints, the choices they make in this arena can have important consequences for their constituents. Even though city officials in California are more likely than others to believe that they cannot provide the same level of services with less money, they are more willing to make local spending cuts. California city officials are more willing than those elsewhere in the United States to makes cuts in general government (74% to 58%), culture and leisure activities such as parks and recreation (70% to 46%), social services (67% to 37%), streets and roads (58% to 26%), and public safety (38% to 14%). However, they are less willing than those elsewhere to make across-theboard cuts (23% to 32%). The greater willingness to cut spending among California city officials reflects a fiscal pattern that is consistent in the West. City officials in the West are more likely than city officials in other regions to say they would make cuts in general administration (70%), culture and leisure (67%), social services (48%), and streets and roads (39%). Similar to their California counterparts, city officials in the West are also less likely to be willing to make across-the-board cuts (24%) than their counterparts in the Northeast (36%), Midwest (35%), and South (30%). Table 6 “If your city is faced with making future cuts in spending, would you make cuts in the following areas?” (% saying “yes”) Region U.S. CA Northeast Midwest South West General government 58% 74% 46% 62% 55% 70% Culture and leisure 46 70 36 46 41 67 Social services 37 67 34 37 35 48 Streets, roads 26 58 20 28 21 39 Public safety 14 38 11 19 12 11 Across-the-board 32 23 36 35 30 24 Note: See Appendix A for a detailed description of each category of expenditures. -8- Revenue Increases Cities are also facing fiscal pressures from the sluggish economy and the slow growth or declines in tax revenues resulting from that. Their revenue streams can also be reduced by state and federal actions as those levels of government try to cope with their own budget pressures. What would city officials prefer to do if they had to increase local revenues? Once again, this is an important issue for city governments from a fiscal, economic, and political standpoint. If their cities need general additional revenues to cover service needs, a large majority of city officials in California (82%) and the rest of the United States (73%) say they would prefer to raise or impose user fees. Relatively few express a willingness to raise taxes. One in three city officials in California and elsewhere in the country would consider a sales tax increase. City officials elsewhere (37%) are more likely to say they would be willing to raise property tax rates than city officials in California (22%), perhaps reflecting the constraints on local property taxes in California under Proposition 13. California city officials (44%) are more willing to raise other taxes than city officials elsewhere in the nation (30%). Few city officials say they would consider a local income tax. It is important to note that there are regional variations in the ability to increase revenues—for instance, whether or not states in certain regions are likely to allow a local sales tax. Regionally, city officials in the Northeast (52%) are more likely to say they would raise property tax rates than city officials in the Midwest (31%), South (34%) and West (41%). Northeastern city officials (14%) are less likely to say they would raise sales tax rates than city officials in the Midwest (32%), South (30%), and West (39%). Similar to trends in California, city officials elsewhere in the West (85%) are more willing to raise fee rates or impose new fees than city officials in other regions. Table 7 “If your city needs to generate additional revenue in the future, would you be willing to raise tax and/or fee rates, or impose new taxes and/or fees to generate those revenues?” (% saying “yes”) Region U.S. CA Northeast Midwest South West Property tax 37% 22% 52% 31% 34% 41% Sales tax 30 35 14 32 30 39 Income tax 14 5 13 20 5 17 Other tax(es) 30 44 34 28 27 39 User fees 73 82 73 73 72 85 Notes: Levying local income taxes would have to first be authorized by the state government. See Appendix A for a detailed description of each category of revenues. -9- Budget Gaps The spending and revenue pressures of the last several years are forcing many cities to deal with a structural deficit—that is, a persistent gap between expenditures and revenues. Because, in most states, cities are required by law to balance their budgets, these budget gaps must be covered through tax and fee rate increases, spending cuts, borrowing, or some combination of these alternatives. Most city officials in California (69%) and elsewhere (61%) prefer to use a mix of spending cuts, tax increases, and fee increases when faced with a budget gap. Far fewer say that they prefer spending cuts alone (30% elsewhere, 19% in California), nor do many prefer tax increases alone, fee increases alone, or borrowing money to cover budget gaps. The responses of city officials outside of California are consistent across regions of the country and small, medium, and large cities. A major issue for city officials is determining what warrants an increase in local taxes. A majority in California (72%) and elsewhere in the United States (76%) say they would consider raising taxes to maintain current funding for public safety. By a smaller majority, they would support raising local taxes for streets, roads, and transportation (60% in California, 58% elsewhere). Far fewer would be willing to raise taxes for culture and leisure activities (34% in California, 27% elsewhere), social services (25% in California, 29% elsewhere), or general government (20% California, 24% elsewhere). Outside of California, city officials in larger cities are less likely than those in smaller cities to favor raising taxes for streets, roads, and transportation. In California, city officials in larger cities are more likely than those in smaller cities to say they would raise taxes to maintain the current funding for social services. Table 8 “Would you be willing to consider raising additional revenues via taxes in order to maintain current funding for the following local services in the future?” (% saying “yes) Public safety Streets, roads, transportation Social services Culture and leisure activities General government U.S. 76% 58 29 27 24 Population CA 100,000 72% 71% 78% 79% 81% 60 59 62 47 43 25 28 32 21 29 34 25 31 16 19 20 22 30 7 19 - 10 - Long-Term Trends There are also major national trends that affect local fiscal conditions and that are outside the jurisdiction and control of city governments. In other words, these are circumstances that are not directly tied to local budgets and tax policies. Some of these longterm trends are shifts in the composition of the economy and the related effects for the tax system, demographic