Senate Standing Committee on Local Government

The Senate Committee on Local Government will come to order. Good morning, everyone. Our first committee, meeting and welcome. Thank you for joining us. The Senate well, the public in person, and we are holding our committee hearings in the Old Street Building. I ask all members of the committee be present in Room 2200 so we can establish our quorum and establish our quorum. I'd like, especially like to greet oh, she's not here. Okay. At the quorum. That's when we do the greeting.

Okay. A little housekeeping. File item number one, SB992 has been pulled at the request of the author. Of the remaining six items, four of them are on consent. File item 2SB1005. File item 3SB1080. File item 6SB935. File item seven, SJR11. Almost almost all of them. We don't have a quorum.

Oh, we do.

Oh, we do. Senator Charles. Oh, hey. Hi. Good morning. Good morning, senator. Okay. So we do have a quorum and we will now establish quorum.

[Roll call]

You have a quorum.

Okay. So what's our first Oh. You must be here.

What are you doing over there? Okay. Motion for the

The motion.

That calendar. Mhmm.

[Roll call]

They will consent will remain on call? Yes. Okay. Great. So we'll move on now to item number four. Both bills will be presented by, Senator Laird, starting with item four s b 922. Senator Lern, you may begin.

Thank you very much, Madam Chair and Members. Senate bill 922 upholds a local government's long standing ability to recover the cost of street maintenance and repair caused by public service operations such as waste hauling. Local governments are responsible for maintaining most local streets and roads. Heavy duty service vehicles, including those providing essential solid waste and recycling services, regularly use local streets and contribute significantly to pavement deterioration. For decades, and I repeat, for decades, it has been a standard practice to integrate the cost of repairing this damage into rates, fees, or franchise agreements associated with providing those utility services.

A recent court decision in Rogers versus the City of Redlands disrupted the long standing practice of recovering some road maintenance costs through agreements with you still utility service providers. This bill, SB 922 clarifies the relevant code section to state that recovering road maintenance costs associated with providing public works and services does not fall within existing prohibitions on imposing weight based fees for the privilege of using local streets and highways. Cities, labor groups, service providers like waste haulers are in joint support of this effort. A service providers benefit from the certainty that their fee contracts will be upheld and local governments will be able to maintain usable roads to prevent damage for expensive service equipment. There is opposition to the bill and the concern is is that local jurisdictions will impose additional construction or development fees.

This bill will not do that. It simply upholds the long standing practice of integrating road maintenance costs into utility service provider agreements. So just to be clear, this is not a vehicle miles tax nor does it open the door to VMPT anywhere in the bill. This is not a backdoor way for cities or counties to impose new fees or taxes. There was one letter where it said, this is an unchecked expansion of local authority.

That is just nonsense. This was done for 35 years, And a court decision last year, questioned it. This bill just fixes the court decision and goes back to where we were for 35 years. And I think it's really instructive that waste haulers, the primary the primary payers of this are in support of the bill. They want certainty along with cities and counties.

And if you look at the analysis, it talks about the fact that there's a difference between a fully loaded car at 4,000 pounds and a fully loaded utility truck at 60,000 pounds. And that does do damage to streets. And this allows the local governments to recover some money against that damage. It is directly related to that. With that, I would request an aye vote. And here to provide testimony is Ben Treville representing the League of Cities and, Lufi Karoof, a legal expert on this issue.

Good morning, Madam Chair. Good morning, committee. Ben Treville with the League of California Cities, proud to cosponsor SB 922 along with CSAC and our CRC. As the senator mentioned, at its core, SB 922 is about clarifying a long standing and common sense practice used by local governments across California. Local governments are responsible for the cost of maintaining most of the streets and roads in our communities.

Everyday essential public services like solid waste collection use heavy service vehicles while on local streets. These service activities leaves a significant deterioration of pavement conditions resulting in ongoing repair. For decades, cities and counties have worked collaboratively with service providers such as waste haulers to account for the street maintenance impacts of those vehicles through existing rates, fees, or franchise agreements. These agreements are familiar, familiar, predictable, and transparent for local governments and service providers. However, a recent court decision recently created uncertainty around these long standing practices.

