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June 7, 2016 — California Primary Election

— Budget Stabilization ("Rainy Day") FundOrdinance —

Local
June 7, 2016 —California Primary Election

City of Long Beach
Measure B Ordinance - Majority Approval Required

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Election Results

Passed

52,300 votes yes (58.03%)

37,829 votes no (41.97%)

  • 100% of precincts reporting (277/277).

Budget Stabilization ("Rainy Day") Fund
— undefined

To help maintain city services, such as police, firefighter, paramedic, park, library, street repair and community programs, during economic recessions that cause temporary budget shortfalls, shall the City of Long Beach establish a budget stabilization ("rainy day") fund as part of the General Fund to provide short-term funding for such general services into which one percent of any new general tax revenues shall be deposited and spent only to balance the budget?

Impartial analysis / Proposal

IMPARTIAL ANALYSIS OF MEASURE B

By Charles Parkin, City Attorney

Voter approval of this measure would amend the Long Beach Municipal Code to establish a budget stabilization (or rainy day”) fund. The fund would be used to pay for future City operations and services that might otherwise be reduced in scope, suspended or eliminated due to unanticipated shortfalls in general fund revenues, whether caused by economic recession or other financial hardship of the City.

The fund would receive automatic deposits/transfers of one percent of any new general tax revenues generated each year, commencing with Fiscal Year 2017-2018. This would include new revenues from the proposed transactions and use tax, which is on the same ballot for election.

Up to fifty percent of available funds could be expended by the City Council in any single fiscal year if the City Council declares a fiscal hardship requiring the use of such resources to maintain current levels of City services and programs. The proposed measure defines “fiscal hardship as a projection by the City Manager in the proposed budget for any fiscal year that slow growth or a decrease in general fund revenues will result in a two percent or greater reduction in funding for general City services, as compared to the prior year’s base budget required to maintain those services.

Under the proposed measure, which was placed on the ballot by the Long Beach City Council, the City Council could not expend funds from the Budget Stabilization Fund more than three consecutive years, after which the City Council must consider alternative revenue sources or permanent reductions in general City services for future years. At no time could the balance of the fund exceed five percent of the City’s general fund revenues forecast in the adopted budget for the subsequent fiscal year.

The proposed measure also includes mechanisms to establish and suspend automatic transfers to the fund based on revenue forecasts.

The proposed measure requires a majority vote of the electorate; however, the ordinance establishing the Budget Stabilization Fund will only become effective if the transactions and use tax measure, which is on the same ballot for election, is also approved by the voters.

 

A yes vote is a vote in favor of authorizing the budget stabilization fund. A “no” vote is a vote against authorizing the budget stabilization fund.

— http://www.longbeach.gov/cityclerk/media-library/documents/elections/elections-home/ballot-measure-information-(gme-2016

YES vote means

Voting Yes on Measure B will:

- Create a special “Budget Stabilization Fund” to protect critical services

- Maintain and protect police and fire staffing levels during recessions

- Save rather than spend a portion of new tax revenues for a rainy day

- Protect residents and neighborhoods from service cuts

NO vote means

A "no" vote is a vote against authorizing the budget stabilization fund.

Proposed legislation

PROPOSED ORDINANCE OF MEASURE B

AN ORDINANCE OF THE PEOPLE OF THE CITY OF LONG BEACH, CALIFORNIA, ADDING CHAPTER 3.94 TO THE LONG BEACH MUNICIPAL CODE TO ESTABLISH A BUDGET STABILIZATION (“RAINY DAY”) FUND

The City Council of the City of Long Beach ordains as follows:

Section 1. Chapter 3.94 is hereby added to the Long Beach Municipal Code to read as follows:

Chapter 3.94

BUDGET STABILIZATION (“RAINY DAY”) FUND

3.94.010 Establishment of the fund.

There is hereby established within the City of Long Beach the “Budget Stabilization Fund, which shall be either a subfund within the City’s General Fund or in a separate fund (the “Budget Stabilization Fund”).

3.94.020 Purpose.

The Budget Stabilization Fund shall be used to fund future City operations and activities that would otherwise be reduced in scope, suspended or eliminated due to unanticipated shortfalls in General Fund structural revenues, whether caused by economic recession or other financial hardship of the City. For purposes of this Subsection, the phrase “General Fund structural revenues means on-going revenues which are available to fund on-going General Fund operations.

