Meeting Date:

January 26, 2006





David A. Berger,




General Manager

Line Item No.:


Prepared By:


Cost Estimate:



General Counsel Approval:  N/A

Committee Recommendation:  N/A

CEQA Compliance:  N/A


SUMMARY:    The purpose of this agenda item is for the Board to consider taking a policy position regarding AB 737 (Exhibit 16-A), and communicating that position to members of the State Legislature who are currently considering this bill.  If enacted into law AB 737 would divert from MPWMD and other tax-supported special districts their allocation of future increased property tax revenues resulting from assessment of certain types of new electric facilities.  Any such increased property taxes instead would be allocated to a city or county as an incentive for their approving new electric facilities proposed to be built within their boundaries.  The California Special Districts Association (CSDA) has urged its member entities to oppose this bill for the reasons described in its suggested letter to legislators (Exhibit 16-B).  CSDA’s concerns about the potential impact of AB 737 were presented at the January 17, 2006 meeting of the Special Districts Association of Monterey County, and the Board’s representative to that association, Vice Chair Lehman asked that the item be placed on this agenda.  Because it was introduced but not acted on during last year’s legislative session, under its rules the full Assembly must consider AB 737 by the end of January.  


RECOMMENDATION:   It is recommended that the Board discuss and decide whether or not to take a policy position on AB 737 and, if so, to authorize the Chair to send a letter describing that position to Assembly Member Laird and other appropriate legislators. 


BACKGROUND:   Property tax is the District’s second largest revenue source, at $1.144 million, or about 25% of total annual income from all sources.  In the recession of the early 1990’s, and again for the past three fiscal years, the state of California has taken existing property tax revenues from special districts, as well as counties and cities, in order to reduce its financial aid obligation to schools.  In November 2004 California voters passed Prop. 1-A, which is an amendment to the state constitution that forbids the Legislature and governor (except under limited circumstances, and then only as loans) from enacting further reductions in property tax revenues received by cities, counties and special districts.  


IMPACT TO STAFF/RESOURCES:  The attached analysis of AB 737 prepared by Legislative Counsel makes no estimate of the potential amount of property tax revenue that could be shifted under this bill, if enacted.  Thus, it is not possible to project its fiscal effect on the District.  Legislative Counsel notes that the bill would create an additional cost mandate for which the state constitutionally is required to reimburse local governments.  The actual amount of any such reimbursement is subject to state determination and annual appropriation, and this reimbursement process has proven to be less than satisfactory in the past.           



16-A     AB 737 Text, History and Status (as of 1/18/06)

16-B    CSDA Suggested Letter to Legislators