As a result, dozens of cities and counties are facing litigation that challenges existing franchise agreements and service related fees putting millions in street maintenance funding at risk. The problem will only get worse as fleets electrify, s b one funds go away, and, vehicles are getting heavier. S b 922 simply clarifies two things. First, restrictions on local road charges apply only to weight based charges imposed for the privilege of using streets and roads. And second, the fees associated with providing public services and public works can recover the street maintenance costs tied to delivering those services.

By by reaffirming reaffirming this authority, SB 922 for source clarity reduces unnecessary litigation, provides certainty for both local governments and service providers, and allows cities to provide the safe streets the public requires. Thank you.

Yes. You may step forward.

Thank you very much. Madam Chair, Members of the committee, my name is Lutfi Kharrouf. I am the head of the taxes, fees, and assessments practice at Best Best and Krieger. And in that capacity, I advise public agencies all across the states all across the state on setting constitutional rates for public services. I'm also defending a number of cities that are involved in litigation that turns specifically on the question of whether they're authorized to recover the proportional share of the cost of local road impacts.

The idea that the cost for providing these services, can include the cost for road repairs is nothing new. And in fact, there's established case law precedent a precedent that supports that. In Howard Jarvis Taxpayers Association for versus the city of Roseville, which was a proposition 218 case, the court of appeal explicitly said that Roseville may charge its water, sewer, and refuse utilities for the street, alley, and right of way costs attributed to the utilities. And Roseville may transfer these revenues to its general fund to pay for such costs. So, again, proposition 218 proposition 26, the constitutional guardrails on setting fees for public services have already been recognized to allow for recovery of local road repairs.

And this is an important issue because 54 out of 58 counties in California suffer from road conditions and are classified as at risk or poor due in no small part to declining revenues. So as Senator Laird has mentioned, local agencies have for a long time recovered these costs as a part of their cost for public services. This is nothing new, and the Redlands decision cast doubt and uncertainty on the ability to recover the full cost of service for providing services. So what SB 92 is meant to do is to ensure that local funding is protected within constitutional limits. What it's not meant to do, as senator Laird mentioned, is to expand any fee authority.

It's not intended to touch development impact fees, VMT, or so forth. And there's nothing in the statute that is intended to sidestep the requirements under Prop 26 or prop 218. In fact, there is no statute that would be able to do that. The Supreme Court has recognized the possibility of that. So, you know, what s b 922 does is is it simply restores clarity that local agencies may continue to proportionally recover the cost of public services.

Without those clarity without that clarity, those costs do not disappear, but road conditions will continue to degrade with less revenue to address them. Thank you.

All those who want to speak in support,

just name and Sure. Patrick Foy representing

the city of Oxnard, one of the many cities defending themselves in this issue, and the city of Redondo Beach in support. Thank you.

Thank you very much.

Jack Wurston from Nossaman on behalf of the County Of Monterey in support.

Thank you.

Good morning. Moira Topp on behalf of San Diego Mayor Todd Gloria in support.

Thank you. Good morning. Kiara Ross on behalf of the cities of Glendale, Rancho Cucamonga, Thousand Oaks, and the town of Truckee all in support. Thank you.

Good morning. Karen Lang on behalf of the city and county of San Francisco in support.

Thank you.

Good morning. Cassandra Marr on behalf of the town of Apple Valley in support.

Good morning. Dylan Elliott on behalf of the county of Madera in support. Thank you.

Good morning, madam chair. Luis Sanchez on behalf of the City of San Bernardino in support. Thank you.

Good morning, Madam Chair. Casey Elliott on behalf of the cities of Paso Robles, Fullerton, Upland, Lafayette, Orinda, and the Tri Valley Cities in support.

Thank you.

Good morning, madam chair. Jackie on behalf of Workology in support.

Good morning. Marcus Detwiler with the California Special Districts Association in support. Thank you.

Good morning. Jason Hanel, ASPE California in support.

Thank you.

Good morning. Chris Scroggen with Capital FC on behalf of Republic Services in support.

Good morning. Emma Jungwirth on behalf of the California State Association of Counties, proud cosponsor of the bill in support. Thank you. Thank you.

