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The Calbuzz Plan for Budget Reform and World Peace

Dec20

Thirty-two years ago, over the strenuous objections from then-Gov. Jerry Brown and nearly every Democratic and Republican official in public life, California voters passed Proposition 13 by 65-35%, slashing property taxes and requiring a two-thirds vote to increase local taxes of virtually any sort.

Brown and the Legislature swiftly rode to the rescue with AB 8 and SB 154, using the $5 billion state surplus to funnel money back to cities, counties and school districts, which meant voters did not absorb the impact of their decision through the immediate reduction of services.

So the dire consequences that the opponents of Proposition 13 had predicted didn’t happen – at least right away.

As a practical matter, a huge financial burden was shifted from local governments to Sacramento and the state’s general fund instantly ballooned by 40% — from $11.7 billion in 1977-78 to $16.3 billion in 1978-79. As a political matter, Prop. 13 opponents were easily portrayed as Chickens Little—and conservative advocates were free ever after to peddle the canard that the tax cut had no impact on local services.

While the numbers now seem quaint — in light of general fund spending plans that soared as high as $103 billion under Gov. Arnold Schwarzenegger – that 40% one-year increase was a financial earthquake that fundamentally transformed the political landscape of California. And while many things have happened in the intervening years – notably the narrow 1988 passage of the Proposition 98 guarantee for funding public schools — the overall mechanism to pay for a huge chunk of the operating cost of California’s cities, counties and school districts has remained a state responsibility.

It’s time to cut the cord.

The general idea is neither new nor hard to understand. Senate President Pro Tem Darrell Steinberg last year proposed a partial plan to “devolve” some services and funds to local governments.

“The only alternative in this difficult fiscal environment is to rethink the roles of government at both the state and local levels and shift programs, along with the dollars to run them, closer to the people served,” Steinberg said at the time. And Gov-elect Brown echoed the theme in his campaign commercials: “We’ve got to take power from the state capital and move it down to the local level, closer to the people.”

Strategically, Brown during the campaign pointedly did NOT explain what that really meant. As Calbuzz noted many times, however, the underlying premise of Brown’s idea was that both power and responsibility must transfer to the local level for the idea to work. In Brown’s recent public hearings on the budget mess, it didn’t take long for the fullness of that implication to emerge. As reported from last week’s session in L.A.:

One dilemma, he said, was that the state tries to make sense out of competing outlooks from regions that have little in common — an argument, he said, for shifting many of the state’s responsibilities to local governments.

“When we take so many local decisions and put them all at the state Capitol, then we have all these different perceptions working on the problem,” he said. “That’s why we get a lot of breakdown and gridlock. Because people see the world differently.”

Based on recent conversations with Steinberg’s staff and Department of Finance types, it’s clear that the transfer of pre-Prop. 13 fiscal responsibilities of cities, counties and school districts back to the locals would account for about 40-50% of the state’s general fund. What’s also clear is that divesting the responsibility for those programs would require the governor and Legislature, by some to-be-determined process, to also provide cities, counties and school districts the authority to find a way to pay for them, most logically through a majority or 55 percent vote of local voters.

So if county residents want a fully staffed sheriff’s department and health services, if a city wants cops, libraries and parks, if a school district wants athletics and music, the residents would have to find the funds to pay for those services, by deciding to raise their own taxes. No more pass-through state funds, no more hocus pocus.

Precisely how California gets to this solution is a level of detail the Calbuzz Department of Management Delegation and Big Picture Thinking is prepared to leave to Sacramento’s legions of hotly talented legislative architects. In this, we associate ourselves with the famous words of the Babylonian sage Hillel who said, after declaring the Golden Rule the essence of Jewish law:  “The rest is commentary.”

No less a modern sage than Big Dan Walters has suggested a pathway to a temporary local tax solution until the full Calbuzz Modest Proposal could be enacted and implemented. As Walters explained it to us in an email, legislative Democrats could quickly pass two new budgets with a majority vote – one with taxes and one without:

“Tax bills would be framed as amendments to an existing statutory initiative that’s germane, such as Steinberg’s income tax surtax for mental health a few seasons back. The Constitution allows the Legislature to propose amendments to statutory initiatives and doesn’t require two-thirds vote to do so because it doesn’t amend Constitution.