changes, ongoing changes in the intergovernmental system, and political challenges such as distrust in government. Over the next five years, city officials in California and throughout the United States think that the largest challenges will come from changes in the intergovernmental system, including cuts in federal or state support for cities (88% in California, 81% elsewhere) and federal or state mandates (82% in California and 87% elsewhere). However, city officials in California are more likely to identify federal or state preemption of local authority as a large challenge (89% in California, 69% elsewhere). Their level of concern on this issue is closer to the level of concern of other city officials in the West (80%) than of those in the Northeast (64%), Midwest (69%), or South (67%). California city officials are also more likely to be concerned about devolution of responsibility to local governments (75% in California, 65% elsewhere). Officials across the country believe that political challenges loom large on the horizon. Seven in ten think that public and voter pressure to limit taxation (77% in California, 69% elsewhere) and public perceptions of waste in government (75% in California, 73% elsewhere) pose significant challenges over the next five years. However, city officials in California are more concerned than their counterparts elsewhere about other political challenges. These include special interest pressure to limit taxation (69% to 46%), lack of public trust in government (70% to 60%), and lack of civic ties between government and the people (60% to 53%). California city officials are particularly more likely to see lack of civic ties as a problem than their counterparts elsewhere in the West (40%). A majority of city officials in California and the rest of the country also see economic challenges and demographic changes as important concerns, particularly competition for economic growth among jurisdictions (70% in California and elsewhere) and increases in the aging population (69% in California, 67% elsewhere). - 11 - Table 9 "How large of a challenge do you consider each of the following trends and challenges for your city over the next five years?" (% responding “somewhat” or “large”) Economic Shifts Increasing mobility of business, capital, and people Pressures from industry groups with special needs Shift from manufacturing to services economy Competition for economic growth among jurisdictions Demographic Changes Increase in aging population Increase in school-age population Increase in immigrant populations Changing composition of households Rapid growth, development, and “sprawl” Changes in the Intergovernmental System Federal and/or state unfunded mandates Federal and/or state preemption of local authority Cuts/limits in state and/or federal support Devolution of responsibility to local governments Changes in federal and/or state tax systems Political Challenges Public/voter pressure to limit taxation Special interest pressure to limit taxation Public perception that government is wasteful Lack of civic ties between government and people Lack of public trust in government U.S. Cities 65% 40 56 70 67% 48 51 47 52 82% 69 81 65 64 69% 46 73 53 60 CA Cities 58% 42 57 70 69% 48 52 39 57 82% 89 87 75 63 77% 69 75 60 70 - 12 - Options for Reform Need for Change? Most city officials claim that their city’s financial conditions are sound today, but they are concerned about the spending pressures that they have been facing and the long-term issues that will present fiscal challenges. Do these pressures and issues indicate that the cities’ system of public finance is in need of change? Three in four city officials in the United States (74%) and nearly nine in ten in California (87%) say yes. However, California city officials are considerably more likely to say that major changes are needed (56% in California, 22% elsewhere). Only 16 percent of city officials elsewhere and 9 percent in California say that no change is needed. In cities outside of California, there are no appreciable differences by region, city size, or tax structure. However, support for major changes increases with population size in California. Fewer than half (44%) of city officials in cities under 10,000 in population say that major changes are needed, compared to 56 percent in cities with populations of 10,000 to 49,999, 61 percent in cities of 50,000 to 99,999, and 66 percent in cities over 100,000. Table 10 “In general, does the system of public finance, which includes your city’s finances, need to be changed?’ If yes, “Are major or minor changes needed?” U.S. CA Cities Cities Yes, major changes 22% 56% Yes, minor changes 52 31 No changes 16 9 Don’t know 10 4 Reform Options The surveys presented city officials with a variety of options for fiscal reform and asked them to indicate whether they think each option is a good or a bad idea. Property tax-related reforms include strengthening the property tax by reducing or eliminating limits on local property tax rates and assessments, taxing commercial property at higher rates than residential properties, or shifting to a land value tax, which would exclude the value of structures and improvements on the land. Options that relate to sales tax include taxing goods sold over the Internet and extending the sales tax to services. City officials were also asked about a local commuter income tax, which would tax incomes of nonresidents that commute into their cities. Other options included reducing or eliminating tax exemptions, reducing super-majority vote requirements for increasing local taxes and fees, establishing a federal program like the General Revenue Sharing program that existed from 1970-1986, and state authorization for use of additional tax sources by local governments. - 13 - The most-favored reform option for both California and other U.S. city officials is reinstituting some form of federal general revenue sharing (69% in California, 73% elsewhere). This is a reform that would provide both more federal resources and flexibility in local spending. California city officials are more likely than their counterparts elsewhere to support the options of taxing goods sold over the Internet (84% to 57%), reducing super-majority vote requirements (81% to 31%), reducing or eliminating tax exemptions (64% to 42%), extending sales taxes to services (64% to 37%), and strengthening the local property tax (60% to 40%). Two fiscal options with little support from California and other U.S. city officials are a commuter income tax (23% in California, 33% elsewhere) and a land value tax (27% in California, 27% elsewhere). Table 11 Reform Options (% responding “good idea”) U.S. CA Cities Cities General revenue sharing 73% 69% State authorize other tax sources 63 71 Tax goods sold over the Internet 57 84 Reduce/eliminate tax exemptions 42 64 Strengthen local property tax 40 60 Higher commercial property tax