Good morning. John Kennedy with the Rural County Representatives of California as a proud cosponsor and also Mean Towing on behalf of Californians Against Waste. Thank you.

Thank you. Special shout out to My Town, Madera. Okay. Now we have witnesses opposed.

Chairwoman Durazo, members, good morning. Kirk Kimmelshu here on behalf of the California Building Industry Association, actually in an opposed and less amended position. As senator Laird mentioned, we very much appreciate his intent with the proposal and his leadership on housing issues, but we are concerned with the provisions and the amendments to current law under SB 922 and how they would potentially impact local construction impact fees as the senator mentioned. The guardrails that exist in current law from our perspective have long protected our members from local and local construction projects from new or expanded fees being imposed. And so from our perspective, the changes to the vehicle code under the proposal could inadvertently open the door for local jurisdictions to impose additional fees, which we are concerned about.

And I think we've had a lot of conversations with with everyone on the dias and the senator included about our efforts to increase housing production in the state. So that's really where we're coming from. We've shared a number of rounds of amendments with the senator, his team, and the sponsors. We really appreciate those conversations. And, frankly, I think we're getting quite close to resolving our concerns and and hope that we'll be able to do that prior to the bill leaving the Senate.

But for those reasons, until we are able to to hopefully land on some language, we must request fully request a respectfully request a no vote. Thank you.

Thank you. Anyone else in another witness in opposition? None? Okay.

Madam Chair, Members, Andrew Antwih here today on behalf of the City of Beverly Hills, begging the committee's indulgence. I know I'm out of, cycle here, but in support.

Okay. You're forgiven. Okay. Anyone want to speak in opposition, not as a principal witness? Seeing none. Okay. Come to the dias and questions or comments. Senator Sayardo?

Couple questions. Sure. So, yeah. I I get that they used to put these for like the waste haulers in their franchise agreements. And and now this law says they can't, but your law is saying, yes, they they can continue to do that.

Because that does give the consumer the, certainty part of it. My concern is that because I can think of waste haulers, maybe Edison, as far as large vehicles. Who else is would be subject to this? Subjected to being able because I because I if there's a weight limit, an upper weight limit, is there a gross vehicle weight when this kicks in? Because I don't want the the Uber Eats people that be subjected to this.

Well, if the Uber Eats people were driving a dump truck with 60,000 pounds in it, they might be Well, that's what I was asking you. Is there But they wouldn't be otherwise. Okay.

So there's there's a gross vehicle limit that this kicks in at. Correct?

Basically, yes.

Okay.

And I think the important thing to reiterate is that this just operated for 35 years

I understand.

Exactly as you are saying.

Yes.

It it get with with that distinction. And we are just trying to put it back. I think Right. For once, I am sorry that Senator Strickland's not on this committee because I heard Redondo Beach support it. And I look forward to telling him about that on the floor.

He's in Huntington Beach.

Yeah. Well, it's one of those beach.

It's one of those beachy cities down there. Yeah. It's a nice it's a nice city too.

Yeah. Yeah.

Yes. No. I just wanna make sure that

it Which is in support.

That it is applied to the people that would normally being applied to in the past.

Yes. I think Not taking on new use. To get to your question, I think it's a concern that is not related to what exactly is here. And and I could face that dilemma that we all face in taking an amendment Right. That the amendment says that this bill doesn't do what we know it doesn't do.

And I don't particularly wanna clutter up the code by taking an amendment that says this doesn't do specifically what we all know it doesn't do and it didn't do in those 35 years. But we will we are committed to continuing to work and try to get somewhere.

Yeah. As long as the globe as long as it's aimed at the the people that used to have to make these. I I remember There

a new couple cement truck driving

there's not

Not a new aim in this. There is not a new aim. It is

This. Sorry. Alright.

just Okay.

Well, then I'm probably okay with it.

Okay. Any more comments? Any more comments or questions? You may wrap up.

Just I appreciate the the exchange and the debate. I appreciate all the people that came to support. I think this just rectifies something that was in place for 35 years and I respectfully ask for an iPhone.

