Presented to Assembly Revenue and Taxation Committee

Over the last two years, an unanticipated funding shortfall in Amador and San Mateo Counties cut city and county reimbursements for two complex state-local financial transactions: the triple flip and VLF swap. It is likely this funding insufficiency, commonly called insufficient ERAF, will continue in future years, requiring state action if the affected local governments are to receive their full triple flip and VLF swap payments. In addressing claims of insufficient ERAF in future years, the Legislature will be faced with the difficult decisions of how much compensation cities and counties should receive and how the compensation should be provided. In this report we describe the causes and potential future development of insufficient ERAF and outline a framework that could be used in developing a remedy for insufficient ERAF.

This is an updated version of a graphic depicting the major milestones in the state-local fiscal relationship over the past 40 years. The latest version has been updated to reflect recent elections, 2011 realignment, and the dissolution of redevelopment and expanded to include milestones related to education finance. Note: The PDF file has three pages. The first page contains the entire graphic and will print on one sheet of paper, such as 8.5 x 11 (letter) or 8.5 x 14 (legal). The second and third pages each contain one half of the graphic and can be joined together for a larger copy of the graphic.

Recently, three California municipalities filed for bankruptcy relief under Chapter 9 of the federal bankruptcy code: Stockton, San Bernardino, and Mammoth Lakes. These filings—occurring just months after the City of Vallejo completed its three year Chapter 9 process—have raised questions about the use of Chapter 9 in California. In this report, we answer some of the common questions about the Chapter 9 process for California local governments such as: which local governments are allowed to file for bankruptcy protections and under what circumstances, what are the major steps of the bankruptcy process, and what types of obligations can be changed or eliminated through bankruptcy.

Presented to Revenue and Taxation Committee, Hon. Henry T. Perea, Chair and Assebmly Local Government Committee, Hon. Cameron Smyth, Chair

Assembly Budget Subcommittee No. 4 on State Administration, Hon. Joan Buchanan, Chair

On February 1, 2012, all redevelopment agencies in California were dissolved and the process for unwinding their financial affairs began. Given the scope of these agencies' funds, assets, and financial obligations, the unwinding process will take time. This report reviews the history of RDAs, the events that led to their dissolution, and the process communities are using to resolve their financial obligations. The report recommends the Legislature amend the redevelopment dissolution legislation to address timing issues, clarify the treatment of pass–through payments, and address key concerns of redevelopment bond investors.

As part of legislation authorizing seven local governments to participate in a pilot program regarding electronic filing of Statements of Economic Interests forms, the Legislature requested our office to evaluate the pilot program. This report presents our findings.

Letter to Assembly Member Dickinson regarding the 1) efficiency of small special districts, 2) accountability of small special districts, and 3) effectiveness of Local Agency Formation Commissions (LAFCOs).

This letter reviews a memorandum of understanding between Anschutz Entertainment Group and the City of Los Angeles regarding the financing of a football stadium and new convention hall, as well as two economic analyses of the proposed project.

As part of the 2011-12 budget plan, the Legislature enacted a major shift—or “realignment”—of state program responsibilities and revenues to local governments. In total, the realignment plan provides $6.3 billion to local governments to fund various criminal justice, mental health, and social services programs in 2011-12, and ongoing funds for these programs annually thereafter. We recommend the Legislature address a few pressing implementation issues before this legislative session ends. We also identify a series of more extensive issues that we recommend the Legislature address in early 2012, such as developing local funding formulas with an eye towards the long term, promoting local accountability, and simplifying the plan’s extensive network of accounts and subaccounts.

Pursuant to Chapter 1124, Statutes of 2002 (AB 3000, Committee on Budget).

Presented to Senate Governance and Finance Committee, Hon. Lois Wolk, Chair

Presented to the Conference Committee on the Budget

In our report The 2011-12 Budget: Should California End Redevelopment Agencies? We analyzed the California Redevelopment Association’s study regarding the economic effects of redevelopment. We concluded that this study significantly overstated the number of jobs resulting from redevelopment. After publication, the researchers explained to us why they thought two of our three reasons were partly incorrect. The purpose of this letter is to clarify the extent to which we agree and disagree with their observations. While we appreciate the additional information on this study, the information provided does not change our criticisms of the study or our finding that it vastly overstates the employment effects of redevelopment.