State and Local Finances

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POSITION IN BRIEF: Support measures to ensure revenues both sufficient and flexible enough to meet changing needs for state and local government services; that contribute to a system of public finance which emphasizes equity and fair sharing of the tax burden as well as adequacy; which include long range finance methods that meet current and future needs while taking into account the cumulative impact of public debt.
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Support a process which maintains statutory authority over tax sources, rates and tax expenditures; that makes limited use of direct voting by the public on revenue measures; and that allows adoption of revenue and finance measures by a simple majority vote.

Support the distribution of revenue sources between state and local governments in a manner to ensure adequate, equitable and flexible funding of public programs based on the responsibilities and requirements of each and which encourages accountability.

Support an equitable, broad-based local property tax, easy and economical to administer, producing adequate revenue, with limitations on the types of services it funds.

Support assessment practices and policies that are equitable, accurate, easy to understand and well publicized, with like properties treated uniformly.

POSITIONS

 

State and Local Government Finance System

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1. To ensure a system of taxation, which provides revenue sufficient to meet the changing needs of the people of the state through adoption of taxes, rates, rate schedules, revenue and finance measures which:

 

a. meet tests of treating equal tax circumstances equally (horizontal equity) and promoting a progressive tax structure (vertical equity);

 

b. provide adequate revenue at the time of adoption as well as contributing to a system with good cyclical adequacy and which grows with the economy (elasticity);

 

c. a preference for measures which:

1) contribute to the flexibility of the system;

2) are accompanied by analyses of potential economic effects which are available to the governing body and general public prior to adoption;

3) simplify the tax system and/or provide for efficient collection and distribution of revenue;

4) facilitate accountability to the public by the unit of government which collects the revenue and that which delivers services;

5) make provision for persons unable to pay fees or charges levied on essential community wide services.


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Adequacy of Revenue

 

2. To ensure adequacy of revenue by:

a. retention of existing sources of revenue with bases as broad as possible consistent with fairness;

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b. a variety of revenue sources available to local governments including a wide range of local taxes which meet tests of equity and adequacy and which take into account flexibility, economic effects, simplicity, efficiency and accountability;

c. local revenue sources including fees, with provision for persons unable to pay fees or charges levied on essential community wide services; and benefit assessments, when benefits accrue primarily to those paying and which contain a protest and appeals process which is simple, clear, speedy, widely publicized, in which the appellant has access to assessment records necessary to prepare an appeal;

 

d. use by local governments of tax base sharing; state and federal assistance; and cost saving man agement techniques;
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e. state reimbursement to local governments for revenue losses due to state imposed exemptions;

 

f. a state imposed resource severance tax.

 

Equity

3. To ensure fair sharing of the tax burden by:

 

a. acceptance of ability to pay as the primary but not exclusive criterion for distributing the tax burden, with emphasis on income based taxes;

 

b. tax expenditures measures which include provision for mandatory, periodic review and justification by the legislature;

 

c. a preference for tax expenditures which:

1) contribute to tax equity;

2) are in the interest of the general public and not just a specific group;

3) provide social benefits which significantly outweigh the increased tax burden to others;

4) simplify tax administration;

 

d. exemption from the sales tax of food, prescription drugs and other goods purchased by prescription, baseline utility costs, repair and services;

 

e. consideration of expanding thesales tax base to include carefully defined non-essential food items, such as candy, and admissions to amusements;

 

f. responsibility for funding health and welfare services by the program mandating level of government;

 

g. collection by the state of any income or sales tax;

 

h. distribution of the local portion of sales tax revenue by a formula which takes into account population, and local and regional needs, as well as point of sale;

 

i. allocation of other funds from the state to local governments on the basis of population; environmental, economic, and/or social impact; need for service, and revenue raising ability.

 

Flexibility of Revenue

 

4. To ensure flexibility of revenue by:

 

a. legislative control of state tax sources and rates;

b. establishment of a general frame work for local revenues by the legislature;

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c. minimal use of direct voting by citizens on tax sources and rates;

 

d. governing body adoption of user fees and fine schedules;

 

e. a simple majority vote by the public or the governing body to adopt, repeal or change a revenue or finance measure;

 

f. public program and funding priorities which give primary consideration to meeting the basic needs of the general population, attaining program objectives economically, and using procedures which promote flexibility and permit diversity of services;

 

g. selective reductions within and among programs rather than across-the-board cutbacks when funding is reduced;

h. each fund or tax "earmarked" for a specific purpose containing an automatic sunset date and provisions for mandatory government body review and reauthorization;

 

i. adoption of designated "ear marked" funds and taxes only in those situations where social benefit significantly outweighs the loss of flexibility;
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j. "earmarking" in all cases statutory rather than in the state constitution;

 

k. periodic review of the allocation formula for tidelands oil revenue to accommodate changing needs;

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l. a continuing search for better ways to finance government.
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State and Local Government Processes

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5. To ensure flexible government processes by:

 

a. adoption of budgets, appropriations, taxes, other revenue sources, and changes in rates and schedules by a simple majority vote of the governing body;

 

b. repeal or changes in statutory tax expenditures by a simple majority vote;

 

c. mid-budget appropriations adjustments through joint action of the executive and legislature or governing body so that checks and balances are retained;

 

d. consideration of options such as two-year budget cycles and budget formats which emphasize performance and outcomes.


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Long Term Debt Financing

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6. To ensure provision for long term debt financing of certain capital projects by:

 

a. approval of bond issues which take into account:

1) the current bond rating status of the state or local jurisdiction, including cumulative impacts and how the adoptionof additional debt will impact ability to finance future projects;

2) the viability and comparative cost of other means of finance such as "pay as you go," leasing and leasepurchase;

3) how the bond issue fits within debt management and infrastructure plans, statutory caps on bonded indebtedness or recommended debt ratios (levels of debt service within a budget);

4) current urgent needs, such as repairs following a disaster, which may not fall within adopted infrastructure plans;

 

b. use of bond financing for:

1) construction of capital projects;
2) purchase of facilities for pub lic use;
3) repair and retrofitting of existing public facilities and structures when other means of financing are not available;

 

c. provision for voter approval of state and local bond measures by a simple majority vote.


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Property Tax

 

Equity

 

7. To ensure property tax equity by:

 

a. the requirement that all types of property subject to the property tax bear a fair share of the property tax burden;

 

b. separation of residential from commercial/industrial properties for taxing or assessment purposes in order to achieve fair sharing of the tax burden;

 

c. provision for property tax relief for those on low or fixed in comes, especially the elderly.

 

Broad Tax Base

 

8. To ensure a broad property tax base by requiring that:

 

a. the property tax be levied on both land and improvements;

 

b. tax exempt properties pay for services directly rendered them.

Uses

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9. To ensure use of the property tax primarily for those services directly related to property such as police, fire protection, streets, water, sewer-age, and street lighting; for such other local services as libraries, parks, recreation, the general administrative costs of local government and public schools.
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Sound Assessments

 

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10. To ensure sound assessment practices and policies which provide:

 

a. an adequate budget for the assessor's office to permit accurate appraisals, a staff of qualified personnel required to take ongoing training, and use of modern appraisal tools whenever the cost can be justified;

 

b. regular, frequent reappraisals;

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c. the use of market value as the standard for assessments with effective alternatives to preserve agricultural land and open space;

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d. an appeals process which is simple, clear, speedy and widely publicized and in which the appellant has access to the assessment records necessary to prepare an appeal;

 

e. uniformity throughout the state.
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Adopted 1969; Updated 1975; New Positions 1976, 1977, 1981, 1995; Readopted at the last convention.