The Williamson Act Should Be Preserved
The California Land Conservation Act of 1965 -- commonly referred to as the Williamson Act -- has been the state's premier agricultural land protection program since its enactment in 1965. Over half of the state's 30 million acres of farm and ranch land are currently protected under the Act.
Enacted to preserve agricultural and open space land and help slow the conversion of these lands to developed uses, it has accomplished this purpose by substituting a lower tax liability for landowners and rewarding counties with financial benefits when land is protected under Williamson Act contracts.
For the last 38 years, the state has reimbursed counties for the lost property tax revenue at a rate of $1 per acre for what is considered non-prime agricultural land and $5 an acre for prime agricultural land. This subvention allowed counties to help preserve California's valuable agricultural resources in the face of development pressure. While State subventions have been proposed for elimination over the years, they had never actually been cut - until enactment of the 2008-09 state Budget Agreement.
Facing severe General Fund pressures, California's 2008-09 Budget ordered the State Controller to reduce the counties' open space subventions by 10 percent. Upon adoption of the 2009-10 State Budget, the Legislature further reduced state subventions to $27.8 million. Still left with a $1.1 billion deficit and no reserve, the Governor used his line-item veto to slash all but a $1,000 placeholder from the reimbursement pot for the 2009-10 budget year.
As Chairman of the Senate Local Government Committee, I held an informational hearing last month to examine this issue in depth. Testifying at that hearing were farmers, environmentalists, and local elected officials who lamented the Governor's line item veto and advocated for the continuation of a state backfill of property tax revenue foregone through Williamson Act contracts.
What we heard at that hearing wasthat local governments will unlikely be able to continue to utilize this important planning tool without the existing financial incentive. This current state of the Williamson Act raises a number of significant policy questions for lawmakers and other interested parties.
The Williamson Act is one of the unique arrows in the quiver of local governments. The program offers an innovative approach to farm and ranch land protection by building an interrelated set of property tax, land use and conservation measures in a single policy package. The Williamson Act is an important component in providing a favorable business climate where farmers and ranchers can continue to keep agricultural lands in production thereby benefiting local and state economies.
The program enables local governments to enter into contracts with private landowners for the purpose of restricting specific parcels of land to agricultural or related use. The contracts last for ten years. Under the law, farmers and ranchers who agree to keep land in agriculture and open space are permitted to pay taxes at a lower rate than the actual market or development value.
In 1998, the Williamson Act was amended to provide for the establishment of Farmland Security Zones, commonly referred to as the Super Williamson Act. Under this program landowners receive an additional tax reduction if they choose to keep their property in the conservation program for at least 20 years.
The state then partially reimburses local government for the lost tax revenue via the Open Space Subvention Act of 1971. The contribution by the state is nominal - just a small fraction of 1 percent of the overall state budget - but the return is significant.
Lands "under the act" contribute significantly to the state's coffers and the nation's food supply, preserving California's enviable role as the nation's leader in agricultural productivity.
Program participation has been steady, hovering around the 16 million acre mark since the early 1980s. This number represents about one third of all privately held land in California, and about one half of all the state's agricultural land. As of 2005, all counties except Del Norte, Los Angeles, San Francisco, Inyo and Yuba offered Williamson Act contracts.
Continued pressure on agricultural landowners to develop their lands for non-agricultural and open space purposes poses a serious policy challenge for state and local governments. Both levels of government have some role to play in designing and implementing policies that preserve a certain amount of open space, while allowing for appropriate land development and continued economic growth at the state and local levels.
Both cities and counties have relied on the Williamson Act to support general plan and zoning objectives, prevent leapfrog development and promote orderly growth. While the Act has always helped protect California's agricultural production, environmental groups have argued that the Act also helps the State meet its greenhouse gas reduction policies and statewide environmental goals.
According to statistics from the California State Association of Counties (CSAC), one in three Williamson Act farmers and ranchers said that without the Act they would no longer own their parcel(s).
Subvention payments are some of the most flexible discretionary monies available to cities and counties. Unlike most funding received by local governments, subvention funds may be used for county or city general purposes (Government Code §16145). Therefore, a loss of the payments represents a decrease in flexible discretionary funding for local governments.
While the lagging economy and crash of the housing market may lessen the pressure from developers on farmers and ranchers to sell their property, the lack of state subventions does not negate the existing 10-year contracts.
In light of the $20 billion budget deficit, the legislature and the governor have very difficult decisions ahead. If state officials again decline to reimburse counties for the lost property-tax revenue, it will have a dramatic effect on California's agricultural community. Without General Fund reimbursements, Fresno County has already said it might not continue with the Williamson Act program. If the number one ag-producing county in the nation decides to opt out, there could be strong pressure on other counties to follow suit.
Implications of a full elimination of the Williamson Act will prove to reach beyond the cost of lost agricultural jobs and production. Cancellation of Williamson Act contracts could lead to other issues, such as problems pertaining to aban doned crops and orchards and subsequent pest management challenges - all of which will place an additional cost burden on local governments.
