CC Resolution 10148RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAMPBELL
URGING THE CALIFORNIA LEGISLATURE TO REJECT THE GOVERNOR'S
PROPOSED SHIFT OF LOCAL VLF REVENUES AND TO HONOR THE 1998
COMMITMENT TO RESTORE THE VLF
WHEREAS, prior to 1935, cities and counties collected property taxes on motor
vehicles to fund essential local public health and safety services; and
WHEREAS, in 1935, the Legislature first enacted the Vehicle License Fee (VLF)
Act, replacing the property tax on vehicles with a 1.75 percent fee charged against the
value of the motor vehicle; and
WHEREAS, in 1948, the rate of the VLF was increased to 2 percent of the value of
the vehicle; and
WHEREAS, in 1986, the voters voted overwhelmingly to constitutionally dedicate
the proceeds of the VLF to fund city and county services; and
WHEREAS, in 1998, a period of strong economic growth, the Legislature approved
the use of a portion of the rapidly growing state General Fund to reduce the VLF payments
of vehicle owners. This amount, known as the "offset", grew in future years to a 67.5
percent offset against the amount owed. The amount paid to local governments in lieu of
the reduced VLF payment is known as the "VLF backfill"; and
WHEREAS, the 1998 legislation and subsequent enactments contain clear
provisions that when insufficient funds are available to be transferred from the General
Fund to fully fund the offsets and backfill amount that the VLF offset shall be reduced and
VLF payments increased; and
WHEREAS, VLF and backfill revenues constitute 15 to 25 percent of typical city and
county general purpose revenues. On average, more than 60 percent of city general fund
spending and more than half of county general funds go to front line law enforcement, fire,
emergency medical services, and health care programs; and
WHEREAS, revenues derived from the VLF and backfill are of critical importance in
funding vital local public health and safety services; and
WHEREAS, any failure by the Legislature to maintain the VLF backfill or restore the
VLF will cause widespread disruption in local government services essential to the well-
being of California citizens and their cities and counties; and
WHEREAS, Governor Davis' proposal to divert $4 billion in local VLF backfill
payments over the next 17 months fails to honor the 1998 commitment and is a direct
assault on local services that will be felt by every California resident; and
WHEREAS, shifting $4 billion in locally controlled revenues for local services is
neither equitable nor fair. No state program or department has been asked to shoulder
such a disproportionate share of the budget pain. These cuts come on top of the nearly $5
billion each year that is transferred from local services to fund state obligations.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Campbell
that if the state General Fund can no longer afford the expense of part or all of the VLF
"backfill" that the Legislature and Governor of California are hereby respectfully urged to
implement the provisions of current law providing for the reduction of the VLF offset in bad
economic times and to restore the VLF in an amount necessary to reduce the VLF backfill;
and
BE IT FURTHER RESOLVED that the City Council of the City of Campbell hereby
expresses its profound appreciation to the legislators who support such VLF restoration
legislation.
PASSED AND ADOPTED this 2~_st day January 2003, by the following roll call
vote:
AYES:
Councilmembers: Watson, Kennedy, Burr
NOES:
Councilmembers: None
ABSENT: Councilmembers: Dean, Furtado
APPROVED:
Daniel E. Furtado, Mayor
By: Donald R. Burr, Vice Mayor
ATTEST:
Anne Bybee, City Clerk