The following is an informative account—provided by City Manager Steve Harding—detailing the history of Jurupa Valley’s struggles with the state, explaining the ramifications its impending disincorporation and expressing a glimmer of hope for the new city’s future.

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At their regular meeting of January 16th, 2013, the Jurupa Valley City Council will be asked to consider a resolution that commences the disincorporation of the City. Should the resolution be approved, it starts an estimated 18-24 month process that transfers the responsibilities of municipal services back to the County of Riverside. With the passage of the resolution, the City will file the appropriate applications with the Riverside County Local Agency Commission (LAFCO) within the next few weeks.

During this process City Hall will remain open. City services will still be provided and permits will still be issued. Our field crew will continue to maintain City streets while the Sheriff’s Department will continue to facilitate the safety of the City’s residents and businesses.

The disincorporation of the City is not about municipal bankruptcy like the cities of San Bernardino, Stockton, and Vallejo. Unlike these municipalities, the City is paying its bills.

It is not about irresponsible spending. The City has the second lowest municipal per capita expenditure rate of any city in Riverside County. Its per capita expenditures are less than half of the similar sized Cities of Temecula and Murrieta. Only the City of Canyon Lake is lower with all three of its employees.

It is not about unfunded pension and retiree health care obligations. All 26 “Employees” of Jurupa Valley are contractors and do not create any retirement or healthcare obligations that need to be met by the City.

Specifically the requested action to commence the disincorporation of the City is solely predicated on the projected insolvency of the City created by the taking of the City’s largest revenue source by the State of California. Just two days prior to July 1, 2011, the City’s official date of incorporation, the State passed Senate Bill 89 effectively moving all Motor Vehicle Licensing Fees (MVLF) from all cities to the State. For most cities this was an inconvenience. For Jurupa Valley it meant losing more than $6.7 million or 47% of its first year revenues.  If the City were left to replace this amount with an equivalent amount of sales tax, it would have to build more than 2 million square feet of new retail space. This would equate to 3 times the size of the 667,000 square feet of retail space in the Gateway Center in the City of Eastvale.

So why Jurupa Valley on not other cities? Part of the answer rests with the passage of Proposition 1A in 2004 which was meant to protect local revenues. Subsequent to its passage Sacramento created a new State and local government revenue distribution formula. In effect, the State took a larger proportion of MVLF from local coffers while allocating an offsetting amount of property tax back to municipalities. Unfortunately, this formula did not take into account future cities. So the 478 cities that were in existence prior to 2004 receive an additional allocation of annual property tax in lieu of MVLF. New cities were not included in this formula.

In an attempt to level the financial playing field between the pre and post 2004 era, Assembly Bill 1602 was passed creating a modified revenue distribution formula specific to new incorporations. This legislation allocated a larger proportionate amount of MVLF to new cities serving as a partial offset to the Property Tax in Lieu of MVLF dollars enjoyed by established municipalities. It was this 2006 MVLF formula that served as the primary basis for establishing the fiscal feasibility of the incorporation of Wildomar, Menifee, Eastvale and Jurupa Valley. It was this formula that was included in Jurupa Valley’s fiscal feasibility analysis approved by the Riverside County Local Agency Formation Commission. It was this formula that served as the basis for the City’s incorporation election.

With the passage of SB 89 back in June 2011, the enhanced revenue allocation system created by AB 1602 ceased to exist. SB 89 was passed after the incorporation election but before the incorporation date in 2011.

From the beginning the City has worked diligently to restore its lost revenues. It has led two legislative attempts to restore the funding taken away by the passage of SB 89. With a near unanimous vote by the both houses of the State Legislature, our 2012 legislation to restore the MVLF got to the Governor’s desk. Less than five days later, the Governor vetoed the effort due to the State’s priority of reallocating MVLF monies to counties in order to offset the costs associated with prisoner realignment. The second legislative attempt was spearheaded by our newly elected State Senator, Richard Roth. This time the legislation stalled in an Assembly Committee primarily due to the State’s “No New Spending” policy.

This year Senator Roth will once again lead the fight to restore funding to our four Riverside County cities with Senate Bill 69. This legislation facilitates the same distribution of revenues to “ALL” cities not just those incorporated prior to 2004.

From day one, this has always been about parity and equity. Whether intentionally or unintentionally, the State has discriminated against the State’s four newest municipalities. Your City Council, State Senator Roth and the County Board of Supervisors will continue to fight for your tax dollars. In the mean time the City will be pursuing the dual path that includes disincorporation. This action is not being taken lightly yet the City needs to cover every base.  The City is working on growing additional local revenues but these efforts will only partially close the gap between costs and revenues. It will not restore the funding taken away by SB 89.

The disincorporation of the City is not a given, but the process is necessary in the event that all efforts with the State fail. The City will abandon the disincorporation process should the State do the right thing and approve SB 69. Either way, the City of Jurupa Valley is open for business.

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Steve Harding is the City Manager of Jurupa Valley.