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Home > News > News Articles > 2019 > March > AB 818 Restores Fiscal Viability for Future City Incorporations
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AB 818 Restores Fiscal Viability for Future City Incorporations

Cities Encouraged to Send Support Letter

March 11, 2019
City residents of California’s 482 cities experience the benefits of enhanced municipal services, local input, accountability and opportunity to improve local quality of life on a daily basis.
However, unless a law can be fixed, many other California residents living in unincorporated areas will never have the chance to experience the advantages that local self-government and cityhood can bring. AB 818 (Cooley) seeks to change that, by restoring the fiscal viability for future city incorporations and providing a fix to a budget trailer bill that swept away a key financing mechanism eight years ago.
Since statehood, as California’s population has grown, there has been a corresponding increase in the number of cities. Beginning with eight cities in 1850, succeeding generations of new residents have continued to form cities. The urge for city formation has its roots in American democracy and the desire for the benefits of self-government. 
With the state’s population over 39 million people today, California has 482 cities serving as centers of commerce and culture, each shaped by the varied priorities and decisions of its residents.
For the last eight years, however, no new cities have formed in California. A key barrier was SB 89 (2011), a budget trailer bill rushed through the Legislature during the state budget crisis, that removed a critical funding mechanism supporting incorporations and made future city incorporations unviable.   
AB 818 would provide future incorporations with a financing solution that was developed by the Legislature in 2017, when addressing the financial harm caused by SB 89 (2011) to four cities that had incorporated prior to 2011. The solution is based upon a statutory formula (based on the 2004 VLF-property tax swap) that would provide new cities with shares of property tax to offset the amount of vehicle license fee revenue they otherwise would have received. In future years, the amount will be adjusted according to the same rules applied in the VLF-Property Tax swap to other cities. In short, these cities will be treated equally with all other cities under the swap.
If the bill passes, local incorporation proponents still have to overcome many hurdles, including compliance with state Local Agency Formation Commission policies, negotiations with counties, and ultimately a public vote. Still, by restoring resources to support incorporation efforts, AB 818 offers residents in other areas of the state the opportunity to pursue potential city incorporation and the enhanced democratic engagement and community empowerment that comes with self-government.
Next Steps
AB 818 will next be heard in the Assembly Committee on Local Government. The League submitted a letter of support on this bill. While this measure has no direct impact on existing cities, letters from existing cities supporting the chance for their fellow residents in unincorporated areas to also pursue the benefits of cityhood would be appreciated by the author. Links to the League’s support letter and a sample city letter can be found at by plugging AB 818 into the search function.

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