In evaluating local government roles, the Commission identified
 two key problems. First, the organization and provision of local government services is far too complex. On the local level, there are a multitude of governmental agencies providing services and regulatory activities. As is the case with state-local responsibilities, the confusing array of local government entities makes it difficult for citizens to understand which agency is responsible for providing a particular service and whom they should hold accountable. Additionally, with so many local entities involved in providing government services, redundancies often exist. A service may be provided on an areawide basis by one agency, while a similar service is also provided locally within each community. For example, in many areas of the state, both municipal water agencies and independent water districts exist side-by-side servicing the same urban area with an arbitrary boundary separating them. Other examples of overlap include fire, library, and park and recreation services. Such overlap often is inefficient and results in greater costs to taxpayers.

California has 7,000 local government agencies, including counties, cities, special districts, and school districts. California voters elect about 15,000 people to oversee these governmental agencies. Many of these entities have overlapping--if not conflicting--duties and responsibilities. The fabric that makes up the quilt of California's local government and education system includes:

• 470 cities that are general purpose governments providing municipal services.
   
• 58 counties providing municipal services to unincorporated areas, countywide services, and selected areawide services primarily as agents of the state.
   
• 5,000 special districts. These entities provide specific services within a county or across several counties. There are about 55 types of activities performed by special districts ranging from operating airports to managing zoos. Approximately 2,200 are "independent" districts. That is, they have elected or appointed boards and are independent of the cities or counties in which they provide services.
   
• 1,062 school districts and county offices of education.
   
• 70 community college districts.

The Commission concluded that the current structure of local government is confusing and fragmented. The problem is more than one of numbers. Within most counties, whether urban or rural, observers will find a multitude of agencies with separate boards operating programs and providing services. It is hard to accept that services provided through this structure are cost-effective. Although many opportunities exist for collaboration among local governments, long-established parochial interests or institutional rigidity prevent such activity. Additionally, it is often difficult for citizens to gather or make sense of information about the cost of local services. It is difficult, if not impossible to find understandable fiscal information about the cost of services from local agencies with responsibilities that overlap. Clarity in the local budgeting and taxation process could improve accountability and better connect citizens and their local governments. These problems exist within the context of an increasing state population and the limited availability of resources to meet people's needs. State and local governments must develop more efficient and effective ways of meeting public needs using existing resources.

The second problem identified by the Commission is that the power of local governments and schools to make choices about the level and quality of local services has eroded over the last 20 years. California has lost its long tradition of home rule. The home rule tradition involves the ability of a community to adopt a home rule charter. There are two aspects to this authority. The first is the power to exercise all authority with respect to local matters, without being granted such authority by state law. Thus local entities with home rule authority start out with broad powers over local matters, which are then subject to self-imposed limits as provided in their charters. The second element of home rule authority concerns the resolution of conflicts between state and local laws. Charter cities, which have home rule authority, may enact laws that are inconsistent with state law with respect to "municipal affairs." In other words, subject to any restrictions local citizens placed in their charter, these entities and their citizens have plenary authority over matters of local concern.
 

Currently, there is no clear dividing line for activities that constitute a "municipal affair" or activities that are of statewide concern. The courts have been the arbiters of disputes between the exercise of local and state power. However, they have no standard or constitutional principle to help resolve such disputes but have been left to drift in a sea of "ad hoc intuition informed by pragmatic common sense." ³²

Clearly, there is a need to reevaluate our local governments. The Commission examined several models for local government organization. One model provided that the municipal services function of counties be eliminated and that counties act only as agents of the state. Under this plan, all local services would be delivered by cities. A second model called for the elimination of counties as agents of the state and required the state to determine how locally-administered state programs would be handled. The Commission concluded that the diversity of California's regions makes it impossible for any uniform approach to local governance to be responsive to the needs of every area. The solutions that work in a rural, sparsely populated area may not be effective in an urban, more densely populated area. Local areas are best suited to determine the most efficient and effective way to serve local needs. Consequently, the Commission believes that the best solution is a flexible approach that allows communities to adapt government structures to their own needs and desired level of public services.