3.94.030 Transfers into and from the Budget Stabilization Fund.

A.   Automatic Deposit of New General Tax Revenues into the Budget Stabilization Fund. The Budget Stabilization Fund shall be funded by an automatic deposit/transfer of one percent (1%) of any new general tax revenues generated each year, commencing with Fiscal Year 2017. For purposes of this subsection, the phrase new general tax revenues means all revenues generated from any new or increased general tax which has been approved by the voters of the City on or after the effective date of this Chapter including, but not limited to revenues from the Transactions and Use Tax which was submitted to the voters concurrently with this ordinance.

B.   Discretionary Deposits into Budget Stabilization Fund not Prohibited. Nothing in this Chapter shall prohibit the City Council, as part of the budgeting process, from contributing additional revenues to the Budget Stabilization Fund, as determined in the City Council’s sound legislative discretion.


C.   Expenditures from the Budget Stabilization Fund. The City Council may expend up to fifty percent (50%) of funds available from the Budget Stabilization Fund in any single fiscal year if the City Council declares a fiscal hardship requiring the use of such resources to maintain current levels of City services and programs. For purposes of this section, a “fiscal hardship shall be deemed to occur whenever the City Manager, in the proposed budget for a fiscal year, projects a level of General Fund structural revenues that will result in a two percent (2%) or greater reduction in funding for general City services, as compared to the base budget that would be needed to maintain existing services. For purposes of this subsection, the phrase “base budget” means the projected on-going costs needed to maintain the same level of General Fund operations as the prior fiscal year’s budget. The City Council may not draw down from the Budget Stabilization Fund more than three (3) consecutive years, after which the City Council must consider alternative revenue sources or permanent reductions in general City services for the ensuing fiscal year. An assessment of the Citys long-term financial outlook should be considered when making decisions about how much to expend from the Budget Stabilization Fund, including a projection of how Budget Stabilization Fund resources are expected to be used and at least partially replenished over the following years..

D.   Maximum balance for Budget Stabilization Fund. At no time shall the balance of the Budget Stabilization Fund exceed five percent (5%) of the City’s General Fund structural revenues forecast in the adopted budget for the subsequent fiscal year. Automatic transfers of revenues into the Budget Stabilization Fund as required by Subsection A shall be made only to the extent that the Fund balance does not exceed the five percent (5%) threshold, as calculated above, and any automatic transfer that would result in such an excess balance shall be suspended.

E.   Suspension of automatic transfer. The automatic transfer described in Subsection A shall be temporarily suspended when revenue forecasts underlying the adopted budget anticipate a decline in General Fund structural revenues, as compared to the structural revenue underlying the adopted or amended budget, whichever is greater, for the fiscal year immediately prior. Automatic transfers shall remain suspended until positive revenue growth is reflected in the structural revenue forecasts underlying the adopted budget. The automatic transfer described in Subsection A shall also be temporarily suspended in any year where the Council authorizes an expenditure from the Budget Stabilization Fund.

F.   Resumption of automatic transfer. In the first fiscal year during which positive General Fund structural revenue growth is again forecast, and during which the Council does not authorize an expenditure from the Budget Stabilization Fund, the automatic transfer shall resume, and shall continue in each fiscal year thereafter, unless (i) the City again forecasts a nominal decline


in General Fund structural revenues, (ii) the Budget Stabilization Fund reaches five percent (5%) of the City’s General Fund revenues, or (iii) the City Council again authorizes an expenditure from the Budget Stabilization Fund.

Section 2. Approval by the City Council. This ordinance was duly introduced on February 23, 2016 and approved upon second reading for placement on the ballot by the City Council on March 1, 2016.

Section 3. Approval by the VotersTransactions and Use Tax Measure  Contingency. Pursuant to California Elections Code Section 9217, this ordinance shall be deemed adopted and take effect only if approved by a majority of the eligible voters of the City of Long Beach voting at the Regular Election of June 7, 2016. Notwithstanding the above, this ordinance shall only become effective if the City’s Transactions and Use Tax Measure, which is on the ballot for the same Election, is also approved by the eligible voters of the City of Long Beach.

 

Section 4. Severability. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby.

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