A number of cities around the state are very concerned about the so-called �triple flip� by which the Legislature adopted a State budget earlier this year.  The �triple flip� uses some $15 billion in debt to �balance� the State�s budget and proposes to fund that debt with one-quarter cent sales tax with payback over a period of nine to thirteen years.  To obtain support for the necessary State tax, the Legislature simultaneously reduced the local sales tax by one-quarter cent.  That loss of local revenues is made up, for the present and if the State�s promises are fulfilled, by a portion of the property taxes taken from local government by the ERAF shifts of the 1992-93 and 1993-94 State budgets.  Essentially, the State proposes to pay cities back with money that belonged to the cities in the first place.  And more importantly, the sales tax now joins the property tax and the vehicle license fee as the third major local revenue source on which local government can no longer depend to fund vital local services.  The concerned cities contend that the �triple flip� is an unconstitutional interference with the power of a charter city to raise revenue for local services. 

The City Council carefully considered this potential litigation in Closed Session on Tuesday, February 3, 2004, and voted to join the other concerned cities around the state, as reported out during the open session of that meeting.  It is estimated that the City of Burbank�s share of the cost of the litigation would be between $5,000 and $16,000 spread over the next two years. 

IT IS RECOMMENDED that the Council adopt the attached resolution entitled:

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE FISCAL YEAR 2003-2004 BUDGET BY APPROPRIATING $16,000 FOR THE PURPOSE OF PARTICIPATION IN THE LOCAL SALES TAX LITIGATION.

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