Government Finance and Operations
How Do Californian’s Spend Their Money?
analysis by the State Board of Equalization (BOE)
of personal consumption spending across the United States turned
out results that are by turns surprising and not surprising at
It will come as a shock to no one, for example, that Californians spend more on housing and utilities than the nation as a whole, 35 percent more, as it turns out, and rank sixth in the country. However, Californians, who are known for their “car culture” and expensive gasoline mandates, also spend 22 percent less on gas and energy, ranking 48th. And spending on vehicles and parts in the state is the only category where spending declined between 2000 and 2012.
Overall, 70 percent of Californians spending is on services, led by housing, health care, insurance, and recreation services. Nineteen percent of spending is on nondurable goods, including food, gas, and clothes. The final eleven percent of spending is durable good, led by recreational goods and vehicles, followed by motor vehicles and then furniture and other household durable good.
Spending on services not only comprises the majority of personal consumption, it also grew much faster between 2000 and 2012. Per capita spending on services rose 53 percent during that period, while spending on good rose 35 percent.
These findings will no doubt inform the ongoing debate in Sacramento about expanding the sales tax to some services, although the two largest categories — housing and health care – has not been proposed to be included in any of those proposals.
Those interested in exploring this data more closely can read the BOE analysis or the underlying data collected and released by the U.S. Bureau of Economic Analysis.
AB 971 – Reimbursing Counties for Special Elections
For many years, the state of California would reimburse counties
for the cost of running special elections for vacancies in the
state legislature and Congress. But that practice ended in 2009
and since then counties have borne the costs alone. Several
legislators have introduced measures over the intervening years,
but all of those efforts have failed.
This year’s hope is AB 971, by Assembly Member Ling-Ling Chang. It would add a provision to law that the state is to reimburse counties for expenses directly related to special elections for legislative vacancies. It would only apply to expenses incurred after January 1, 2015.
Every other level of government in California pays its share of election costs, but counties are required to pick up the state’s share. The costs of state and federal vacancies come to counties unexpectedly, after their budgets have passed, and these unexpected costs can have a significant impact on county general funds.
This is not the only source of state funding the state has eliminated in recent years. The state has also stopped paying for election-related mandates, so while the amount counties spend on elections has nearly tripled in less than 20 years, the state’s share of election funding has dropped to zero.
Reimbursing counties for legislative vacancies is an important component of involving the state in funding elections.
CSAC will be supporting AB 971 when it is heard in the Assembly Elections and Redistricting Committee next Wednesday, April 15.
High Risk Local Agency Audit Draft Regulations Released
Proposed draft regulations for the State Auditor to conduct audits of local agencies deemed to be at “high risk” for fraud, waste, abuse, mismanagement will be heard on Monday as part of the public review process. The regulations are the result of AB 187 (Lara) passed in 2011 in the wake of the City of Bell scandal that sought to create greater state oversight and transparency of local government agencies.
CSAC staff met with State Auditor representatives late last year to discuss concerns with the draft regulations and will provide a formal response to the State Auditor’s proposed regulations. The concerns are based on the need to establish more reasonable time frames to allow counties to respond to State Auditor findings, the definitions of certain terms, and the lack of information sharing opportunities between the State and local agencies before formal audit procedures begin.
The draft regulations and the statement of reasons for the regulations are available here.
Debt and Investment Advisory Group Offers Educational Webinars
The California Debt and Investment Advisory Commission is holding trainings this spring and summer that might interest county officials. For more information or to register for the free classes outlined below, counties can visit the CDIAC Programming website, email, or call (916) 653-3269.
CDIAC Public Investment Webinar Series: THE PUBLIC INVESTMENT PORTFOLIO
A Step-by-Step Examination of Public Investment Securities
MAY 21, 2015 TO SEPTEMBER 16, 2015
This webinar series is designed to guide public agencies in the development and management of an investment portfolio. Public fund management in California allows for the investment officer to select instruments set forth in Government Code. Each investment instrument comes with a differing level of risk, requiring public investors to undertake a full assessment of each. These webinars will examine each instrument type, review the statutory authority, and analyze how the investment’s features may or may not achieve a local agency’s investment policy objectives.
