Roughly 100 leaders from the League’s divisions, departments, policy committees, diversity caucuses and board of directors met Nov. 13-14, 2014, in Sacramento to set strategic direction for the organization. The group reviewed the League’s progress toward accomplishing its strategic goals over the past year and participated in an interactive workshop to develop goals for 2015. This senior leadership meeting of city officials from throughout the state used a dynamic, inclusive goal-setting process that built on the success of prior years and charted some new directions for 2015 as well.

Progress on 2014 Goals

The initial part of the meeting involved an assessment of progress toward accomplishing our 2014 goals (listed below). For more details on related efforts, see the article “2014 Legislative Year in Review” in this issue.

1. Provide New Options for Infrastructure Investment and Economic Development. Advocate for new tools, authority and funding to enable increased investment in state and local infrastructure and economic development to support expanded job growth and economic opportunity for all Californians.

• New tax increment authority was granted through League-supported infrastructure finance district law amendments in SB 628 (Beall), and some redevelopment dissolution clarification bills were signed into law;New infrastructure and affordable housing funding was provided in the form of a significant allocation of cap-and-trade funding ($832 million) and the state water bond, Proposition 1, that voters approved in the November 2014 election; and
• League-supported stormwater and other water supply recommendations were included in the final version of Prop. 1.

2. Expand Reform of Pension and Other Post-Employment Benefits (OPEB) Policies to Better Contain Long-Term Costs. Build on recent pension reforms and urge the adoption of additional measures to contain and manage the long-term growth of pension and OPEB costs, ensure the sustainability of these employee benefits, and protect the capacity of cities to adequately fund vital public safety and other community services.

• The League has worked closely with the California Public Employees’ Retirement System (CalPERS) as it implements the 2013 Public Employees’ Pension Reform Act (PEPRA) and revises its actuarial and investment earnings assumptions, all of which can have dramatic impact on cities’ retirement costs. Concerned about compliance with PEPRA, the League joined the governor in opposing a CalPERS proposal to include “temporary pay” and a list of 99 categories of special pay as “pensionable compensation” under PEPRA. This CalPERS action received criticism from the media and is currently pending in the state Department of Finance and then the Office of Administrative Law for further review.
• The City Managers’ Department launched a survey of cities’ OPEB liabilities — funded and unfunded — to help inform future activities of the League and cities. The League also began conducting stakeholder discussions with other local agencies, pension reform advocates and representatives of local employee unions to discuss the fiscal squeeze many local agencies will face over the next decade — as increasing pension and benefit costs will likely outstrip revenue growth — and identify solutions, including possible proposals for the 2016 ballot.

3. Build Effective Partnerships to Help Respond to Growing Community Needs. Build effective partnerships with state and local officials and other organizations to promote local authority and funding sufficient to meet growing community needs.

• To strengthen relations between state legislators and city officials, League regional public affairs managers helped convene dozens of meetings and receptions with legislators at the local level. Two new advocacy tools — a legislative candidate questionnaire and candidate forums hosted by the League’s regional divisions — were launched to help city officials become more informed about the views and priorities of legislative candidates. The California Civic Leadership Institute® continued its successful work in helping to build relationships and policy understanding with legislative candidates from local government backgrounds. Since its inception in 2005, 132 city and other local officials have graduated from the California Civic Leadership Institute®.

2015 Strategic Goals

The League leadership adopted four strategic goals for 2015, suggesting a new focus on the regulatory impacts of state government actions as well as new ventures in updating the local government revenue structure.

1. Expand Economic Development Tools and Reduce Regulation. Advocate for new tax-increment financing and other economic development tools, and support reductions in burdensome and overlapping state regulations, to support job creation and a stronger economy.

• There was strong support for maintaining our efforts to revive tax-increment financing and other economic development tools with equal focus on reducing burdensome and often overlapping regulations that frustrate both local governments and the private sector.

2. Implement Additional Pension, Other Post-Employment Benefits (OPEB) and Related Reforms to Help Reduce Unfunded Liabilities and Insolvency Risks. Support responsible implementation of recent pension reforms by CalPERS, and urge the adoption of additional pension, OPEB and related reforms by the Legislature and cities to better manage the long-term growth of unfunded pension and OPEB liabilities and reduce the risk of fiscal and service-level insolvency by cities.

• There was widespread support for keeping focused on ways in which both CalPERS and cities can work together to better manage pension costs as well as the related rate increases that create local fiscal stress and cuts in local services. This could include continued focus on the importance of multiyear financial planning for cities, publication of the soon-to-be released study of OPEB obligations of cities, and education about the opportunities to make contributions to reduce the unfunded pension and OPEB liabilities of cities.

3. Modernize the Financing of Critical Infrastructure Maintenance and Construction Programs. Provide state and local governments with new and innovative revenue options and resources to finance critical infrastructure maintenance and construction needs for our transportation (streets, roads, rail and transit), water supply, wastewater, stormwater and other critical infrastructure systems.

• The expected rapid growth over the next few years in both electric vehicles and vehicle fuel economy will require a new way to finance transportation infrastructure in California and the nation. Moreover, the growing federal and state regulatory requirements for treating drinking water, stormwater and wastewater demand more sensible approaches to funding compliance.

4. Update the Local Government Tax Structure to Respond to the “New Economy.” Consistent with the constitutional protections for property, sales and local taxes contained in Propositions 1A (2004) and 22 (2010), develop policy options, where feasible, for responding to the erosion of the major local government revenue sources from the expansion of e-commerce, increased consumption of retail services rather than goods, changing patterns of commerce and innovations in technology.

• The underlying changes in the economy that have led to increased sales of untaxed goods (for example, digital books) and services suggest some fundamental changes in the state laws governing local revenue sources are necessary. This goal signals that these undeniable trends will be the focus of League research and policy development over the next year in partnership with our members who rely on these revenues to fund critical local services.

Many thanks to all the city officials who provide their time as leaders in the League and who participated in our dynamic goal-setting process. Your commitment makes all the difference in the League’s success on behalf of its member cities. Let’s have a great 2015!

More About the “New Economy”

The new economy is the result of the transition from a manufacturing-based economy to a service-based economy. Examples of such services include online retailers, mass customization manufacturers (such as 3D printing), social media, sharing-economy companies like Lyft and Airbnb, and online media companies. For more information on how the new economy has affected sales tax receipts, read “The Fiscal Challenges Ahead for Cities,” November 2014, available at www.westerncity.com.

Photo credits: Jmiks/Shutterstock.com

This article appears in the January 2015 issue of Western City
Did you like what you read here? Subscribe to Western City