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The
creation of special districts allows citizens and elected officials
to tailor-make local government in California. Approximately 3,400
special districts serve as a valuable kind of local government with
each special district offering a particular type of service. They
are created by citizens and local elected officials to meet common
local needs. State law provides for the formation of special districts.
California has fewer cities, counties, special districts and school
districts per 100,000 people than the average for the other 49 states.
Cities and counties offer broad general services, but various priorities
often compete for limited funding. When citizens want new or a greater
degree of specialized services, they can form a district to provide
the service.
What
is a Special District?
A special district is defined by state law as "any agency
of the state for the local performance of governmental or proprietary
functions within limited boundaries." According
to the Senate Committee, special districts can be defined by the
four characteristics:
1. a form of
government
2. governed by a board
3. provides services and facilities
4. has defined boundaries
According to
the LAO, water special districts perform at least one of the following:
1. water delivery
2. waste disposal/sanitation
3. flood control & water conservation
Just a few
of the services offered by special districts:
- Water
- Sewer
- Trash Collection
- Electricity
- Fire Protection
- Parks & Recreation
- Mosquito
Abatement
How
Did Special Districts Come About?
Special districts first came about when farmers in the San Joaquin
Valley formed the Turlock Irrigation District in 1900 to assist
them in getting a consistent water supply at a reasonable rate.
The district was formed under the Wright Act of 1887,which allowed
a majority of residents in an area to form a public entity for water
delivery and to finance its operation through bond sales. The landowners
realized that working together was the best means to develop a water
system that would meet their need for a stable and affordable water
supply. On the heels of the Turlock Irrigation District's success,
many other farm communities organized special districts to promote
water and agricultural development and in the process, enhance the
economic vitality of their communities.
Dependent
vs. Independent
The governing bodies of special districts are either dependent or
independent. A dependent district is one in which either a city
council or county board of supervisors directly controls the district.
An independent special district is one in which the governing body
is either directly elected by the voters or appointed for a fixed
term of service, often by a board of supervisors. The governing
boards can vary with the size and nature of the district. The Senate
Committee's report shows that about two-thirds of California's special
districts are independent. According to the Legislative Analyst's
Office, LAO, there are approximately 935 independent water special
districts and about 351 dependent water special districts in California.
About 8% of the state's water special districts are multi-county
special districts, providing services to residents of more than
one county.
"Enterprise"
vs. "Non-enterprise"
Residents of special districts often have to pay a fee for the
services they receive. The services for which they pay are known
as district "enterprise" functions. The fees are directly tied to
the cost of providing the service, such as water delivery or sewer
treatment. The Senate Committee reported that slightly more than
one quarter of the state's special districts are enterprise districts.
Some districts also offer services that are considered "non-enterprise" functions
because they are meant for the benefit of the community and are
not funded by direct charges to special district customers.
Non-enterprise functions include flood control, groundwater management
and fire protection, among others. Because customers do not pay
for such services, special districts rely on property tax revenues
and other types of voter-approved revenue, such as property-related
assessments, fees and charges.
How
are Special Districts Created?
Registered voters in the proposed district must submit an application
detailing the proposed district's boundaries and services, as well
as any potential environmental effects and the financing options.
The application is sent to the Local Agency Formation Commission
(LAFCo), which will review the proposal and schedule a public hearing.
If LAFCo approves the proposal, it must hold a public hearing to
acknowledge any formal protests from voters or property owners,
which could effectively kill the proposal. However, if the proposal
makes it through these first steps, the voters inside the proposed
district's boundaries vote on the measure. If the proposal involves
new special taxes, it will need 2/3-voter approval to pass. Once
the proposal is passed, LAFCo and other officials file the formal
documents to start the new district. If special districts serve
on a LAFCo, two members are appointed by an independent special
district selection committee. The appointees then serve with two
city appointees, two county appointees and one public appointee.
What
is a LAFCo?