Webinar 1: Treasuries – May 21
Webinar 2: Agencies – June 17
Webinar 3: Municipals – June 24
Webinar 4: Money Markets
Part 1: Banker’s Acceptances, Commercial Paper – July 8
Part 2: Certificates of Deposit (CDs), Deposit Placement Services and Collateralized Bank Deposits – July 22
Part 3: Repos, Reverse Purchase Agreements and Securities Lending – August 5
Webinar 5: Corporates – August 19
Webinar 6: Asset-Backed Securities, Mortgage-Backed Securities, Collateralized Mortgage Obligations – September 2
Webinar 7: Mutual Funds, Money Market Mutual Funds and Local Government Pooled Investments – September 16
LAND-SECURED FINANCING CURRENT TOPICS AND PRACTICES
MAY 1, 2015 | 8AM-5PM | CONCORD, CA
Community facilities districts (CFDs) and assessment districts
(ADs) continue to provide public agencies resources to finance
public facilities and services. They have filled the void in
public financing for these purposes left by Proposition 13. This
intermediate course provides public officials with an
understanding of these financial structures and an update on
current topics and practices related to their use and
Assembly Revenue and Taxation Committee – Monday, April 13
Assembly Bill 279 (Dodd) Business License Information –
This bill extend to counties, if they so choose, the current authority given to cities to exchange tax collection information with the State Franchise Tax Board on business license holders. AB 279 offers a logical and helpful tool given the close financial ties between counties and the State. AB 279 permits county tax collectors and their state counterpart to closely coordinate and share information, promoting timely, efficient and accurate tax collection. AB 279 will support tax collection efforts and maximize tax collection dollars from those taxpayers and businesses that owe either the State or a county money.
Assembly Bill 464 (Mullin) – Transaction and Use Tax Cap – SUPPORT
AB 464 would increase the maximum combined transactions and use tax rate within a county from 2 percent to 3 percent, upon voter approval. CSAC has consistently supported the ability of local communities to choose to tax themselves for purposes of investment in their communities. This increase may offer a helpful financing option for infrastructure improvements, parks, public safety service and other local programs.
Assembly Local Government Committee – Wednesday, April 15
AB 1220 (Harper) Residential short-term lease agreements – OPPOSE
This bill would prohibit counties and cities from levying transient occupancy taxes on short-term vacation rentals, defined as residential units leased by private party for compensation for a term of less than 90 days. Often referred to as an “AirBnB” bill, AB 1220 seeks to establish a distinction between private homes, apartments and condominiums leased for a short term by the owner for compensation from other more traditional hotel-style lodgings. While these physical accommodations may look different, in fact, the purpose of these accommodations and the impact on local services are very much the same. CSAC supports counties’ continued authority to assess and collect TOT on the rate paid by the consumer for all appropriate transient lodging.
Senate Governance and Finance Committee – Wednesday, April 15
SB 239 (Hertzberg) LAFCO Proceedings for Fire Service Contracts – PENDING
This measure establishes a new “hybrid” Local Agency Formation Commission (LAFCO) process to consider the extension, by contract or agreement, of fire protection services outside a public agency’s boundaries. The bill may create redundancies and confusion in the current LAFCO service review process in several areas. SB 239 would define extraterritorial fire service delivery as a “change in organization” and require extensive fiscal analysis by the LAFCO. In addition, the bill would require state agencies to seek LAFCO approval for changes in service. Finally, the measure could jeopardize pre-approved contracts between local agencies and recognized employee associations protected by the Meyers Millias Brown Act (MMBA). CSAC staff is continuing to review this measure to understand the full implications for local fire protection operations and service levels in counties.