State-Local Relations Trends
State-local relations in 2010 are complex and continually changing. Major trends since 2007 include creation of state commissions to study the local government system and to make recommendations for its reorganization; state laws granting local governments more or less discretionary authority; state assumption of control of failing public schools and fiscally distressed cities; and numerous court decisions determining the respective powers of the state and its political subdivisions.
Book of the States 2010, Chapter 2
State-local relations are legally complex in most states and courts play a major role in delimiting the boundaries of powers between the state and its political subdivisions. These powers may be classified as exclusive state ones, exclusive general purpose local government ones, and concurrent powers exercisable by state and local governments. The latter historically were subject to the English Common Law Ultra Vires Rule—popularly known in the U.S. as Dillon’s Rule—holding they are creatures of the state and subject to its control. Abuse of the superior powers of the state legislature to control and modify local governments produced a voter reaction in the form of constitutional amendments in 41 states forbidding the legislature to enact a special law (applicable only to a named government).
The National Municipal League, now the National Civic League, in 1921 proposed a model constitutional provision establishing an Imperium in Imperio—states within a state—by dividing power between the state and its local governments.Sixteenstates currently use this system, although its effectiveness in providing greater local discretionary authority often has been limited by narrow judicial interpretation. The American Municipal Association, now National League of Cities, in the 1950s engaged Dean Jefferson B. Fordham of the University of Pennsylvania Law School to study state-local relations His 1953 report proposed a constitutional provision devolving to a municipal corporation adopting a charter all powers capable of devolution subject to pre-emption by general law with the exceptions of the powers to enact laws governing civil relations and to define and provide for the punishment of a felony. Twelve states have constitutional provisions providing for devolution of powers. All three systems are incorporated in the New York Constitution and result in exceptionally complex state-local relations that encourage municipal attorneys frequently to seek advisory opinions from the state attorney general, comptroller and commissioner of education.
Voters in 2008 took advantage of home rule in Centennial, Colo., and by a 2-to-1 margin approved a proposition converting the city from a statutory one into a home rule city, thereby expanding the city’s powers. Voters in Menifee, Quail Valley, Sun City and part of Romoland in California ratified a proposition to incorporate these communities as the City of Menifee.
Interest in merging local governments continues to be a trend. The Indiana Commission for Local Government Reform in 2007 recommended eliminating 1,008 township governments by transferring their responsibilities to county executives, changing most county offices from elected to appointed, establishing the position of an elected county chief executive and transferring the responsibilities of several county officers to the executive.. In 2009, Gov. Mitch Daniels sought legislative approval for a bill reorganizing township government. Senate Bill 512 was approved in the Senate by a narrow vote of 28 to 22, but was defeated in a House committee. The initial version of the bill would have eliminated township government.
The 2007 Maine State Legislature enacted a school district restructuring program to reduce the number of districts from 290 to a maximum of 80. By July 1, 2009, 26 districts had been restructured, with the average size increasing from 566 students to 2,133 students. Maine also reduced its public safety dispatch centers from 48 to 16 since 2003.
The 2007 New Jersey General Assembly created the Local Unit Alignment, Reorganization and Consolidation Commission to study and report on county and municipal government structure and functions. In 2009, Gov. Jon S. Corzine proposed reducing state aid to more than 300 townships with populations of less than 10,000 and offering grants for merger studies. The only merger in the state since 1950 was the 1997 merger of Hardwick and Pohaquarry.
The Ohio General Assembly in 2008 created a Commission on Local Government Reform and Consolidation to develop recommendations to improve the effectiveness and efficiency of local governments. In addition, Ohio established a Local Government Services Collaboration Grant Program, funded at $900,000, to provide grants to local governments interested in consolidating services with services of other local governments.
