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Why Four of California's Newest Cities May Soon Dissolve

All four are in Riverside County (east of LA). Reduced vehicle license fees, shifting funds from cities to prisons and a huge state budget deficit created the perfect storm to drain expected revenues. Hope was placed in a bill to fix it.
September 19, 2013, 8am PDT | Irvin Dawid
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Brien Clark

James Nash writes that California’s newest city, Jurupa Valley, population nearly 100,000, formed only two years ago, "may become the first to self-destruct in 40 years, disincorporating because Governor Jerry Brown and lawmakers stripped funds from local government to reduce prison crowding." The same fate awaits three other new Riverside County cities: Wildomar, a city of 32,000 incorporated in 2008, Eastvale and Menifee, population of 80,000, also incorporated in 2008.

If you listen to the video on Jurapa Valley's homepage, you'll hear that they blame their potential, impending dissolution solely on the last bullet listed below, but there are additional factors, including:

  • Reduced Vehicle License Fee (VLF) revenues that began in 1998 with Gov. Pete Wilson and was a key factor in the recall of Calif. Gov. Gray Davis in 2003 after he restored the VLF to the full 2 percent from 0.65 percent of a vehicle's current estimated value.
  • In 2011, when the city was incorporated, Gov. Brown faced "a budget gap of $17.2 billion".
  • California's chronic prison overcrowding problem 
  • Passage of SB 89 in 2011 that redirected $130 million in vehicle-license fees earmarked for municipalities. [Gov. Brown] put the funds toward a program that shifted social services and thousands of state prisoners to county responsibility. This bill cause the loss of "47% of its expected revenue in its first year as a city", according to Mayor Verne Lauritzen.

The video places the salvation for all four cities in SB 56: "VLF Allocations to Cities" written by state Senator Richard Roth (D-Riverside) that would have addressed inequities in the way newer cities receive VLF revenues. Sadly, the bill died in June.

Nash distinguishes disincorporation from bankruptcy by the presence of debt.

The city hasn’t issued debt and has no pension obligations, since all of its “employees” are contractors, Mayor Verne Lauritzen said.

Bonds were issued by "[a] separate government body, the Jurupa Community Services District" that will continue to operate in the event that Jurupa Valley and Eastvale disincorporate.

Full Story:
Published on Friday, September 13, 2013 in Bloomberg News
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