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9 A -IZ VLFfrom page .................... ............................... Assembly Member Darrell Steinberg and other Assembly Democratic members discussed the proposal with the press this week, following wecks of rumors that it was under consideration in the lower house. The Democrats believe that they could pass the measure on a simple majority vote, rather than the two- thirds vote required by the constitution for fiscal measures, if the tax swap measure does not increase state revenue overall.The question of whether the proposal would be subject to Prop 98 school funding is unclear at this time. Both Governor Davis and Lt. Governor Cruz Bustamante have expressed interest in the idea. The state constitution dedicates vehicle license fees to cities and counties but it is silent on the rate of the fee and how it is distributed. The League and our LOCAL coalition partners sup- ported the restoration of the VLF because it keeps a promise made by the legislature and the Gover- nor in 1998: if the state general fund could not afford the VLF backfill in the general fund due to declining revenues than the VLF would be re- stored to keep local government "whole ". The League's Concern: Keep Local Services Fully Funded While Assembly Member Steinberg ryas reported as saying that it is his intent to unsure that the increased personal income and "sin" taxes in his proposal are used to keep cities and counties fully funded, no language or specific details are available as yet. Steinberg reportedly will introduce the legislation next week. The League will continue to communicate with legislators that public safety and other essential local services funded by the VLF must be main- tained, and that cities urgently need the year-to- year stability and certainty that a constitutionally dedicated source of funds provides. Substituting the unpredictable revenues from personal income and sin taxes for the predictable VLF revenues could put these vital services at risk. This con - cem, however, needs to be balanced against the reported growing opposition to the VLF restoration across the state. Other VLF Changes on the Horizon Changes to the VLF could also result if one of two ballot measures proposed by Senator Tom McClintock qualifies and is approved by voters on the November 2004 ballot. The Attorney General has just approved the title and summary for the two measures for circulation. One is a statutory measure that would lower the VLF rate to $1.00 per year. The other is a constitutional change that would repeal the VLF, but also create a constitu- tionally protected VLF backfill, payable each year from the state sales tax or some other state tax source. The latter measure also would impose limits on the fee - raising authority of state and local governments. Senator McClintock and other Republicans have also sued the state to block restoration of the VLF to the 2% valuation level. UPDATE: AB 1221 TECHNICAL TASK FORCE A subcommittee of the task force met July 22 to discuss the detailed mechanics of property and sales tax processes. County auditors, city finance officials, revenue collection consultants, and League and California Association of Counties staff joined in a discussion of issues raised by the larger task force. Issues such as annex- ation, incorporation and redevelopment areas were examined. Subcommittee members developed some options to ad- dress these issues and identified some areas that required further study. These recommendations and concerns will be shared with the Technical Task Force at its next meeting, which has not at this time been scheduled. PAGE 2 /PRIORITY FOCUS Visit the League's Official Web Site -- www.cacities.org