rates 39 42 Extend sales tax to services 37 64 Commuter income tax 33 23 Reduce super-majority vote requirement 31 81 Land value tax 27 27 Tax and Spending Limits The local tax and spending limit is one type of fiscal reform that has been implemented in recent decades. These limits can constrain local governments’ ability to implement other fiscal reforms—especially those that might generate tax revenues. For instance, Proposition 13 in California lowered property tax rates, placed limits on annual increases, and required a supermajority vote to pass special local taxes. Other states have local spending and tax limits, and many voters and special interest groups continue to support this type of fiscal reform. To what extent do city officials believe these limits are a good idea? In light of the history of Proposition 13, it is noteworthy how much city officials in California differ from city officials elsewhere in attitudes toward tax and spending limits. The majority of California city officials (52%) say they think the limits are sometimes (30%) or always a bad idea (22%). In contrast, slightly more than half of city officials elsewhere (52%) think tax and expenditure limits are a good idea. Only one in three (37%) believes that these limits are sometimes (22%) or always (15%) a bad idea. - 14 - However, city officials in the West are slightly more negative than California officials and much more negative than officials in other regions. Sixty-three percent of officials in the West say that tax and spending limits are a bad idea, compared to 39 percent in the South, 36 percent in the Midwest, and 20 percent in the Northeast. These differences in attitude may be related to the fact that tax and expenditure limits are often imposed via voter initiatives, and referenda and such direct-democracy mechanisms are more common in Western states than elsewhere. In the rest of the country, city officials in cities with populations of 100,000 or more (47%) and populations between 50,000 and 99,999 (49%) are more likely to say that tax and expenditure limits are a bad idea than city officials in cities of 10,000 (29%) and those with populations between 10,000 and 49,999 (40%). Table 12 “In general, what do you think about tax and spending limits (for example, a property tax restriction or annual limits on revenue and spending levels)?” Always a bad idea Sometimes a bad idea Sometimes a good idea Always a good idea Don’t know U.S. 15% 22 45 7 11 CA 22% 30 40 2 6 Northeast 11% 9 52 16 12 Region Midwest South 13% 18% 23 21 48 44 74 9 13 West 26% 37 30 2 5 Sources of Opposition and Support Whatever concerns they might have about voter distrust, seven in 10 city officials in California, and six in 10 city officials elsewhere, believe voters and neighborhood groups are among those most likely to support fiscal reforms. They believe support is also forthcoming from their colleagues in City Hall (78% in California, 70% elsewhere) and from businesses (65% in California, 60% elsewhere). City officials also believe that their state governors are more likely to support than to oppose fiscal reform. However, California officials are much more likely to believe their governor will support reform (71% in California, 45% elsewhere). While much of this difference may have to do with Governor Arnold Schwarzenegger’s considerable popularity, city officials elsewhere in the West are generally more likely (63%) than those in the Northeast (34%), Midwest (41%), and South (50%) to have that view of governors. Who is seen as opposing fiscal reform? In California and elsewhere, the majority of city officials believe that special interests are more likely to oppose than support fiscal reforms (55% in California, 50% elsewhere). They believe the same of state legislatures, but the feeling is stronger in California (65%) than elsewhere (41%). Again, this reflects differences among regions. Fifty-seven percent of city officials in the West say that their state legislatures are likely - 15 - to oppose fiscal reforms, compared to one in three city officials in the Northeast (32%), Midwest (35%), and South (35%). Table 13 “Do you think the following groups are more likely to support or oppose fiscal reforms?” Business Oppose Support Don’t know Neighborhoods Oppose Support Don’t know Special Interests Oppose Support Don’t know Voters/Residents Oppose Support Don’t know Governor Oppose Support Don’t know State Legislature Oppose Support Don’t know City Hall Oppose Support Don’t know U.S. Cities CA Cities 25% 60 15 24% 65 11 22% 60 18 18% 70 12 50% 24 26 55% 19 26 25% 61 14 14% 69 17 29% 45 26 11% 71 18 41% 35 24 65% 21 14 13% 70 17 8% 78 14 - 16 - Appendix A. Survey Methodology The results presented here are from the Future of Public Finance Survey conducted by the National League of Cities, League of California Cities, and the Public Policy Institute of California. Survey efforts were overseen by Chris Hoene, research manager at the National League of Cities. The findings in this report are based on a direct mail survey of city officials in all 478 cities in California and in 1,180 other cities in the rest of the United States, conducted from June to August 2004. Questionnaires were completed via an Internet survey protocol using secure passwords provided to each city or were returned to the National League of Cities, where they were compiled and coded. The survey data were analyzed at the Public Policy Institute of California and the National League of Cities. California Survey This survey was sent to city officials in all 478 cities in California. Most of the respondents (95%) were nonelected officials such as city managers. The number of usable responses totaled 241, for a response rate of 50 percent. The survey is representative of the responses of city officials in cities across California. The survey responses are closely comparable to the distribution of cities across the state by population size and region. The findings do not change significantly when we use statistical weighting to correct for a slight overrepresentation of cities of between 50,000 and 99,000 in population and a slight underrepresentation of cities of 10,000 or less. Table 14 City population 100,000 % of 478 cities statewide 26 44 18 12 % of 241 survey responses 22 43 22 13 Table 15 Region Central Valley San Francisco Bay Area Los Angeles Other Southern California Other % of 478 cities statewide 19 21 19 23 18 % of 241 survey responses 21 21 19 22 17 - 17 - National Survey Using established sampling techniques, the survey was sent to a random sample of 1,180 U.S. cities. The survey was sent to elected officials, who were asked to direct the survey to the primary city staff member in charge of city finances. The number of usable responses was 372, for a response rate of 32 percent. The survey is not fully representative of the responses of city officials nationwide, although it does offer a good