2005 California Government Code Sections 56815-56815.2 Article 3. Revenue Neutrality

56815.  (a) It is the intent of the Legislature that any proposal
that includes an incorporation should result in a similar exchange of
both revenue and responsibility for service delivery among the
county, the proposed city, and other subject agencies.  It is the
further intent of the Legislature that an incorporation should not
occur primarily for financial reasons.
   (b) The commission shall not approve a proposal that includes an
incorporation unless it finds that the following two quantities are
substantially equal:
   (1) Revenues currently received by the local agency transferring
the affected territory that, but for the operation of this section,
would accrue to the local agency receiving the affected territory.
   (2) Expenditures, including direct and indirect expenditures,
currently made by the local agency transferring the affected
territory for those services that will be assumed by the local agency
receiving the affected territory.
   (c) Notwithstanding subdivision (b), the commission may approve a
proposal that includes an incorporation if it finds either of the
following:
   (1) The county and all of the subject agencies agree to the
proposed transfer.
   (2) The negative fiscal effect has been adequately mitigated by
tax sharing agreements, lump-sum payments, payments over a fixed
period of time, or any other terms and conditions pursuant to Section
56886.
   (d) Nothing in this section is intended to change the distribution
of growth on the revenues within the affected territory unless
otherwise provided in the agreement or agreements specified in
paragraph (2) of subdivision (c).
   (e) Any terms and conditions that mitigate the negative fiscal
effect of a proposal that contains an incorporation shall be included
in the commission resolution making determinations adopted pursuant
to Section 56880 and the terms and conditions specified in the
questions pursuant to Section 57134.
56815.2.  By July 1, 2001, the Governor's Office of Planning and
Research, in consultation with the Controller, shall convene a task
force composed of representatives of cities, counties, special
districts, and local agency formation commissions, as nominated by
their statewide organizations and associations, with expertise in
local government fiscal issues for the purpose of creating statewide
guidelines for the incorporation process.  The guidelines shall be
completed by January 1, 2002, by the Office of Planning and Research
and shall serve as minimum statewide guidelines for the incorporation
process.  The guidelines shall include, but not be limited to,
information to assist incorporation proponents to understand the
incorporation process, its timelines, and likely costs.  They shall
also provide direction to affected agencies regarding the type of
information that should be included in the comprehensive fiscal
analysis of an incorporation, as well as suggestions for alternative
ways to achieve fiscally neutral incorporations.  The guidelines
shall be advisory to the commissions in the review of incorporation
proposals.