In conjunction with realigning the state-local relationship and providing local entities with more responsibilities, the entities within each county or multi-county area should reevaluate their organization and functions to ensure that local services are being provided in an effective and efficient manner. In conducting this evaluation, consideration should be given to which services are areawide in nature and which are more local (community-based). Wherever possible, duplication of responsibilities among local entities, including cities, counties, special districts, and schools, should be eliminated. To the extent that responsibilities are to be shared, each entity's responsibilities should be clearly known. This will also provide an opportunity to increase collaboration between governmental and non-governmental organizations involved in providing public services. Finally, once the citizens of a community evaluate, reconnect, and reorganize their governments, their ability to control local affairs should be strengthened.
 
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As mentioned previously, over the past two decades, local control over service delivery and financing has eroded. The weakening of the local revenue base has transferred program regulatory and fiscal responsibilities from local communities to the state. This is particularly true for counties. A key goal of the Commission is to move authority for program administration and service delivery back to the local level. The Commission believes that local governments are best suited to respond to local needs and to organize service delivery in an efficient manner. In conjunction with being given more responsibility, local governments must reevaluate the ways in which they provide such services and ensure clarity as to which local entity is accountable for providing a service.

Although improving service delivery and clarifying accountability are important objectives, constitutional barriers and the lack of tangible incentives have discouraged, if not prevented, local governments from initiating reform efforts. The state constitution imposes a number of barriers to reform, including: 1) local governments have no control over the allocation of property taxes raised in their communities--the constitution requires the state to allocate these revenue; and, 2) the constitution makes it difficult for local entities to work collaboratively by prohibiting the pooling of resources to address problems that overlap jurisdictions.

Clearly, a constitutionally mandated reform effort is needed, and the barriers to reform must be removed. Meaningful incentives must be provided to encourage the adoption of bold and innovative approaches to addressing community problems and improving government efficiency, accountability, and service delivery. Change must be initiated and evaluated at all levels of government, and proposals for local change must be submitted to local voters. As noted earlier, since the diversity of California's regions makes it difficult for a uniform approach to local governance to be responsive to each area's needs, the flexible approach proposed by the Commission allows local governments to adapt their structure to the needs of their communities.

The Commission notes that this recommendation does not require local areas to change their current governance structure. The recommendation does require citizens within each county to undertake the evaluation. If it is determined, upon completion of the evaluation, that existing government structures and entities are meeting current needs, a Community Charter could be established that leaves those structures unchanged. The steps involved in this recommendation are as follows:
 
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Each county (or multi-county area) would establish an appointed body known as the Citizens Charter Commission on Local Government Efficiency and Restructuring (CCC). The procedures for establishing the CCC would be slightly different for single-county and multi-county CCCs. Appointments would be made by elected officials from the county(ies), cities, school districts, and special districts. Further, each "type" of local government would be represented on the CCC, and each CCC would be required to reflect the diversity present within the community. The standard statutory selection process would be used for the appointments. The work of each CCC for preparing the Government Services Plan and the proposed Community Charter would be financed equally by the state and local entities. Each Charter Commission would allocate a proportionate share of the local financial obligation among the local entities.

Single-County Commission:  A single-county CCC would be comprised of at least 15 members, consisting of both non-government participants (majority) and government officials. Once formed, each CCC could appoint any number of additional members, but the majority of members would have to remain non-government officials. For single-county commissions, appointment to the 15-member CCC would be apportioned as follows:

Appointing
Auhority

Non-
Govern-
ment
Officials

Govern-
ment
Officials

Total

County Board of
Supervisors

3

2

5

City Councils

3

3

6

School Boards

1

1

2

Special District Boards

1

1

2

8

7

15

Multi-County Commission:  With the passage of concurring resolutions by each county, a multi-county CCC may be formed to develop an areawide Government Services Plan and a Community Charter to be voted on by the people. For multi-county commissions, apportionment will be twice the numbers indicated in the above chart.
 
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Each CCC would examine the current structure of local governments and the needs of all communities within the area. The CCC would be granted the constitutional power to organize, reorganize, and change the existing boundaries of any local government agency, with the exception of an existing charter city, since it derives power from the constitution. Following the completion of their evaluation, the Charter Commission must develop and adopt a Local Government Services Plan for the delivery and financing of local services. The Local Government Services Plan would include the following:

• Local government should be organized to be more efficient and effective:  A goal of this process is to make local government more efficient and to better connect the residents of a particular area with the government that provides services. The implementation of the plan should result in a reduction in the number of governmental agencies and in the cost of providing local services. Additionally, these changes also should result in greater accountability to the public by involving the public in the design of their local government. The plan should stress collaboration among governmental and non-governmental agencies.
  