cross-section of responses from a large number of city officials. The preponderance of small cities in the national distribution of cities led to sampling techniques designed to ensure an adequate number of responses from larger cities. Because of the separation and oversampling of California cities for the purposes of this analysis, the number of responses from cities in the west is lower than it would be normally. Table 15 Population size 100,000 Response Rate (%) 32.5 49.7 11.8 5.9 Region Northeast Midwest South West Response Rate (%) 15.3 40.3 30.4 12.6 Throughout the report, we refer to cities of different population sizes—less than 10,000; 10,000 to 49,999; 50,000 to 99,999; and 100,000 or more. We also draw comparisons among regions defined by the U.S. Census—Northeast, Midwest, South, and West—which include cities in the following states: Table 16 Northeast Connecticut Maine Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont Midwest Illinois Indiana Iowa Kansas Michigan Minnesota Missouri Nebraska North Dakota Ohio South Dakota Wisconsin South Alabama Arkansas Delaware District of Columbia Florida Georgia Kentucky Louisiana Maryland Mississippi North Carolina Oklahoma South Carolina Tennessee Texas Virginia West Virginia West Alaska Arizona California Colorado Hawaii Idaho Montana Nevada New Mexico Oregon Utah Washington Wyoming - 18 - At various points in the paper, we refer to categories of expenditures and revenues. Expenditure categories include public safety (police, fire, emergency services), streets, roads, and transportation (as well as planning functions), social services (including human services and community development), culture and leisure activities (parks and recreation, libraries), and general government (administration, personnel). Revenue categories include local property tax, local sales taxes, income taxes (not levied locally; levying local incomes taxes would require state authorization), other taxes (including utility user’s taxes, business taxes, and touristrelated taxes for lodging, restaurants, and amusements), and user fees. - 19 - Appendix B. Survey Questionnaire – National Sample NATIONAL LEAGUE OF CITIES LEAGUE OF CALIFORNIA CITIES PUBLIC POLICY INSTITUTE OF CALIFORNIA Future of Public Finance Survey [Note: Responses from 372 U.S. city officials from June-August 2004] 1. How would you characterize your city in terms of location within your region? (Circle one) 22% Central city 46% Suburban 32% Rural/Non-metropolitan 2. Which source of revenue makes up the largest share of your city budget? (Circle one) 58% Property tax 20% Sales tax 8% Income tax 5% User fees/Charges 3% State revenues 0% Federal revenues 6% Other_____________________ 3. Does your municipality have fiscal responsibility/authority over local schools/school districts? (Circle one) 11%Yes 86% No 3% Don’t know 4. Which source of revenue makes up the second largest share of your city budget? (Circle one) 23% Property tax 20% Sales tax 6% Income tax 17% User fees/Charges 21% State revenues 1% Federal revenues 12% Other _____________________ 5. How would you rate fiscal conditions in your city today? (Circle one per line) 22% Excellent 40% Good 26% Fair 11% Poor 1% Don’t know 6. Would you consider yourself to be politically (regardless of whether city elections are partisan or nonpartisan)… (Circle one) 2% Very liberal1 8% Somewhat liberal 36% Somewhat conservative 11% Very conservative 32% Middle-of-the-road 1% Other 7. Do you think of yourself as closer to the Republican Party or Democratic Party (regardless of whether city elections are partisan or nonpartisan)? (Circle one) 42% Republican Party 37% Democratic Party 20% Neither 1% Other/Don’t know 8. Is your municipality currently constrained by a tax and/or spending limit (for example, a property tax restriction or annual limits on revenue and/or spending levels)? (Circle one) 44% Yes 49% No 7% Don’t know - 21 - SPENDING AND TAX PRESSURES Over the past several years, many cities have experienced declining fiscal conditions. The following questions seek to gauge your views on how fiscal stress should be dealt with in your city. 9. How has the range of your city’s responsibilities and commitments changed over the past five years? How do you think those responsibilities will change over the next five years? (Circle one per line) A.Past 5 years? 81% Increased 4% Decreased 12% No change 3% Don’t know B.Next 5 years? 81% Increase 4% Decrease 8% No change 7% Don’t know 10. How would you prefer to deal with situations when expenditures exceed revenues in your city? (Circle one) 30% Mostly through spending cuts 1% Mostly through tax increases 1% Mostly through fee increases 61% Mixture of spending cuts, tax increases, and fee increases 0% Borrow money to cover short-term shortfalls 7% Other___________ 1% Don’t know 11. If your city is faced with making future cuts in spending, would you make cuts in the following areas? (Circle one per line) Yes No Maybe Don’t know A. Public safety (police, fire, EMS) 14% 60% 20% 6% B. Streets, roads, transportation and/or planning 26% 31% 36% 7% C. Social services (human and/or community development) 37% 22% 33% 8% D. Culture and leisure activities (parks, libraries) 46% 13% 34% 7% E. General government (administration, personnel) 58% 12% 23% 7% F. Across the board cuts 32% 28% 29% 11% 12. If your city needs to generate additional revenues in the future, would you be willing to raise tax and/or fee rates, or impose new taxes and/or fees to generate those revenues? (Circle one per line) A. Property tax B. Sales tax C. Income tax D. Other tax(es) E. User fees Yes 37% 30% 14% 30% 73% No 30% 24% 33% 14% 6% Maybe 26% 16% 12% 35% 17% NA 7% 30% 41% 21% 4% - 22 - 13. Would you be willing to consider raising additional revenues via taxes in order to maintain current funding for the following local services in the future? (Circle one per line) A. Public safety (police, fire, EMS) B. Streets, roads, transportation and/or planning C. Social/human services and/or community development D. Culture and leisure activities (parks, libraries) E. General government (administration, personnel) F. K-12 education spending Yes No Don’t Know 76% 13% 8% 58% 25% 14% 29% 45% 19% 27% 50% 16% 24% 55% 15% 20% 17% 7% NA 3% 3% 7% 7% 6% 56% 14. Do you think that your city government could spend less and still provide the same level of services? (Circle one) 6% Yes, a lot less 46% Yes, a little less 41% No, could not spend less 7% Don’t know 15. Do you approve or disapprove of the way that governments are handling budget and tax issues? (Circle one per line) a. Your city government 84% Approve b. Your governor 33% Approve c. Your state legislature 19% Approve d. President George W. Bush 31% Approve e. The U.S. Congress 15% Approve 13% Disapprove 59% Disapprove 75% Disapprove 57% Disapprove 72% Disapprove 3% Don’t know 12% Don’t know 6% Don’t know 12% Don’t know 13% Don’t know 16. In