The New Jersey Commissioner of Education in 2007 decided the Jersey City and the Newark school systems, respectively under state control since 1989 and 1995, should be allowed to regain some local control. Patterson schools have been under state control since 1991. The Missouri State Board of Education in 2007 assumed control of 93 troubled St. Louis public schools which had a graduation rate of 55 percent and a drop-out rate of 19 percent.
California Proposition and State Laws
California voters in 2008 approved a proposition prohibiting state and local government agencies from using eminent domain to take private, owner-occupied residences for private projects. An Alabama court invalidated a 1969 Jefferson County occupational tax, which necessitated the layoff of 1,004 county employees. The state legislature on Aug. 14, 2009, authorized the county to levy a new 0.45 percent tax on all workers in the county, including previously exempted professionals, and provided for a referendum in 2012 on continuance of the tax or its phase-out over five years. A companion bill requires the county commission to appoint a county manager.
Colorado House Bill 09-1118 of 2009 eliminated the requirement an officer charged with keeping records must keep them in a “well-bound book” and substituted a requirement the records must be kept in a “visual text format that may be transmitted electronically.” House Bill 09-1217 allows a county to create a local improvement district to provide utility projects. Senate Bill 09-001 requires counties to adopt countywide community wildfire protection plans after determining a fire hazard exists in an unincorporated territory. And House Bill 09-1034 authorizes regional transportation authorities to levy five mills tax on property within its jurisdiction.
The 2008 Florida State Legislature enacted House Bill 697 granting discretionary power to the Florida building commission to implement energy standards for new commercial, governmental and residential buildings, and CS/SB 1694 establishing a voluntary certification process for 911 emergency dispatchers. The 2009 legislature enacted Senate Bill 252 applying the Code of Ethics to local government contract employees, and Senate Bill 216 prohibiting local governments to expend funds advocating for or against a referendum issue.
The Illinois General Assembly in 2007 overrode Gov. Rod Blagojevich’s veto of a bill requiring public schools to provide students with a moment of silence at the start of classes. A 2008 Indiana law mandates a referendum on elementary and middle school building projects costing more than $10 million, and high school projects costing more than $20 million. New York Attorney General Andrew Cuomo drafted and the 2009 state legislature enacted The New N.Y. Government Reorganization and City Empowerment Act, which authorizes citizens, officers and counties to reorganize 10,521 local governments. The act allows consolidation or dissolution to be initiated by local governing bodies or initiative petition. Consolidation of towns and/or villages is subject to a constitutional referendum as is a proposed dissolution of a village.
New York City Mayor Michael R. Bloomberg’s control of the city’s public school system expired on June 30,2009, but was extended for six years Aug. 6. Mayoral control continued as a majority of the members of the reconstituted school board support the mayor. In August, the legislature enacted the extension law. The Vermont General Assembly in 2009 eliminated local government zoning authority over telecommunications facilities (Act 54), authorized the Windham County assistant judges to borrow $200,000 to renovate the county sheriff’s office without a referendum, and increased property taxes by $23.2 million to fund education.
The Virginia General Assembly in 2009 amended (1) §15.2-3201 of the Code of Virginia to extend from 2010 to 2018 the restriction on city annexation authority, granting of city charters, and county immunity proceedings, (2) §15.2.4166 of the code to increase from five to 15 years the period during which cities in transition to town status may continue to receive specified state library aid, (3) §§24.2-233 et seq. to provide a person who circulates or signs a petition for removal of a public officer is not liable for costs associated with the proceedings, (4) §2.2-4303 to increase from $30,000 to 50,000 the amount for single or term contracts for professional services not requiring competitive negotiations under the Public Procurement Law, and (5) authorized local governments to ban the disposal of certain rechargeable batteries in any disposal facilities provided a recycling program has been implemented.
Gov. Jim Doyle of Wisconsin in 2007 used the item veto to remove words and numbers from the state budget enacted into law by the state legislature, and thereby raised the levy limits on local governments from 2 to 3 percent that added approximately $41 million to property tax bills.