“If done in special session, the package (which also could short-circuit election deadlines as in 2009) would take effect 90 days after adjournment of the session. Thus, if done by mid-February it could be on ballot in mid-May — say May 17 when runoffs in LA city elections would be held, perhaps boosting Democratic (pro-tax) turnout somewhat and offsetting what otherwise could be anti-tax Republican turnout.

“Framing tax measures as amendments to past initiative may, in fact, may be only legal way to place taxes before voters; that’s how 2009 measures were framed. If it’s done that’s probably how it will be done since Republicans won’t sanction taxes even going to voters . . . (and this process) is the only way legally and politically it could be done.”

All that could buy time to get to what we’re suggesting –a wholesale restructuring of the way local government is financed.

The general line for the political movement that would get us there is this: return power to the people. With its echoes of the 1960s (God, how we miss those times) those words might not be exactly the preferred slogan, but the fundamental point is clear: transfer power away from Sacramento hacks and back to local communities.

Of course, the Prop. 13 fetishists will scream to the heavens that the idea of allowing local taxes to be raised with a 50% or 55% majority (even if such tax hikes are required to include sunset provisions, which help them pass) offends the laws of nature. They’ll call it an unholy attack on the Sacred Cult of Howard and predictably go nuts.

Let them. Voters in California trust local decision-makers far more than they do the Legislature and they deserve the right to choose – by majority vote – whether to hand the power to those local officials to actually govern. Local school board members, city council members and supervisors are far more susceptible at election time to the decisions of grassroots voters than are state lawmakers representing huge far-flung districts.

Local officials with the power to determine levels of service — based on local support – will finally, and properly, have the tools to make some tough decisions about local programs and pensions – while also facing the up-close-and-personal political consequences of making them.

And when the drown-the-baby-in-the-bathtub anti-government types scream about all this, proponents can reply: We’re for democracy and for empowering local government. It’s the other guys who are for keeping all the power up in Sacramento and in smoke-filled back rooms where THEY have power. We want to return power to the people, to local communities, where you can keep an eye on how money is spent and for what.

A lot has happened in the 32 years since Proposition 13 that will have to be taken into account. The landmark Serrano vs Priest decision, for example, will require that school districts aren’t wildly underfinanced in one community and lavishly funded in another. Proposition 98 will have to be handled. All kinds of state mandates that don’t include funding will have to be altered. See Hillel: on commentary.

California state government has plenty to do to fund and repair higher education, highways, state parks, state law enforcement, prisons, state courts, environmental protection, natural resources and the like, just as state government did before Proposition 13.

But three decades after the great transfer of power to Sacramento, it’s time to fight for power to local communities, for sanity in government finance and even, we dare say, for democracy.


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There are 5 comments for this post

  1. avatar ReilleyFam says:

    Yep, funding and responsibility back to the locals. That way in any giving community they can fund THIER priorities. If Orange county wants no TANF and lots of cops & LA county wants the opposite; fine. Voters in any given city &/or county can decide what they can afford and how they want it divided up.

  2. avatar sqrjn says:

    Such a very bad idea. Possibly a good idea in “the worse the better” marxist sense.

    Power may devolve to the local level, but responsibility will remain in Sacramento. No way Californian or Federal Courts are gonna let Jerry point the finger at municipalities. Things will go wrong. The state will have to bail the locals out and the unwashed masses will suffer in the meantime. Hillel can sit on it and spin.

  3. avatar chrisfinnie says:

    Since I’m not familiar with it, can somebody explain HOW Serrano vs Priest proposes to eliminate these disparities? Because, as much as I agree with the principles of local control, that was the first thing that occurred to me. Beverly Hills will still have good public services. Bell will have none.

    Plus, it seems cities have come to the conclusion that the most cost-effective way to provide services is to consolidate–not to provide for them locally. I’ve read recently about several cities that have contracted police or fire services out to larger neighbors, figuring that economies of scale would save everybody money. And I have long wondered why the largest city in my county has not one, but several school districts–one for high schools and several for neighborhood elementary and middle schools. Seems inefficient to me.

    But, beyond the arguments about inequality or economies of scale, there are some services only the state can provide. State colleges and universities, for example, state highways for another, bridges that no local government could afford, the CHP, state prisons, rail lines, Medicaid, unemployment, utility oversight, etc., etc., etc. It seems like a pretty long and expensive list, even without much detail at the end. Even with shifting what it can to local government, can the state afford all that?

  4. avatar dkh says:

    Hillel lived in Israel and had no connection to Babylon

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