general, what do you think about tax and spending limits (for example, a property tax restriction or annual limits on revenue and spending levels)? (Circle one) 15% Always a bad idea 22% Sometimes a bad idea 7% Always a good idea 1% Don’t know 45% Sometimes a good idea 17. When it comes to changing the way your city taxes and spends money, which approach do you most prefer? (Circle one) 51% Mayor and/or council should decide 0% State government (governor and/or state legislature) should decide 11% Voters should decide at the ballot box 35% City should engage in a large-scale citizen engagement process; then mayor and/or council make decision 1% Other________________________ 2% Don’t know - 23 - PRINCIPLES OF PUBLIC FINANCE 18. When making decisions about your city’s finances, how important are the following principles of public finance? (Circle one per line, on a scale from 1-not important to 4-very important) Not Very Don’t Important Important know A. Taxpayer equity: a fair distribution of tax and revenue burdens 2% 3% B. Intergovernmental equity: fair distribution of revenues and responsibilities across levels of government and jurisdictions 3% 9% C. Revenue Adequacy: adequate revenues to meet service needs 1% 3% D. Ease of Administration: costs of revenue collection 4% 10% E. Economic effects: how budget and tax decisions impact the behavior of individuals and firms 1% 9% F. Accountability: the ability of residents to understand the system 2% 7% G. Self-directed governance: local authority and autonomy 3% 9% H. Responsibility to the broader system: the impact of budget decisions on other jurisdictions and levels of government 7% 15% I. Other______________________________ 1% 2% 24% 68% 35% 49% 29% 63% 45% 37% 37% 48% 31% 57% 29% 54% 38% 29% 2% 6% 3% 4% 4% 4% 5% 3% 5% 11% 89% 19. Which of the following revenue sources do you think is most fair in terms of its ability to equitably distribute revenue and tax burdens? (Circle one) 18% Property tax 33% Sales tax 24% Income tax 17% User fees/charges 8% Don’t know 20. Which of the following revenue sources do you think is the most effective at providing adequate revenues to meet needs in your city? (Circle one) 47% Property tax 25% Sales tax 13% Income tax 5% User fees/charges 10% Don’t know 21. Which of the following revenue sources do you think has the least negative effect on economic behavior of individuals and firms in your city? (Circle one) 10% Property tax 31% Sales tax 17% Income tax 27% User fees/charges 15% Don’t know 22. Which of the following revenue sources is most desirable to have in terms of local authority? (Circle one) 41% Property tax 24% Sales tax 11% Income tax 13% User fees/charges 11% Don’t know 23. Taking this all into account (questions 29-33), which of the sources would you rate the highest? (Circle one) 38% Property tax 26% Sales tax 19% Income tax 8% User fees/charges 9% Don’t know - 24 - TRENDS AND CHALLENGES A number of trends and factors are impacting city fiscal conditions that are largely outside of city control. The questions below attempt to gauge your views on the challenges presented by these trends. 24. How large of a challenge to you consider each of the following trends and challenges for your city over the next 5 years? (Circle one per line, on a scale from 1–Little or no challenge to 4-Very large challenge) Little or Somewhat of Large Don’t no challenge a challenge challenge know A. Increasing mobility of business, capital, and people B. Increasing aging population C. Federal and/or state unfunded mandates D. Public/voter pressure to limit taxation E. Increasing pressure from industry groups F. Increasing school-age population G. Federal and/or state preemption of local authority H. Political pressure by special interest groups I. Shift from manufacturing-to services-economy J. Increasing immigrant populations K. Cuts or limits in state and/or federal fiscal support L. Public perceptions that government is wasteful M. Competition for economic growth across jurisdictions N. Changing composition of households O. Devolution of responsibilities to local governments P. Lack of strong civic ties between government/residents Q. Lack of public trust in government R. Rapid growth, development, and/or sprawl S. Changes in federal and/or state tax systems 27% 26% 11% 24% 53% 44% 23% 47% 36% 43% 12% 20% 23% 47% 27% 40% 33% 40% 27% 61% 4% 64% 3% 78% 4% 67% 2% 37% 3% 41% 7% 64% 5% 44% 2% 51% 5% 47% 4% 78% 3% 71% 2% 66% 4% 43% 4% 59% 6% 51% 2% 58% 2% 49% 3% 60% 4% 8% 10% 7% 7% 7% 8% 9% 7% 8% 6% 7% 7% 7% 6% 8% 7% 7% 8% 9% 25. Of the trends and challenges listed in question 35, which three do you think will have the largest fiscal and economic impact on your city over the next five years? (Enter the letters for the options listed in Question 35 in the blanks provided below. For example, “lack of public trust in government” would be entered as “Q.”) 44% C. 37% K. 18% R. OPTIONS FOR REFORM 26. In general, does the system of public finance, which includes your city’s finances, need to be changed? If yes, are major or minor changes needed? (Circle one) 22% Yes, major changes 52% Yes, minor changes 16% No, no changes 10% Don’t know - 25 - Thinking about your city’s finances, please indicate whether you think each of the following reform options is a good idea or a bad idea (regardless of whether you think each option is currently feasible). 27. Protecting and strengthening the local property tax by reducing or eliminating limits on property tax rates and assessments, and by minimizing impacts of future limits? (Circle one) 40% Good idea 37% Bad idea 23% Don’t know 28. Under the property tax, taxing commercial properties at higher rates than residential properties? (Circle one) 39% Good idea 44% Bad idea1 7% Don’t know 29. Utilizing a Land Value Tax—a tax on the value of land, excluding the value of structures and improvements on the land. It is similar to the property tax, but shifts the reliance to the value of land, rather than the value of buildings, in order to provide incentives (decrease disincentives) to improving the value of buildings? (Circle one) 27% Good idea 35% Bad idea 38% Don’t know 30. Taxing all goods sold over the Internet? (Circle one) 57% Good idea 24% Bad idea 19% Don’t know 31. Extending sales taxes to services not currently taxed, such as legal and accounting services, auto repairs, haircuts, etc.? (Circle one) 37% Good idea 43% Bad idea 20% Don’t know 32. Utilizing a local commuter income tax, taxing incomes of nonresidents that commute into your city and use city services? (Circle one) 33% Good idea 44% Bad idea 23% Don’t know 33. Broadening local tax bases by reducing and eliminating tax exemptions and abatements? (Circle one) 42% Good idea 35% Bad idea 23% Don’t know 34. Reducing super-majority voter requirements (more than 50%) for increases on local taxes and fees? (Circle one) 31% Good idea 42% Bad idea 27% Don’t know 35. The Federal