The Kansas health services secretary in 2009 assumed control of Milwaukee County’s child care, food aid and medical assistance programs because of mismanagement. Numerous public officials in rural areas of Oregon resigned in 2008 because of a new state ethics form considered to be invasive and unnecessary. They particularly resented the required listing of relatives and household members. Members of school boards and special district boards do not have to file the forms.
The Texas State Comptroller offers a local government management assistance program providing county governments with a critique of their operating procedures at no cost to the county. The program, for example, reviewed Navarro County government department and offices in 2009 among other counties. The Vermont Department of Environmental Conservation in 2007 assumed complete responsibility for permitting on-site sewage systems and water supplies. And the Wisconsin Health Services Secretary in 2009 stripped Milwaukee County of its responsibility to administer food aid, child care and medical assistance programs because of years of county mismanagement.
In 2007, the Washington State Supreme Court invalidated Initiative Proposition 747, which limited tax collections and note rates to 1 percent annually unless voters approved a larger amount, on the ground voters were deceived by anti-tax activist Tim Eyman: “A voter reading the text of the initiative would have perceived a much small impact on government coffers than would actually occur under I-747.” The 2nd District Court of Appeal in Los Angeles referred to the constitutional prohibition of the transfer of authority over any part of a school system to entities outside the public school system, and unanimously invalidated Assembly Bill 1381, which had transferred substantial jurisdiction over such schools to the mayor of the city. In Massachusetts, Barnstable Superior Court Judge Richard Connon opined Town Councilor J. Gregory Milne was ineligible to serve on a town charter commission because he held a public office. The New Jersey Supreme Court invalidated a Trenton ordinance reorganizing the police department because a mandatory referendum is required by state law. The Lamoille County Superior Court in Vermont held it is illegal for Stowe voters to decide by Australian ballot whether to approve or reject sections of the town budget since state law requires a vote on the entire budget. And the U.S. Circuit Court of Appeals for the Second Circuit ruled Vermont municipalities must demonstrate they have considered the negative secondary effects of sexually oriented businesses prior to enacting an ordinance prohibiting their operation.
The Arizona Court of Appeals in 2008 opined cities and towns may reject developers’ plans if they conflict with the values of their respective residents. The League of Arizona Cities and Towns in 2008 filed suit against State Treasurer Dean Martin and then-Gov. Janet Napolitano challenging the constitutionality of section 47 of Chapter 285 of the 2008 session laws requiring counties and incorporated cities and towns to deposit $29,748,400 into the state general fund to help remove a $1.6 billion budget deficit. The state Supreme Court in 2009 noted the constitution strictly limits the contents of general appropriation bills and invalidated section 47 for its failure to identify the prior appropriations being reduced.
The U.S. Court of Appeals for the Tenth Circuit in 2009 ruled members of a city council, despite an air of impropriety, were entitled to absolute legislative immunity for their action condemning the plaintiff’s property. The Seventh Circuit in NRA v. City of Chicago in 2009 opined the city’s handgun ban did not violate the Second Amendment because it is not incorporated to the States.1
A Town of Gilmanton, N.H., zoning ordinance prohibited aircraft takeoffs and landing in some districts. The state Supreme Court in 2008 (1) rejected the appellant petition for a writ of mandamus directing issuance of a special exception allowing such aircraft operations, (2) opined a zoning board of appeals does not have to defer to a decisions by the historic district commission, and (3) rejected a suit by a coalition of local governments contending the state funding of public schools violated the constitutional requirement to pay for an adequate education. The U.S. Court of Appeals for the 1st Circuit in 2008 rejected the argument that Concord’s ban on electronic changeable copy signs violates the guarantee of free speech. The New Hampshire Supreme Court in 2009 reviewed the state constitution section providing “the state shall not mandate or assign any new, expanded or modified program or responsibilities to any political subdivision in such a way as to necessitate additional local expenditures by the political subdivision.” The court confirmed its earlier decisions that the prohibition does not cover mandates imposed prior to 1984 when voters ratified the constitutional amendment. A New Hampshire district court judge in 2009 struck down four local government sex offender residency restriction ordinances. And the Merrimack County Superior Court in 2009 ruled a proposed spending cap amendment of the Concord city charter is not authorized by state law.
