Will 21st Century Begin With Gov't Reform? Commission of Local Governance Issues Report

Executive Summary

As California enters a new millennium, we find ourselves at a crossroads. Faced with surging growth, dynamic change, and greater diversity than the world has ever known, the time is right for California to set a new course. We must start by examining the system of governance and we must establish a vision of how the state will grow.

The Commission was asked to assess governance issues and make appropriate recommendations, directing special attention to the Cortese-Knox Local Government Reorganization Act , the 57 local agency formation commissions (LAFCOs) governed by the Act, and citizen participation in local government.

The Commission's report and recommendations are intended to provide new tools to enable California to cope with growth in a rational manner, in part by making better use of the often invisible LAFCOs in each county.

Four points should be recognized in order to frame the debate about the future role of government:

1. The future will be shaped by continued phenomenal growth. If we fail to recognize, accept, and respond to this, we risk making California an unattractive place to live and work.

2. California does not have a plan for growth. If we stay the current course, we may one day wake up to discover a world marred by sprawling suburbs, expensive and overextended public services, a decimated agricultural industry, less open space, and fewer recreational opportunities. In a state that on the East Coast would cover a dozen states, there is no formal intermediate planning authority between the State and individual local governments.

3. Local government budgets are perennially under siege. Because of taxing and spending constraints enacted over the past two decades, local governments struggle to provide essential services and have little latitude to adjust resources to match residents' priorities.

4. The public is not engaged. Although there clearly is frustration with traffic gridlock and the high cost of housing, most Californians have little interest in the day-to-day functioning of government or preparing plans for future growth.

21st Century Challenges to Local Government

[M]ost new growth will be generated internally, through the natural increase of the existing population. Closing the gates will not solve the growth problem. By 2020, California will add 11 million people , then it will grow by another 13 million in the two decades that follow. According to the Census Bureau, California's rate of increase will exceed that of every other state, including those with much smaller population bases.

By 2040, more than two-thirds of the state's population will be non-Anglo . Moreover, demographers believe that it will still be a relatively young population forty years from now, foreshadowing continued growth . This growth and diversity should keep California's economy vibrant well into the millennium. Unless, that is, failure to invest in education, infrastructure, and smart growth policies leads businesses to seek other locations.

While the immediate future looks bright for California's economy, it will present some real challenges to our longer-term resolve to maintain livable communities. Currently, there is no comprehensive strategy to determine how the burdens of growth will be shared, how resources benefiting more than one locality will be protected, and how necessary but locally undesirable facilities will be sited. As a result, farmland and open spaces continue to be swallowed up by sprawling suburban expansion. As development pushes ever outward from existing cities, expensive extensions and improvements will be needed for freeways, water and sewer lines, and other infrastructure. Job centers will become farther removed from the housing that supports them, leading to longer commutes, increased air pollution, and a more stressful lifestyle. At the same time, many contaminated former industrial sites near downtown areas lie abandoned due to the cost of cleaning them up.

Several barriers may hinder local governments' ability to deal with 21st Century challenges, including :

• Local finance sources are unstable, uncertain, often inadequate, and subject to unpredictable revisions by the Legislature.

• Land use decisions are often made for reasons that have more to do with the finances of the local government than the land use needs of the local community, and some decisions may ultimately erode future quality of life.

• People are confused by the array of government agencies-58 counties, 473 cities, about 1,800 dependent and 2,200 independent special districts, 800 jointly-controlled agencies, nearly 1,000 school districts. The mere numbers suggest potential cross-purpose efforts.

• The legal process that must be followed to restructure local government to meet these challenges has not been comprehensively revisited since 1963, and is commonly viewed as arcane, incomprehensible, and sometimes biased.

Recommendations

ISSUE: Reform of Local Government Reorganization

Problem: Current procedures in the Local Government Reorganization Act were enacted prior to Proposition 13 and the extensive growth of the past 35 years. The law is a composite of three previous procedural statutes that were not substantially modified when combined, nor have they been since. Consequently, policies are often unclear and procedures are cumbersome and uncertain. Moreover, LAFCOs are viewed by many local officials as biased and nonresponsive to local development needs.

1. The Commission recommends that LAFCO policies and procedures be streamlined and clarified.

• The Cortese-Knox Act must be comprehensively reorganized and redrafted to make procedures more consistent and easier to understand.

• Consistent procedures must be established for voter/land owner petitions to initiate a change of organization or reorganization.

• All LAFCOs must adopt written policies and procedures.

• New incorporations ought to be statutorily exempt from CEQA, since the new city must initially adopt the existing general plan and zoning ordinances of the county, or the city if incorporation is part of a special reorganization. Environmental impacts will not be encountered at the planning level until a new general plan is adopted.

2. The Commission recommends that LAFCOs be neutral, independent, and provide balanced representation for counties, cities, and special districts.

• Except for special statutory exceptions [like L.A. County], a uniform membership selection scheme must apply to all LAFCOs as follows: 2 from counties, 2 from cities , 2 from special districts (if requested), and 1 public member, whose selection shall require an affirmative vote from at least one of the members from each selection authority.