Local agency formation commissions (LAFCos) were created by the
California Legislature in 1963 in an effort to control the proliferation
of new local government entities, primarily the incorporation of
new cities, throughout the state. LAFCos are responsible for reviewing
and considering proposals for incorporation, formation of special
districts and annexations, among other responsibilities. The commissions
are appointed by local agencies and generally have five or seven
members. The smaller commissions consist of two county supervisors,
two city council members and one public member, while the larger
commissions include two special district representatives. The goals
of LAFCo include promoting orderly development, discouraging urban
sprawl, preserving open space and agricultural lands, and ensuring
the efficient delivery of local services. Local agencies and project
applicants provide the funds to operate LAFCos.
Where
Does Special District Funding Come From?
Special districts receive funding from various sources. However,
most of their funds come from service fees and property tax revenues.
Both enterprise and non-enterprise districts are allowed to issue
bonds to pay for capital improvements. General obligation bonds
for special districts are backed by property taxes and require a
2/3-majority vote. Revenue bonds, however, are paid from user fees
and don't necessarily require voter approval. Enterprise districts
rely primarily on non-tax revenues because their costs are directly
linked to the services they provide, reported the Senate Committee.
The State Controller's report on special districts indicates that
in Fiscal Year 1997-98, enterprise districts earned $13.8 billion
in revenues. Of that, $4.8 billion in non-tax revenue went to districts
providing water-related services.
Accountability
Standards
Special districts are primarily accountable to the voters who elect
their boards of directors and the customers who use their services.
As such, special districts are required to comply with the Brown
Act, the Public Records Act, the Political Reform Act, and the Initiative,
Referendum/Recall Procedures. Special districts hold regularly scheduled
public board meetings in which residents are given an opportunity
to comment on the district's proceedings. Additionally, the state
provides critical oversight to special district operations, which
is based on various services and functions. Special districts are
required to submit annual financial reports, including an annual
financial audit and its adopted budget, to the State Controller.
The oversight ensures that special districts are run in a fiscally
responsible manner.
Californians
Need Strong Special Districts
California special districts are funded by a variety of sources,
maintain different types of governance structures, and offer a number
of diverse services. In fact, they are often referred to as the
most efficient form of government. Special districts have clearly
defined missions, provide quality service at an affordable cost,
and typically involve very little bureaucracy. They use property
tax revenues wisely to invest in their infrastructure systems, improve
local services, and plan for the future. All levels of government
must deal with fiscal challenges. It is crucial that special districts
retain property tax revenue to enable them to continue meeting the
public's needs, to retain the connection between real property values
and property-related services, and to maintain affordable rates
and charges. It is in our best interest to keep special districts
strong and local services where they belong at the local level.
Water
Special Districts
In its 2002 report, the Legislative Analyst's Office examined the
1,286 independent and dependent water special districts in California.
The report defined water special districts as those which perform
at least one of three specific duties: water delivery, waste disposal
(sanitation), and flood control and water conservation. Lighting,
recreation and park, and street services are the most common non-water
activities performed by the state's water districts, the report
says. The LAO's study of water special districts is required by
law. In it's report, the LAO concluded that these districts are
on the right track. "Our analysis indicates no evidence of
a statewide structural governance problem," the LAO reported.
In its report,
the Senate Committee identified the following advantages to special
districts:
1. Special districts
can tailor services to citizen demand
2. Special districts can link costs to benefits
3. Special districts are responsive to their constituents
Helpful
Links
Sources
- Legislative
Analyst's Office
Water Special Districts: A Look at Governance and Public Participation
Chapter 107, Statutes of 2001
Sacramento, CA
March 2002
- Senate Local
Government Committee
What's So Special About Special Districts?
3rd ed.
Sacramento, CA
February 2002
NOTE: The Senate
Committee on Local Government obtained most of its information about
special districts from the State Controller's annual report on special
districts, which defines special districts more broadly. As a result,
the State Controller's Office reports that there are approximately
4,800 special districts in the state.
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