  The plan may include sub-county components. A sub-county area, which includes one or more local agencies, may develop and place before the voters a charter that provides for the structure and powers of that agency or agencies. A sub-county charter may not conflict with the countywide charter.
   
• Allocating local service and regulatory responsibility:
   The plan must designate which local agency is responsible for the delivery of services, the governing structure responsible for the services, and the financing of the services. The plan must also designate which entities are responsible for comprehensive planning, as well as functional planning, and the exercise of land use controls. The entities assigned the function of regulating land use will be responsible for simplifying and streamlining the existing land use regulatory process.
  
  As part of the allocation of service responsibilities, a process for developing, adopting, and updating a comprehensive multi-year capital outlay plan will be included. The Local Government Services Plan would identify all of the agencies responsible for capital facility planning, financing, and operation. The objective of this requirement is to improve the coordination and efficiency of capital facility programming in order to meet the needs of growing communities. General obligation bonds used to finance any project that is consistent with the plan will require a majority vote of the voters.
   
• Organizing state-local programs and programs administered on behalf of the state:  The charter would give local entities the ability to provide for the organization and administration of programs shared with the state (such as mental health), and programs performed as agents of the state (such as indigent health care). The objective of this authority is to provide organizational flexibility for the local government to improve efficiency and effectiveness in the delivery of public services.

Following the adoption of the State-Local Realignment Plan, each CCC would write a Home Rule Community Charter (Community Charter) to implement the Government Services Plan taking into account the need to provide for the organization of locally-administered state services. The Community Charter would be placed on the ballot at the next available election. If the voters reject the charter, a revised charter would be developed by the CCC, and submitted to the voters at the next election. The citizens of a county could place an initiative measure on the ballot creating a Community Charter. This is the same authority that citizens currently possess to place a city charter on the ballot by initiative.

An essential element of this process will be the availability of information about local finances. In order to guarantee that all relevant information is available to members of the Charter Commission, as well as the general public, the Commission recommends that the constitution require that all local government agencies disclose their revenue and expenditures in a uniform manner as required by statute.

The Commission took particular note of the position that charter cities have in the construct of the state's local government system. Since 1896, the constitution has included the power of communities to adopt charters which provide for the rules governing local activities. As discussed in the recommendations regarding the home rule power, the Commission concluded that there was a need to strengthen this provision as well as to recognize the special status of the 89 charter cities. The Commission determined that a home rule community charter could not interfere with or abrogate the authority of a charter city.

Additionally, a state technical advisory group should be established by statute to provide technical assistance and to monitor the progress of the local charter commissions. This activity would also be useful in providing a link between the local charter commissions and the state-local realignment process. The technical advisory group would go out of existence following action by the local electorate.
 
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One of the objectives of the Commission is to enhance local control and ensure that local taxes are maintained and protected for providing local services. Additionally, the Commission examined the current method of levying the local sales tax and found that it had an adverse effect on development patterns. Often described as the "fiscalization of land use," local zoning decisions are made based on the amount of sales tax that will be generated, rather than consistency with overall growth and development polices of the community. In order to accomplish these objectives--protect local taxes for local purposes and reduce the fiscal pressure on land use decisions--the Commission makes the recommendations described below:

The non-school share of the property tax would be allocated by the charter. The state would be prohibited from redistributing this portion of the tax. The distribution of the local government share of the property tax would no longer be determined by state law, it would be determined by the local Community Charter.


The general purpose locally levied 1% sales tax could be allocated by the Community Charter. The area covered by the sales tax would be determined in the charter. For example, a countywide charter may have sub-county components with the sales tax allocated to local governments within their respective areas. The objective of this recommendation is to reduce the fiscal influence of land use decisions. Currently there is extensive competition among cities for the location of retail outlets. Since the sales tax is levied on transactions that are not sensitive to the political boundaries of a city, it would make sense to allow the distribution of the sales tax to be based on a larger area covering more economic activity.


At one time automobiles were subject to property tax. When the state repealed the tax it was repealing a local revenue. An "in-lieu" fee was established in the place of the property tax. About $3 billion goes to local government on a per capita basis. The allocation of these resources could also be part of the home rule charter process.