The New Jersey Supreme Court in 2009 unanimously ruled townships cannot restrict where released sex offenders may reside because state law allows parole officers to make that decision, thereby invalidating 127 such ordinances. The court in 2009 upheld a 2008 law changing the school financing formula by placing less focus on the poorest schools. The New York Supreme Court, a trial court, in 2009 invalidated a Rensselaer County sex offender residency law as pre-empted by state law, and a similar Albany County law. The New York Supreme Court in 2008 rejected the claim of a mining company that its state permit and the Mined Land Reclamation Law preempted the Nassau town ordinance. And the Ohio Supreme Court in 2009 upheld a 2006 state law barring city residency laws as a condition of employment by citing section 34 of the state constitution granting the legislature authority to prohibit residency laws.
Economic Crisis Produces State-Local Friction
The economic recession created severe fiscal problems for most states and local governments. The fiscal problem was most acute in California where the state comptroller on July 2, 2009, commenced issuing a total of $1.1 billion in IOU vouchers to taxpayers and vendors because of the failure of the state legislature to enact budget bills. Three rating agencies reduced the state’s credit rating to one level above junk. The budget deadlock was broken in late July and a projected $28 billion deficit was erased.
The state public education budget was cut by $1.5 billion, its second cut in a year.. In February, the education budget was reduced by $11 billion. Voter-approved Proposition 98 of 1988 requires the state legislature to appropriate approximately 40 percent of general fund revenues to support public schools. General purpose local governments experienced a sharp reduction in tax revenues that were exasperated by the state borrowing $2 billion from local governments repayable in three years, and a shift of $1.7 billion in local redevelopment funds to the state. The assembly rejected a proposed shift of $1 billion in motor fuel taxes to the state from cities and counties.
The $11.5 billion New Hampshire state budget enacted by the 2009 General Court reduced the state’s contribution to the state retirement system for local government employees by 5 percent ($27 million) in fiscal year 2010 and by another 5 percent in fiscal year 2011. Local governments maintain the reductions are a violation of the constitutional prohibition of unfunded mandates and filed a lawsuit.
The 2007 New Jersey State Legislature enacted a property tax relief law granting homeowners an average tax credit of $1,100 and elderly homeowners a $1,250 credit, and placing a 4 percent cap on local property taxes with exceptions for townships and school districts that may exceed the limit with voter approval.
States established 74 rated investment pools allowing local governments voluntarily to join a pool and to receive a higher rate of interest. A Florida pool, organized by the League of Cities, invested in the Columbia Fund, which shut down Dec. 10, 2007. To protect the investments of cities, the League took out a $156 million loan to establish a new investment pool for cities. The Florida Local Government Investment Pool, the largest pool in the nation, held $32 billion in investments in 2007 when numerous withdrawals reduced the fund to $14 billion and resulted in a temporary freeze on withdrawals. The pool held assets of $5.7 billion in February 2009.
Municipal bankruptcies were common during the Great Depression, and threats of bankruptcies occurred in the 1970s. New York state responded to the crises by creating a separate state financial control board for New York in 1975, Yonkers in 1978, Troy in 1995, Buffalo in 2003 and Nassau County in 2000. The Massachusetts General Court in 2004 created a financial control board for Springfield, and the board was dissolved in 2009. Michigan assumed control of the finances of Flint, Hamtramck and Highland Park. The current economic recession has placed severe strains on local government finances and the City of Vallejo, California, sought bankruptcy protection in 2008 with no reserves and 80 percent of the general fund dedicated to fire and police services.