Thank you. Okay. Do we establish the court first? Okay.

We have court. We just need a motion.

Okay. We just need a motion. Move the bill. Thank you, Senator Adegin. And we'll call the vote.

[Roll call]

Okay. The bill is out. All done. Before we go on to your next bill, I just want to welcome everybody back who was here before. And I want to greet and welcome majority leader Ashby and senator Cervantes who are joining the committee for the first time this year. Thank you. Thank you. Welcome. Okay. Let's go on to s b 1078. Senator Laird.

Thank you very much, Madam Chair and Members. Senate Bill 1078 would allow the Santa Cruz County voters to decide if the combined local tax limit should be raised above 2% to fund essential services in in their community. This is something that the legislature has done on multiple occasions. I have authored similar bills for the self help transit tax in San Luis Obispo for the Santa Cruz Metropolitan Transit District. It- It has just happened up and down.

Given the federal cuts, the the county wishes to go to the voters to decide to backfill some of the cuts, primarily medical. This was done a few months ago in Santa Clara County, and it passed. And this would just give Santa Cruz County the opportunity to do that. This itself is not a tax. This just enables a vote of the people and the people can decide whether or not that they wish to levy it.

With me today in support is the Santa Cruz County Executive Officer Nicole Coburn. And at the appropriate time, I would respectfully ask for an aye vote.

Yes. Go ahead.

So thank you, madam chair and members. I'm Nicole Coburn, the County Executive Officer of the County Of Santa Cruz. I am here today to ask for your aye vote on Senate Bill 1078 Senator Laird's measure that would allow our Board of Supervisors to approve placing a measure before the voters this November to increase our sales tax and use rate by a half a percent. We, like other communities across the straight, are struggling to maintain access to critical healthcare, hospital and food assistance services in light of the significant reductions by the Federal Government in HR1.

And we have heard loud and clear that the state will not be able to completely backfill these losses for counties, leaving our hospitals, clinics, and other supportive services at risk of severe cuts. The county of Santa Cruz is a safety net for those communities that are traditionally the most disproportionately impacted by budget reductions. I wanna note that 83,000 people in Santa Cruz County are enrolled in Medi Cal. That's 30% of our population.

Over 40% of births are due to people- are with people who are on Medi Cal. We have an additional 31,000 who receive CalFresh monthly, and that's over 20,000 households. SB 1078 offers the opportunity to continue to protect these communities who need the most assistance. As a result, we would like the opportunity to ask our voters to consider options to help maintain access to important safety net programs in our community. We currently have $25,000,000 in HR1

impacts that we do not have budget solutions for, and that's just our county, not our hospitals, our clinics, or any other community partners. We greatly appreciate senator Laird's leadership on this important measure and respectfully request your aye vote on SB 1078 on behalf of the County of Santa Cruz. Thank you very much.

Anyone else in support?

Good morning. Molly Mala on behalf of the Central California Alliance for Health in support. Thank you.

Thank you. Anyone else in support? Seeing none. Anyone in opposition? Seeing none. Come back to the dias. Yes. Senator Arregiun.

Thank you, Senator Laird, for this bill. So when would Santa Cruz County wanna go to the voters for this tax increase?

Oh, I'll let the CAO respond.

So we're contemplating this November. We our the deadline already passed for the June election. So depending on what happens over the summer, we may place a measure on the ballot in for November.

Just a suggestion. I I support your bill. I'm happy to move the bill to you at appropriate time. There are several proposals in the works. I represent Contra Costa County. They're asking for this authority. Los Angeles County is asking for this authority. Other jurisdictions in California are asking for this authority, particularly to do in November. So I just wanna call attention. There is a conversation in the assembly right now on doing one large bill.

And so we need to move this forward now to make sure that this, gets to their house. This can be part of those conversations. But if you have haven't been in touch with, the speaker and those engaged in that discussion, I just wanna call attention to that, make sure that this if this moves forward, it can be part of that larger effort so that it takes effect immediately. You have the authority to do this because we definitely wanna make sure that you have the ability to bring this for the voters. Once again, we're not imposing the tax.

