City officials from around the state gathered outside the Capitol Wednesday morning to urge lawmakers to draw on the state’s estimated $68 billion budget surplus to allocate $1.6 billion for programs that achieve shared local and state government goals, as well as reimburse cities for unfunded mandates.

The League of California Cities organized the news conference with close to a hundred city leaders to outline what local governments need from the state to make real progress in the areas of housing supply and greenhouse gas reduction, as well as call attention to the state’s unpaid obligations owed to local governments for state-mandated programs.

“The state’s historic surplus of close to $70 billion dollars provides lawmakers with an incredible opportunity to be a true partner to cities in advancing our shared goals towards housing and climate resiliency,” said Cal Cities Executive Director and CEO Carolyn Coleman. “And the surplus leaves the Governor and Legislature no excuse to delay paying the nearly $1 billion dollars it owes local governments for costs related to state mandates.”

Housing supply and affordability are two of the most critical issues facing Californians today, yet there is no longer a dedicated state funding source to help stimulate housing production and address important infrastructure needs that come with new developments. Existing tools, while helpful, lack sufficient financial capacity to match the scale of the need.

This is why cities are urging the Governor and lawmakers to allocate $500 million to create the “Housing and Economic Development Program,” a state-local partnership to help finance housing production, incentivize development, and achieve real progress toward housing production goals.

The program would encourage partnerships between the state and local agencies by providing matching funds to cities that adopt local tax increment financing tools to support affordable housing, upgrade essential infrastructure, and spur economic development.

“A strong state-local partnership would propel significant investments in housing production and public infrastructure,” said Cal Cities President and Walnut Creek Mayor Pro Tem Cindy Silva. “Those investments would in turn drive economic development, job creation, and go a long way in helping to prevent low-income earners from falling into homelessness.”

Cities are also requesting that some of the surplus go toward reimbursing cities for costs related to state mandates that have gone unpaid over the past two decades.

According to data from the California State Controller’s office, as of Oct. 1, 2021, the state owes more than $933.5 million to cities, counties, and special districts for costs related to state mandates incurred after 2004. The money owed to cities stems from years of unpaid reimbursement claims filed by local governments for the cost of implementing dozens of mandated programs approved by state lawmakers. Of that amount, $466.6 million is owed to cities.

“A strong city budget creates strong, resilient communities,” said Long Beach Council Member Roberto Uranga. “We hope the Governor and Legislature will use some of this extraordinary surplus to reimburse cities the money they are due so we can continue to pay for and provide our communities with the services they count on.”

Cities are also calling on the state to include funding for organic waste recycling in the 2022-23 State Budget.

Cities are a key partner with the state to achieving our shared solid waste management and recycling goals, which would contribute to the reduction of greenhouse gas emissions. To that end, cities urge the inclusion of $180 million in the 2022-23 State Budget to help cities develop and implement organic waste recycling programs as mandated in SB 1383 (Lara, 2016).

The funding would help support the costs associated with waste collection, education, outreach, edible food recovery, procurement activities, and capacity planning.

“This critical funding will not only help local governments comply with the state law as it pertains to organic waste recycling,” said El Cerrito Mayor Gabriel Quinto, “but it will also minimize the financial burden that the cost of implementing these regulations could have on residents.”

In a Cal Cities-conducted survey in December 2020, 92% of cities indicated that rates will go up in the next three years in order to implement SB 1383 regulations and successfully get their recycling programs up and running.

Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials.