Jurupa Valley is the newest incorporated community in California, thanks to the citizen initiative. Due to the state government’s decision, it may become the shortest-lived — or maybe the last — incorporated city in California’s 162-year existence. In a last-minute effort to balance its accounts, the state canceled the most crucial source of revenue for new communities. SB 89, pushed through the Legislature and signed into law two days before Jurupa Valley’s formal incorporation date, redirected almost $140 million in yearly devoted Vehicle License Fees (VLF) from cities to the state. This was done to pay law enforcement grants and the state’s penal system reorganization.
For most of the state’s 482 financially strapped towns, this was just another blow to already strained budgets. Fontana, Santa Clarita, and Temecula are among the 140+ communities that have annexed populated regions since 2004. It forebodes insolvency for the four newest local jurisdictions formed after 2004. Even after receiving the repurposed VLF public safety funding, SB 89 lowered the amount available to Jurupa Valley, Eastvale, Wildomar, and Menifee by $16.2 million. Jurupa Valley alone lost $6.7 million, or 47% of estimated first-year revenues. Only Los Angeles had a bigger annual cash amount allocated to the state. Even San Diego, the state’s second-largest municipality, gave up less than Jurupa Valley. The state’s largest city loses less money than the state’s newest municipality. The solution is at best muddled.
The VLF has been a constitutionally protected local revenue stream since 1986. Before 1935, cities incorporated a car charge in their municipal property taxes. The VLF has always been a locally developed format. The California Legislature replaced locally controlled programs with the more recognized statewide coordinated billing method. The VLF, collected and given by the state per capita to cities, has been susceptible to political cutbacks. California automobile owners have seen their registration costs slashed over the years as the state seeks to demonstrate fiscal responsibility. But decreased automobile registration fees did not equal lower administrative costs. The state just funded the expenditures through another fund.
From 1998 to 2004, the loss of the VLF to local governments was mitigated by a direct contribution from the state’s General Fund. In 2004, the state allocated compensatory extra property tax in place of the lower VLF. In essence, existing cities stayed solvent. However, prospective incorporations or annexations of populated regions by existing cities were not considered. Property tax in lieu of VLF allocations to post-Prop. 1A local governments would be different from other municipalities in the state.
In 2006, AB 1602 was enacted into law, ensuring that all towns get an equal portion of VLF monies. The measure also granted a five-year income “bump” for newly formed communities, replacing the prior seven-year subsidy. Wildomar, Menifee, Eastvale, and Jurupa Valley were incorporated based on this covenant. SB 89, enacted in late June 2011, breached the promise of AB 1602.
ABIDE BY THE RULES BUT PENALIZED
Jurupa Valley, like its sister communities, followed the state’s rules. Prior to incorporation, a citizens’ committee was constituted. It commissioned a fiscal feasibility assessment to assess its capacity to fund municipal services. It discussed the cost of switching services with Riverside County. The Riverside County Local Agency Formation Commission recommended putting the question of incorporation on the ballot. Residents voted overwhelmingly in favor of becoming California’s newest municipal jurisdiction in March 2011. Jurupa Valley was incorporated to have more direct control over its own affairs, public safety, and future.
The city has been stingy. No. 2 in Riverside County in terms of per-capita spending No progress on the state-mandated General Plan or hiring permanent employees. As a result of not having municipal workers, it has avoided any pension or long-term health-care commitments. With the Riverside County Sheriff’s Department, it has even severely lowered its contract amount to a pre-corporate level.
Jurupa Valley has not sat idly by in its budgetary quandary. The city and its consultants met with the governor’s office, the state finance department, and legislators. SB 1566 prompted these attempts. This bipartisan bill, co-authored by Senators Gloria Negrete-McCleod and Bill Emmerson, would revive AB 1602. Despite being approved by two Senate committees, SB 1566 was not approved by the Senate Appropriations Committee. If SB 1566 is not passed, Jurupa Valley may have to contemplate disincorporation.
The budgetary burden on all levels of government is visible, but the damage to essential democratic norms is not. In essence, the process of building a city and its administrative structure is an implicit illustration of the “freedom of association” guaranteed by the Constitution. The Constitution protects and clarifies the rights, relationships, and obligations of states and the federal government, but it is silent on local governance. They exist at the pleasure and authority of their state legislatures. The California Supreme Court recently upheld AB 26 which abolished municipal redevelopment agencies. But can the state block the democratic goal of association? It would be a good test for constitutional academics and high judges.
But the state of California’s policies has actual consequences. The state has omitted something, inadvertently or not. In a sea of zeros, the state may easily discard four cities as collateral damage. But there are instances when the state should do the right thing and let these new communities, like Jurupa Valley, move forward. The state must show that good governance is alive. The reintroduction of the revenue equivalent of the lost VLF would promote municipal equity. Keeping SB 89’s discriminatory impacts, even if inadvertent, contributes to the growing divide between haves and have-nots. Jurupa Valley does not want to be remembered as the state’s final and shortest-lived city, through no fault of its own.