Government should re-instate some form of General Revenue Sharing Program— providing federal funds to cities that are available for general use, or targeted for infrastructure investment? (Circle one) 73% Good idea 12% Bad idea 6% Don’t know - 26 - 36. State governments should authorize local governments to utilize other local tax sources not already authorized to use (such as a local option sales or income tax, currently not available in many states)? (Circle one) 63% Good idea 18% Bad idea 19% Don’t know 37. Would you be willing to forego local tax revenue authority in return for expanded revenue capacity (for example, by swapping local tax authority for a share/greater share of state revenues)? If yes, how much? (Circle one) 3% Yes, a lot 17% Yes, a fair amount 13% Yes, a little 51% No 16% Don’t know 38. Do you think the following groups are more likely to support or oppose fiscal reforms? (Circle one in each row) Strongly Strongly Don’t Oppose Oppose Support Support Know A. Business community/Chamber of Commerce B. Neighborhood groups/Civic organizations C. Outside special interests D. Voters/residents E. Governor F. State legislature G. Colleagues in City Hall (Mayor and/or council) H. Other (please list)________________________ 7% 18% 45% 4% 18% 49% 15% 35% 18% 5% 20% 48% 9% 20% 35% 12% 29% 29% 2% 11% 50% 1% 1% 1% 15% 15% 11% 18% 6% 26% 13% 14% 10% 26% 6% 24% 20% 17% 1% 96% 39. As you may know, the federal government expects to run a deficit of approximately $500 billion dollars in 2005. How much do you think the federal deficit is a problem for cities? 47% Big problem 35% Somewhat of a problem 12% Not a problem 6% Don’t know - 27 - Appendix C. Survey Questionnaire – California Sample NATIONAL LEAGUE OF CITIES LEAGUE OF CALIFORNIA CITIES PUBLIC POLICY INSTITUTE OF CALIFORNIA Future of Public Finance Survey [Note: Responses from 241 CA city officials from June-August 2004] 1. How would you characterize your city in terms of location within your region? (Circle one) 18% Central city 53% Suburban 29% Rural/non-metropolitan 2. Which source of revenue makes up the largest share of your city budget? (Circle one) 25% Property tax 56% Sales tax 0% Income tax 5% User fees/charges 2% State revenues 0% Federal revenues 12% Other _____________________ 3. Which source of revenue makes up the second largest share of your city budget? (Circle one) 36% Property tax 23% Sales tax 0% Income tax 11% User fees/charges 8% State revenues 0% Federal revenues 22% Other ________________________ 4. How would you rate fiscal conditions in your city today? (Circle one per line) 12% Excellent 33% Good 39% Fair 5% Poor 1% Don’t know 5. Would you consider yourself to be politically (regardless of whether city elections are partisan or nonpartisan)…(Circle one) 3% Very liberal 18% Somewhat liberal 36% Middle-of the-road 31% Somewhat conservative 7% Very conservative 5% Other 6. Do you think of yourself as closer to the Republican Party or Democratic Party (regardless of whether city elections are partisan or nonpartisan)? (Circle one) 34% Republican Party 34% Democratic Party 21% Neither 11% Other/Don’t know SPECIAL SECTION ON CALIFORNIA 7. As you may know, the California state government has an annual budget of around 100 billion dollars and currently faces a multi-billion dollar gap between state spending and revenue, which has been called a structural deficit. How much do you think this deficit is a problem for cities in California? (Circle one) 90% Big problem 8% Somewhat of a problem 0% Not a problem 2% Don’t know - 29 - 8. Governor Schwarzenegger proposed a budget plan for the next fiscal year that includes spending cuts in transportation and general government, defers spending increases for public education, bond financing, and local government property tax reductions for two years. In exchange for the local government property tax reductions, the governor has pledged support for a constitutional amendment to prevent future state reductions of local revenues. The plan includes no new taxes. In general, are you satisfied or dissatisfied with the governor’s budget plan? (Circle one) 65% Satisfied 29% Dissatisfied 6% Don’t know 9. Do you think that tax increases should have been included in the governor’s budget plan? (Circle one) 59% Yes 28% No 13% Don’t know 10. How concerned are you that the state’s budget deficit will cause severe cuts in funding for local government services such as parks and recreation, police and public safety, and roads and transportation in your city? (Circle one) 72% Very concerned 24% Somewhat concerned 3% Not very concerned 1% Not at all concerned 0% Don’t know 11. What if the state if it said it needed more money in order to maintain current funding for local government services—would you be willing to support higher taxes for this purpose? (Circle one) 63%Yes 22% No 15% Don’t know 12. A measure on the November ballot, the Local Taxpayers and Public Safety Protection Act, cosponsored by the League of California Cities, would require voter approval for any state legislation that reduces local government revenue. This measure would permit local governments to suspend performance of state mandates if the state fails to reimburse local governments providing those services. How much do you think that this measure will help protect city governments from state actions that reduce city revenues? (Circle one) 50% Great deal 38% A fair amount 8% Only a little 1% Not at all 3% Don’t know 13. A companion measure to the Local Taxpayers and Public Safety Protection Act, co-sponsored by the League of California Cities and Governor Schwarzenegger, also may be on the November ballot. It would prevent the state legislature from reducing local property tax, sales tax and vehicle license fee revenues and provide for the suspension of state mandates that are not reimbursed by the state in a timely way. If this measure is approved by the Legislature and placed on the November ballot, how much do you think it will help protect city governments from state actions that reduce city revenues? 47% Great deal 41% A fair amount 8% Only a little 1% Not at all 3% Don’t know - 30 - SPENDING AND TAX PRESSURES Over the past several years, many cities have experienced declining fiscal conditions. The following questions seek to gauge your views on how fiscal stress should be dealt with in your city. 14. How has the range of your city’s responsibilities and commitments changed over the past five years? How do you think those responsibilities will change over the next five years? (Circle one per line) A. Past 5 years? 85% Increased 5% Decreased 8% No change 2% Don’t know B. Next 5 years? 