May 26 2009

California is about to take local money, again

The Prop 13 hangover never ends.
By Don Blubaugh

IN 1978, WHEN voters approved Proposition 13 they set in motion intended and unintended consequences. What was intended was a reduction in property taxes that were climbing rapidly because of the inflationary spiral on housing values. Voters approved the measure and property taxes were slashed by 57 percent. This intended benefit was achieved.

A major unintended consequence happened also. The state of California started determining how local property taxes would be distributed, taking a portion of it themselves to help pay for education previously paid for from other state revenues.

Several times since then the state has raided local funds to balance its budget. It is about to do it again.

The state was flush with money in 1978 and chose to ease the burden on local government and schools (the primary recipients of property tax revenues) by providing state funding to ease the loss resulting from Prop. 13.

While doing so the state changed the long-standing way property tax had been distributed and assumed control of property tax distribution.

Before 1978, property taxes were under the exclusive control of cities, towns, counties, school districts and other local government agencies. With Prop. 13 the state mandated how the reduced Prop. 13 tax receipts would be distributed including the ability to take those property taxes for the state’s own purposes.

So, be prepared.

With the failure of recent ballot propositions the state will again attempt to take some of that money to help balance its own budget. The rub is, the economic downturn has already directly affected local government and budget reductions are commonplace.

Now these agencies will have to make deeper budget cuts because of likely state action.

This is especially frustrating to local officials who, over the years, have really balanced their budgets without using smoke and mirrors, borrowings and other financial gimmicks the state has.

Once again, the state plans to rob money from local agencies in the hopes that within a few years economic times will be better. That’s the fallacy of state budget making. Legislators keep hoping for better days ahead instead of doing the hard work of living within its means today.

You should be outraged. Local governments have, for the most part, taken up the challenge and balanced their budgets every year. To now have to deal with the effects of irresponsible legislators and governors is beyond the pale. Local government will again be required to give up funds to Sacramento unless you voice your views to legislators and the governor.

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Blubaugh in former city manager of Hayward, Walnut Creek, Martinez and is a member of the Bay Area News Group’s citizen editorial board.  This column was originally published in the May 23, 2009 BANG-EB newspapers.