Wildomar’s hope of getting back more than $1.7 million from the state has been torpedoed.
In his Sept. 19 veto message, Brown said AB 1098 would have undermined 2011 “realignment formulas” and therefore jeopardized public safety funding and created an $18 million hole in the state's General Fund.
The veto occurred after months of lobbying by city officials from Wildomar, Jurupa Valley, Menifee and Eastvale. If signed into law, the bill would have restored approximately $18 million in vehicle license fee (VLF) revenues to the four recently incorporated cities, as well as various cities that had annexed inhabited areas after 2004.
The League of California Cities argued in its request for signature letter for AB 1098 that there would be a no negative impact on realignment funding due to what it called “a more than expected influx of funds for the Department of Motor Vehicles administration from a new $12 fee on vehicle registrations.”
“Realignment” is Sacramento's shifting of responsibility to pay for law enforcement services from the state to local jurisdictions. In the case of VLF revenues, the monies were taken from cities to fund law enforcement grants previously paid by the state General Fund, the League argues.
Vehicle license fees have long been a major general revenue source to cities and counties, but the four new cities that incorporated after 2004 relied on it more heavily.
The reason is complicated: It began in 1998, when the state reduced the VLF revenue rate to cities, but provided "a backfill" from the state General Fund to offset the hit. But then in 2004 the state Legislature approved a “swap" that eliminated the general fund backfill but directed more property tax revenues to cities and counties as compensation.
"However, the Legislature failed to include a mechanism to provide such property tax revenues to cities that incorporate, or cities that annex new territory, after 2004," the League has argued.
In 2006, AB 1602 was passed to provide new cities with compensation via VLF revenues. But the VLF promise was derailed when in June 2011 the governor signed off on his budget package, which included a bill -- SB 89 -- that cut the VLF revenue stream from local cities and directed it to the state.
Although the revenue stream would have "phased down" for Wildomar and the other new cities over a five-year period after incorporation, the immediate hit was a tough one. Following news in June 2011 that the VLF revenue stream was eliminated -- to the tune of more than $1.7 million for this current fiscal year in Wildomar -- Wildomar City Manager Frank Oviedo and Assistant City Manager Gary Nordquist were forced to make difficult 2012-13 fiscal year budget cuts, in particular a reduction in the city's police service.
Wildomar and the three other cities still have a glimmer of hope, however, as they await a court ruling on the constitutionality of SB 89. On Sept. 23, 2011, the League filed the lawsuit in the Sacramento County Superior Court arguing that SB 89 and its companion bill AB 118 violate Props. 22 (2010) and 1A (2004). Wildomar and the other cities still await a ruling on League of California Cities v. Chiang.