Proposition 13 attempted to distinguish between special taxes--those taxes levied on specific activities and other taxes. After 18 years of initiative measures and endless court battles, the distinctions between "special" and other kinds of taxes remains muddled. The Commission concluded that voters should play an active role in issues dealing with local taxation. In order to simplify the process, the Commission chose to require that local taxes--either special or general--be subject to a majority vote of the governing body proposing the tax and the voters unless the home rule charter contained a higher threshold. This provision will allow the charter development process to determine not only the organization of services but also the vote requirements in excess of a majority vote. The Commission concluded that approval of local taxes by a majority the voters should be the rule unless the Community Charter provides for a higher vote requirement. The restrictions on the property tax contained in Proposition 13 would remain.

Those specific local taxes could be included in the charter and the voters could adopt them as part of the adoption of the Community Charter. Some local taxes could be countywide, while others could be sub-county or community-based. The voters will have the opportunity to connect the governmental agency providing the service with the taxes levied to provide those services.
  
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The need for local control was reflected in the provisions of the 1879 constitution which granted certain home rule authority to cities and to a limited extent to counties. Under Article XI and subsequent amendments, cities were authorized to enact local regulations that did not conflict with the general laws of the state and to engage in utility activities to provide services to their people. The legislature was prohibited from levying a state tax for a local purpose. Charter cities were granted protection from legislative interference in municipal affairs.

The Commission's goal in strengthening home rule authority is to eliminate the confusion over matters in which charter cities and state interests might conflict. By strengthening home rule and more clearly defining its parameters, such conflicts should be minimized. Moreover, by extending home rule authority to agencies participating in a Home Rule Community Charter, the Commission is offering a meaningful incentive.
 

The Commission proposes an approach in which charter entities will prevail over a state law unless one of the following conditions exists:

• The local action has significant extraterritorial effects. The action of the local agency would affect the health, operation, or behavior of people, businesses, or governments outside the boundaries of the area covered by the charter or the action's primary purpose is to regulate activities outside the charter's boundary.
   
• The need for statewide uniformity overwhelms local differences. In this case the policy interest in statewide uniformity outweighs a predisposition toward local control. For example the lack of uniformity might present substantial obstacles to travel, to the ordinary conduct of business in the state, or to the advancement of an important state policy that requires such uniformity. General laws relating to the state's health environmental, transportation social service and judicial systems that are matters of statewide concern and are not the purview of a local charter except to the extent that the state gave the charter the authority to act.

One of the Commission's objectives is to provide additional incentives for local agencies to participate in the Community Charter. The ability to adopt local programs without state interference is one of those incentives. The purpose of the charter is to provide for a new governance document for defining the organization and powers of local agencies. The Commission's recommendation strengthens local government authority over issues that have been viewed as "municipal affairs," and provides a constitutional standard for balancing the interests of the state and local communities.

What is the Problem?

• Local government has become far too complex. There are 7,000 units overseen by over 15,000 elected officials.

• The power to make decisions about local problems has been eroded over the last 20 years.

What Change is Needed?

• Local comunities should review their govern- mental structures and develop local government service plans.
   
• Local communities should be given more control over locally levied taxes including the property tax.

What Does the Commission Recommend?

33.

Evaluate local government structures and develop a community charter.

The local government agencies within each county (or multi-county area) would be required to initiate a process to examine their current governance structure, methods of service delivery, and assignment of responsibilities and powers. From this examination, each area would develop a Local Government Services Plan. Following the development of the Local Government Services Plan, each local area would develop a "Home Rule Community Charter" to implement the Local Government Services Plan. The charter would be placed before the voters in each area for approval.

Establishing the Citizens Charter Commission

34.

Protect locally levied taxes and provide for a majority vote on local taxes and bond measures.

The constitution should protect the property tax and other local taxes from state reallocation. Additionally, increases in local taxes, except the property tax, should be subject to a majority vote of the governing board and the voters. A higher popular vote requirement may be included in the home rule community charter.

Allocation of the property tax

Allocation of the local sales tax

Allocation of the vehicle license in-lieu fee

Local tax authority and the voter requirement

35.

Strengthening the home rule provision.

The Commission recommends that California's longstanding tradition of home rule be strengthened and provide a constitutional standard for balancing of state vs. local interest.