• All LAFCOs must select their own executive officers and counsel, although LAFCOs may select county or other public employees for these roles.

• Conflict of interest and lobbying disclosure laws must apply to LAFCO members and staffs.

ISSUE: Orderly Growth and Resource Protection

Problem: Urban sprawl persists and growth sometimes proceeds into areas where extension of services is inefficient, expensive, or ill-timed. Despite the policies and procedures of the Cortese-Knox Act, the loss of prime agricultural and open-space lands continues to occur at an alarming pace.

3. The Commission recommends strengthening LAFCO powers to prevent sprawl and ensure the orderly extension of government services.

• Pre-zoning must be required for territory proposed to be annexed to a city to ensure clear knowledge of plans and potential impacts.

• LAFCO must be required to update spheres of influence at least once every five years.

• LAFCO approval must be required for extension of major "backbone" infrastructure to serve regionally significant development projects .

• LAFCO must initiate periodic regional or subregional service reviews, [at least] every five years, to determine whether local government services are adequate.

• The current statutory provisions allowing unilateral termination of proceedings by special districts (annexations) and cities (detachments) must be rescinded, so that all proposals may be fully examined at a public hearing. Nevertheless, substantial weight must be afforded an objection by an affected city or special district.

4. The Commission recommends that policies to protect agricultural and open space lands and other resources be strengthened.

• A more precise definition of "prime agricultural lands" must be adopted.

• LAFCO must be prohibited from approving a proposal that might lead to development of prime agricultural or open-space lands if a feasible alternative exists.

• Water supply considerations must be integrated into LAFCO boundary change decisions.

ISSUE: Local Fiscal Reform

Problem: Local government financing options are limited, difficult to understand, often inadequate, and subject to unforeseen changes by the Legislature.

5. The Commission recommends that the state-local fiscal relationship be comprehensively revised.

• Negotiations must be initiated between the State and local governments to comprehensively realign State and local fiscal resources and must aim for a Constitutional amendment.

• The State must provide full funding for any activities mandated upon local government at the time that the mandate is imposed.

• Tax bills must be informative and easy for taxpayers to understand, providing information on which agency receives funds, which agency is responsible for levying the tax, and whom to contact for information.

ISSUE: Guiding the Directions of Future Growth

Problem: Land use decisions are sometimes made for reasons that have more to do with the finances of the local government than the land use needs of the local community .

6. The Commission recommends that the State develop incentives to encourage compatibility and coordination of plans and actions of all local agencies, including school districts, within each region as a way to encourage an integrated approach to public service delivery and improve overall governance.

• The State's infrastructure financing programs must create incentives that further its growth planning goals and priorities, and all State policies, regulations, and programs must be implemented in a manner consistent with these goals.

• Allocation of the sales tax on a point-of-sale basis must be revised to reduce its incentive effect, and property tax allocations to general purpose local governments must be increased.

• LAFCOs must be better use[d] to support growth planning goals.

ISSUE: Local Government Coordination and Efficiency

Problem: State and local agencies often proceed with their own plans without recognizing the potential effects on other agencies and the public. The result can be confusion and dissatisfaction with services. One situation that illustrates this problem is the site selection decision for a new school, which is not subject to broader local planning review.

7. The Commission recommends enhancements to communication, coordination, and procedures of LAFCOs and local governments.

• Notification and coordination procedures between local governments and school districts must be strengthened.

• Procedures similar to those for LAFCO proceedings (i.e., notice, public hearing, and written statement of determinations) must apply to school district reorganization.

• The value and consistency of the comprehensive fiscal analysis must be improved and the State must prepare guidelines for its preparation.

• A special blue ribbon commission must be appointed to undertake a study of water governance in California.

• Extension of services outside its jurisdiction by a city or special district must be subject to LAFCO approval, even if the service recipient is a public agency.

ISSUE: Public Interest in Government

Problem: Voter turnouts and public opinion surveys indicate an alarming level of apathy by the public regarding government processes and actions. This poses a risk to democracy by enhancing the influence of organized special interests.

8. The Commission recommends that opportunities for public involvement, active participation, and information regarding government decision-making be increased.

• LAFCOs must be required to maintain web sites.

• LAFCO public and governmental notification requirements must be expanded.

• Proponents of a new incorporation or special reorganization must be permitted to petition LAFCO for full or partial waiver of fees to cover the cost of processing the application, and LAFCO must be able to petition the State to provide a loan, repayable by the new city, to cover the cost.

• The cost of verifying citizen petitions for any change of organization must be considered a governmental cost.

• Proponents of reorganization actions must be required to report campaign contributions and expenditures, in accordance with the Political Reform Act and the Elections Code.

Conclusion

Enacting the Commission's recommendations will be an important first step toward reforming state and local governance in California. The actions proposed are incremental . These recommendations will, nevertheless, begin a debate that may compel the State to prepare for the next century.