82% Increase 5% Decrease 7% No change 6% Don’t know 15. How would you prefer to deal with situations when expenditures exceed revenues in your city? (Circle one) 19% Mostly through spending cuts 2% Mostly through tax increases 2% Mostly through fee increases 69% Mixture of spending cuts, tax increases, and fee increases 7% Borrow money to cover short-term shortfalls 0% Other______________________ 1% Don’t know 16. If your city is faced with making future cuts in spending, would you make cuts in the following areas? (Circle one per line) Yes No Maybe Don’t know G. Public safety (police, fire, EMS) 38% 25% 33% 4% H. Streets, roads, transportation and/or planning 58% 16% 22% 4% I. Social services (human and/or community development) 67% 8% 19% 6% J. Culture and leisure activities (parks, libraries) 70% 7% 17% 6% K. General government (administration, personnel) 74% 4% 17% 5% L. Across the board cuts 23% 37% 23% 17% 17. If your city needs to generate additional revenues in the future, would you be willing to raise tax and/or fee rates, or impose new taxes and/or fees to generate those revenues? (Circle one per line) Yes No Maybe NA A. Property tax 22% 32% 13% 33% B. Sales tax 35% 23% 19% 23% C. Income Tax 5% 35% 8% 52% D. Other tax(es) 44% 13% 29% 14% E. User fees 82% 3% 10% 5% - 31 - 18. Would you be willing to consider raising additional revenues via taxes in order to maintain current funding for the following local services in the future? (Circle one per line) Yes No Don’t Know NA F. Public safety (police, fire, EMS) 72% 14% 7% 7% G. Streets, roads, transportation and/or planning 60% 22% 11% 7% H. Social/human services and/or community development 25% 46% 16% 13% I. Culture and leisure activities (parks, libraries) 34% 42% 15% 9% J. General government (administration, personnel) 20% 55% 15% 10% F. K-12 education spending 14% 18% 5% 63% 19. Do you think that your city government could spend less and still provide the same level of services? (Circle one) 2% Yes, a lot less 31% Yes, a little less 66% No, could not spend less 1% Don’t know 20. Do you approve or disapprove of the way that governments are handling budget and tax issues? (Circle one per line) a. Your city government b. Your governor c. Your state legislature d. President George W. Bush e. The U.S. Congress 95% Approve 56% Approve 3% Approve 20% Approve 9% Approve 3% Disapprove 33% Disapprove 92% Disapprove 64% Disapprove 75% Disapprove 2% Don’t know 11% Don’t know 5% Don’t know 16% Don’t know 16% Don’t know 21. In general, what do you think about tax and spending limits (for example, a property tax restriction or annual limits on revenue and spending levels)? (Circle one) 22% Always a bad idea 30% Sometimes a bad idea 40% Sometimes a good idea 2% Always a good idea 6% Don’t know 22. To what extent do you agree with the following statements? (Circle one per line) A. We need a more responsible public discussion in this country about government and taxes. 52% Strongly agree 43% Agree 3% Disagree 1% Strongly disagree 1% Don’t know B. Voters/residents want more services, but want to pay less. 50% Strongly agree 40% Agree 6% Disagree 1% Strongly disagree 3% Don’t know 23. When it comes to changing the way your city taxes and spends money, which approach do you most prefer? (Circle one) 45% Mayor and/or council should decide 0% State government (governor and/or state legislature) should decide 10% Voters should decide at the ballot box 41% City should engage in a large-scale citizen engagement process; then mayor and/or council make decision 3% Other_______________________ 1% Don’t know - 32 - PRINCIPLES OF PUBLIC FINANCE 24. When making decisions about your city’s finances, how important are the following principles of public finance? (Circle one per line, on a scale from 1-Not important to 4-Very important) Not Very Don’t Important Important know A. Taxpayer equity: a fair distribution of tax and revenue burdens 2% 3% 35% 60% 0% B. Intergovernmental equity: fair distribution of revenues and 4% 14% 43% 37% 2% responsibilities across levels of government and jurisdictions C. Revenue Adequacy: adequate revenues to meet service needs 0% 2% 19% 76% 3% D. Ease of Administration: costs of revenue collection 2% 14% 46% 35% 3% E. Economic effects: how budget and tax decisions impact 1% 8% 53% 35% 3% the behavior of individuals and firms F. Accountability: the ability of residents to understand the system 1% 4% 35% 58% 2% G. Self-directed governance: local authority and autonomy 0% 3% 22% 71% 4% H. Responsibility to the broader system: the impact of budget 3% 15% 48% 29% 5% decisions on other jurisdictions and levels of government I. Other______________ 1% 0% 2% 6% 91% 25. Which of the following revenue sources do you think is most fair in terms of its ability to equitably distribute revenue and tax burdens? (Circle one) 13% Property tax 23% Sales tax 27% Income tax 30% User fees/charges 7% Don’t know 26. Which of the following revenue sources do you think is the most effective at providing adequate revenues to meet needs in your city? (Circle one) 36% Property tax 42% Sales tax 4% Income tax 10% User fees/charges 8% Don’t know 27. Which of the following revenue sources do you think has the least negative effect on economic behavior of individuals and firms in your city? (Circle one) 17% Property tax 25% Sales tax 17% Income tax 32% User fees/charges 9% Don’t know 28. Which of the following revenue sources is most desirable to have in terms of local authority? (Circle one) 42% Property tax 31% Sales tax 4% Income tax 16% User fees/charges 7% Don’t know 29. Taking this all into account (questions 29-33), which of the sources would you rate the highest? (Circle one) 36% Property tax 41% Sales tax 6% Income tax 8% User fees/charges 9% Don’t know - 33 - TRENDS AND CHALLENGES A number of trends and factors are impacting city fiscal conditions that are largely outside of city control. The questions below attempt to gauge your views on the challenges presented by these trends. 30. How large of a challenge to you consider each of the following trends and challenges for your city over the next 5 years? (Circle one per line, on a scale from 1–Little or no challenge to 4-Very large challenge) Little or Somewhat of Large Don’t no challenge a challenge challenge Know A. Increasing mobility of business, capital and people B. Increasing aging population C. Federal and/or state unfunded mandates D. Public/voter pressure to limit taxation E. Increasing pressure from industry groups F. Increasing school-age population G. Federal and/or state preemption of local authority H. Political pressure by special interest groups I. Shift from manufacturing-to services-economy J. Increasing immigrant populations K. Cuts or limits in state and/or federal fiscal support L. Public perceptions that government is wasteful M. Competition for economic growth across jurisdictions N. Changing composition of households O. Devolution of responsibilities to local governments P. Lack of strong civic ties between government/residents Q. Lack of public trust in government R. Rapid growth, development, and/or sprawl S. Changes in federal and/or state tax systems 39% 29% 15% 19% 54% 49% 8% 28% 40% 45% 