We're just giving the voters the authorization to- to- to consider this and to impose a tax if it gets the the votes necessary to pass. And just given the- the devastating cuts by this administration on health and human services, this is essential. So just- just a suggestion.

Madam Chair?

Hold on. Just one second. Okay. Yes. Go ahead.

If I can just comment. I know that there are discussions going on and they are not limited to the assembly. Yes. And I think that would be the best way to proceed. But as you said, we need to move every bill ahead until such point as there's an agreement on that.

And it helps that you're the Budget Chair.

Well, it helps and hurts some.

Right. I don't want that to become then a part of whether or not we--

Yes.

I- I'll support this as as we move forward. And there may be specific different specific circumstances. So let's keep focused on- on Santa Cruz. Senator Choi. Did you?

Thank you, Chair. I'm a little bit troubled by the fact that also is saying this is not a tax increase, but this clearly imposes district tax their ability to raise 0.5% by ordinance. When that allowance is given, most likely, as you heard, since they need that capacity or authority to charge more than 0.5% to the cap above and beyond the 2%, which is at state tax level cap. And you are insisting that's not a tax. It is not a tax, but you are authorizing the ability to tax that amount, half a percent above the cap.

And if this trend continues case by case by the county, if second or third or tenth or fifty eighth counties come forward, do we have ability to say no when we approve this one? This is a fairness issue. And in fact, we are removing the cap from 2% to 2.5%.

Is that a a a question, sir?

Yeah. That is my concern. If you have any comments to that.

That's fine.

We are in agreement. We're just in disagreement in the interpretation about it because this is not a tax, but this enables the people to choose to do it. And and that's what we're trying to do here is give the people the right to do this.

Yeah. As I said, this is a word game. In fact, this is not directly increasing the tax. But, however, this bill is authorizing to tax more, and they are here because of the need to raise the tax and then, obviously, it's likely to pass and above the cap level that we have. So I am very troubled by that as a conservative fiscal management is all the responsibility of the local government. Thank you.

Thank you. Any other comments or questions? I- I- I support this very much. I think the voters at the local level deserve the opportunity to hear the case that's going to be made to them. And I think you, you know, you've made some very compelling, presented some very compelling reasons as to why you would take that case to the public to the voters.

The cuts in Medi Cal, people being taken off of Medi Cal, the HR1 cuts, you you you made a whole you started to make the case for it. I think it's up to the local voters to decide. Is this worthy of us with all the economy as it is? They're gonna balance it out. They're gonna make the decision as to whether or not they wanna move forward.

Is it urgent enough? Is it enough of a serious case? So, Senator Laird, I fully support your- your bill. Okay. You may close.

Thank you very much. I really appreciate the the discussion. And I would just add one thing, which is, the account executive articulately laid out the food and medical care with regard to Medi Cal. But in addition and I know particularly Senator Durazzo is tired of me mentioning it, but the Watsonville hospital that we saved four years ago now due to the federal cuts is back to where it was four years ago. And- And we run the risk actually of them are going under before we can even go to the voters for this.

And- And they have indicated that hospital support is also a thing that could come from this, and we need it dramatically in the county. So I really appreciate the debate. I respectfully ask for an aye vote.

Thank you. Okay. Alright. Senator Arreguin moves the bill.

The motion is do passed to the Committee on Revenue and Taxation. [roll call].

Five two. Five two? Five two, the vote is- the bill is out. We're gonna go back to the consent calendar. Like a motion. We Okay. We have a motion by Sen- Did we have a motion by written? We had a motion already. Okay.

Thank you. The consent calendar consists of file item number two, SB 1005. File item three, SB 1080. File item six, SB 935. File item seven, SGR11. Senator Arreguin?

Aye.

Arreguin, aye. Ashby?

Aye.

Aye.

Cervantes, aye.

Ashby, aye. Cervantes?

Seven zero.

Okay. The Bill is out 7-0. Mhmm. Okay. Is that it? Yes, Consent? Done. Okay. Thank you everyone who participated in the public testimony today. Your comments and suggestions are very important to us. Thank you. We've now concluded the agenda with the Senate Committee on Local Government. Meeting adjourned. Thank you.