In every crisis there is opportunity. I am committed to finding a way to preserve the Williamson Act and its benefits to rural communities and counties. We should not allow the Williamson Act to fall by the wayside during this fiscal crisis. Our agricultural resources and the economic benefits they provide should be preserved for generations if at all possible.
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Where Our Tax Dollars Go
The old saying, "Nothing in life is certain, but death and taxes," comes to mind as the April 15 tax filing deadline comes and goes. Now is a good time to reflect on where your tax dollar goes.
According to the Tax Foundation, California's Business Tax Climate is 48th worst in the nation. California's state/local tax burden percentage stands at 6th highest in the nation, estimated at 10.5% of our incomes. Californians pay $5,028 per capita in state and local taxes. California also has the highest gas tax in the nation, at 67 cents per gallon, far above the national average of 47.7 cents per gallon.
Most of the state's general fund comes from personal income taxes, but corporate taxes and sales taxes also contribute. Currently, general fund sources bring in approximately $88 billion in revenues a year. The breakdown of these revenues is illustrated in the chart below.
So where does the money go? More than 40% of the state's budget is spent on education, both K-12 and colleges. Another 29% is directed to social service programs. That leaves just 18.5% for everything else, including prisons, transportation, housing programs, natural resources, the legislature, state courts, executive government, etc.
The state budget is very complicated, with numerous voter-passed initiatives setting up complex formulas for taxes and spending. Proposition 98, for example, ties property taxes to school funding and appropriates a large portion of the budget, by law, to public schools. The fact that so much money is constitutionally-obligated makes it difficult to make cuts or to move money from one purpose to another.
To make matters even more challenging, the federal government exerts its authority through the courts, forcing the state to comply with regulations that further tie the hands of the Legislature. The federal receiver that a panel of federal judges has imposed on the state prison system to oversee prison health care is an example of that.
With the economy shrinking in recent years, the sources of state taxes - personal income, sales and corporate revenues - have fallen. State revenues fell from $102 billion just three years ago to about $84.5 billion in 2008-09.
Meanwhile, the budget has grown, with state spending at $91 billion in 2008-09. This imbalance has left a significant budget deficit. This year, the Legislature imposed $12.5 billion in tax increases. The attempt to fix the budget deficit with more taxes was unsuccessful, and the deficit currently stands around $20 billion.
The answer is clearly not higher taxes, especially when the economy is weak. We cannot sit back and hope that the economy will recover and revenues will grow. In fact, California's economy is not expected to turn around for years to come. We must accept this reality and get spending under control now. To fix the problems that led to higher taxes, bigger deficits, and higher unemployment, we must prioritize our spending, enact reforms that encourage job growth and suspend regulations that cause job creators to create jobs elsewhere.
We must focus on getting Californians back to work. With personal income taxes accounting for more than half of general fund revenue, adding jobs and increasing income is obviously the best approach to increasing state revenues.
I hope this primer has shed some light on some of the state's basic fiscal operations. You can rest assured that I will do everything I can to oppose more taxes, to encourage job growth, and to use your tax dollars as wisely and efficiently as possible.
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Mosquito Control - West Nile Virus
Spring has arrived - and after a wet winter the mosquito population will be much higher than we have seen in past years. It is important for everyone to check their property for ways to reduce mosquito breeding areas in order to protect against the West Nile Virus.
West Nile virus (WNV) is a mosquito-borne disease that has spread throughout the United States and is well established in most states, including California. Approximately 80 percent of people who are infected with WNV will not show any symptoms. Symptoms can include fever, headache, body aches, nausea, vomiting, and sometimes swollen lymph glands or a skin rash on the chest, stomach and back. Symptoms generally last for just a few days. In very rare cases, WNV can be fatal.
In order to prevent the spread of West Nile Virus, mosquito and vector control officials recommend that we drain all sources of standing water around our homes and properties. If we have bird baths or pet water bowls, they should be changed at least three times per week. If you have large bodies of water and would like to plant mosquito fish call your local mosquito or vector control district. In Sacramento the number is (916) 685-5464.
For more information go to: www.fightthebite.net
or information on West Nile Virus go to: http://www.westnile.ca.gov/wnv_faqs_basics.php
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District Outreach - School Superintendents
This week, Assemblyman Roger Niello and I invited school district superintendents from Sacramento and southern Placer County to a breakfast meeting to discuss education issues and the current state budget situation.
In a difficult budget environment, the superintendents expressed a desire to have flexibility in how they spend the dollars provided to them by the state. Assemblyman Niello and I said we would do our best to provide them with the ability to use their funds wisely, and begin planning for the time when revenues will increase, and not make the same mistakes the Legislature has made in the past in imposing new mandates on school districts, teachers, and administrators that tie their hands as they try to provide a quality education to our children.
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Quotations of the Month
"I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."
- Winston Churchill
"A government which robs Peter to pay Paul can always depend on the support of Paul."
- George Bernard Shaw
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