10% 22% 28% 58% 22% 36% 28% 40% 34% 53% 5% 3% 66% 3% 2% 81% 1% 3% 75% 2% 4% 39% 3% 3% 39% 9% 3% 86% 3% 3% 67% 2% 3% 51% 6% 3% 50% 2% 3% 86% 1% 3% 75% 0% 3% 68% 2% 2% 36% 3% 3% 70% 5% 3% 59% 1% 4% 70% 0% 2% 56% 1% 3% 55% 8% 3% 31. Of the trends and challenges listed in question 35, which three do you think will have the largest fiscal and economic impact on your city over the next five years? (Enter the letters for the options listed in Question 35 in the blanks provided below. For example, “lack of public trust in government” would be entered as “Q.”) 45% G 43% K 30% C OPTIONS FOR REFORM 32. In general, does the system of public finance, which includes your city’s finances, need to be changed? If yes, are major or minor changes needed? (Circle one) 56% Yes, major changes 31% Yes, minor changes 9% No, no changes 4% Don’t know - 34 - Thinking about your city’s finances, please indicate whether you think each of the following reform options is a good idea or a bad idea (regardless of whether you think each option is currently feasible). 33. Protecting and strengthening the local property tax by reducing or eliminating limits on property tax rates and assessments and by minimizing impacts of future limits? (Circle one) 60% Good idea 28% Bad idea 12% Don’t know 34. Under the property tax, taxing commercial properties at higher rates than residential properties? (Circle one) 42% Good idea 40% Bad idea 18% Don’t know 35. Utilizing a Land Value Tax—a tax on the value of land, excluding the value of structures and improvements on the land. It is similar to the property tax, but shifts the reliance to the value of land, rather than the value of buildings, in order to provide incentives (decrease disincentives) to improving the value of buildings? (Circle one) 27% Good idea 35% Bad idea 38% Don’t know 36. Taxing all goods sold over the Internet? (Circle one) 84% Good idea 9% Bad idea 7% Don’t know 37. Extending sales taxes to services not currently taxed, such as legal and accounting services, auto repairs, haircuts, etc.? (Circle one) 64% Good idea 26% Bad idea 10% Don’t know 38. Utilizing a local commuter income tax, taxing incomes of nonresidents that commute into your city and use city services? (Circle one) 23% Good idea 59% Bad idea 18% Don’t know 39. Broadening local tax bases by reducing and eliminating tax exemptions and abatements? (Circle one) 64% Good idea 17% Bad idea 19% Don’t know 40. Reducing super-majority voter requirements (more than 50%) for increases on local taxes and fees? (Circle one) 81% Good idea 14% Bad idea 5% Don’t know 41. The federal government should reinstate some form of General Revenue Sharing program— providing federal funds to cities that are available for general use or targeted for infrastructure investment? (Circle one) 69% Good idea 14% Bad idea 17% Don’t know - 35 - 42. State governments should authorize local governments to utilize other local tax sources not already authorized to use (such as a local option sales or income tax, currently not available in many states)? (Circle one) 71% Good idea 11% Bad idea 18% Don’t know 43. Would you be willing to forego local tax revenue authority in return for expanded revenue capacity (for example, by swapping local tax authority for a share/greater share of state revenues)? If yes, how much? (Circle one) 3% Yes, a lot 11% Yes, a fair amount 11% Yes, a little 57% No 18% Don’t know 44. Do you think the following groups are more likely to support or oppose fiscal reforms? (Circle one in each row) Strongly Strongly Don’t Oppose Oppose Support Support Know I. Business community/Chamber of Commerce 6% 18% 45% 20% 11% J. Neighborhood groups/Civic organizations 2% 16% 57% 13% 12% K. Outside special interests 13% 42% 16% 3% 26% L. Voters/residents 2% 12% 57% 12% 17% M. Governor 2% 9% 52% 19% 18% N. State legislature 26% 39% 18% 3% 14% O. Colleagues in City Hall (Mayor and/or council) 3% 5% 50% 28% 14% P. Other (please list)________________________ 1% 2% 0% 6% 91% 45. As you may know, the federal government expects to run a deficit of approximately $500 billion in 2005. How much do you think the federal deficit is a problem for cities in California? 33% Big problem 53% Somewhat of a problem 8% Not a problem 6% Don’t know - 36 - PUBLIC POLICY INSTITUTE OF CALIFORNIA Board of Directors Cheryl White Mason, Chair Chief, Civil Liability Management Los Angeles City Attorney’s Office Edward K. Hamilton Chairman Hamilton, Rabinovitz & Alschuler, Inc. Gary K. Hart Founder Institute for Education Reform California State University, Sacramento Arjay Miller Dean Emeritus Graduate School of Business Stanford University Ki Suh Park Design and Managing Partner Gruen Associates Constance L. Rice Co-Director The Advancement Project Walter B. Hewlett Director Center for Computer Assisted Research in the Humanities David W. Lyon President and CEO Public Policy Institute of California Thomas C. Sutton Chairman & CEO Pacific Life Insurance Company Raymond L. Watson Vice Chairman of the Board Emeritus The Irvine Company Carol Whiteside President Great Valley Center Advisory Council Mary C. Daly Research Advisor Federal Reserve Bank of San Francisco Clifford W. Graves General Manager Department of Community Development City of Los Angeles Daniel A. Mazmanian C. Erwin and Ione Piper Dean and Professor School of Policy, Planning, and Development University of Southern California Dean Misczynski Director California Research Bureau Elizabeth G. Hill Legislative Analyst State of California Rudolf Nothenberg Chief Administrative Officer (Retired) City and County of San Francisco Hilary W. Hoynes Associate Professor Department of Economics University of California, Davis Andrés E. Jiménez Director California Policy Research Center University of California Office of the President Norman R. King Executive Director San Bernardino Associated Governments Manuel Pastor Professor, Latin American & Latino Studies University of California, Santa Cruz Peter Schrag Contributing Editor The Sacramento Bee James P. Smith Senior Economist RAND Corporation PUBLIC POLICY INSTITUTE OF CALIFORNIA 500 Washington Street, Suite 800 O San Francisco, California 94111 Phone: (415) 291-4400 O Fax: (415) 291-4401 www.ppic.org O info@ppic.org" ["post_date_gmt"]=> string(19) "2017-05-20 09:37:42" ["comment_status"]=> string(4) "open" ["ping_status"]=> string(6) "closed" ["post_password"]=> string(0) "" ["post_name"]=> string(11) "op_1204mbop" ["to_ping"]=> string(0) "" ["pinged"]=> string(0) "" ["post_modified"]=> string(19) "2017-05-20 02:37:42" ["post_modified_gmt"]=> string(19) "2017-05-20 09:37:42" ["post_content_filtered"]=> string(0) "" ["guid"]=> string(53) "http://148.62.4.17/wp-content/uploads/OP_1204MBOP.pdf" ["menu_order"]=> int(0) ["post_mime_type"]=> string(15) "application/pdf" ["comment_count"]=> string(1) "0" ["filter"]=> string(3) "raw" ["status"]=> string(7) "inherit" ["attachment_authors"]=> bool(false) }