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Cities cry uncle 

A proposed ballot initiative would stop the state from poaching city revenues

 2010 may be the year of the angry voter, a prospect that strikes fear into the hearts of incumbent politicians. But voters are not alone: City and county governments are preparing to strike back against what is being called state banditry of local funds.

In the worst economy most people can remember, the California legislature views local government revenues as a cash reserve to use toward the state budget. And as the state falls deeper into debt—a deficit of more than $15 billion at the most recent reckoning—the legislature is looking to grab any money it can. Earlier this year, the state “borrowed” billions of dollars from cities and counties toward balancing the budget.

Cities are now fighting back. A proposed measure informally known as “Proposition 13 for cities” is working its way toward qualifying for the November ballot. Called the “Local Taxpayer, Public Safety and Transportation Protection Act of 2010” it would amend the state constitution to impose a firewall that would allow municipalities to keep their own money. If enough signatures are secured to qualify the proposition for the ballot and voters pass the measure, it would prohibit the state to take or borrow money from local governments to shore up the books.

“We don’t want to be an ATM for the state,” said San Luis Obispo City Councilmember Allen K. Settle, an ardent supporter of the proposal. “That’s what we’ve become for Sacramento. It’s like someone reaching into your pocket and taking your money and then coming back for more.”

Settle lists the instances of the state government pinching city money. The gradual siphoning off of funds will affect the ability of the city to provide services, Settle complained. “Where does it end?” he wondered.

Since the passage of Proposition 13 in 1978, cities and counties have become more dependent on the state for funds. Property taxes that had gone directly to support local governments now funnel through Sacramento and the state has been taking increasing amounts of what used to belong to municipalities.

San Luis Obispo had $800,000 requisitioned by the state last year. Luckily for cities, the state returned the money by issuing a bond, a situation outgoing SLO budget director Bill Statler said was a short-sighted move. Some have likened the move to borrowing from a loan shark; it solves an immediate problem but in the long run it costs dearly.

The state has taken $30 million in the last 20 years from the city of San Luis Obispo, Statler said. To the budget chief, the relationship between the state and cities is akin to the 1980 Sugar Ray Leonard-Roberto Duran fight in which Leonard pummeled Duran until he begged in Spanish to have the fight stopped: “We’re in that situation and like Duran, cities are saying ‘No mas, no mas,” Statler said. The city won’t gain from the proposition; it would simply be able to keep the money for local services it should rightfully have, he added.

The League of California Cities is a primary sponsor of the proposed measure. David Mullinax is a regional manager of the organization and has helped collect more than 1.1 million signatures that were recently submitted to the state. Approximately 700,000 confirmed signatures are needed to qualify a proposition for the ballot.

A similar California proposition—Proposition 1a—passed in 2004 by more than 82 percent of the vote. However, it included an element many of its authors later regretted: an emergency clause. “We thought of emergency as things like earthquakes and tsunamis and things like that,” said Mullinax. “We tried to be good players but we didn’t think a legislature that couldn’t make its own budget was an emergency.”

Now Mullinax and city leaders throughout California worry the state will again devise a scheme to lay claim to even more money to shore up the budget. Mullinax admits the “Local Taxpayer, Public Safety and Transportation Protection Act of 2010” may not be most alluring title, but he says it's one of the most necessary propositions that may come to a vote in a long time.

Cities have been hit hard by the economy (San Luis Obispo sales tax income for the last quarter of 2009 was down 4.9 percent) and the proposition would protect the dwindling revenue cities must retain for local services.

“We’re not asking for any of the money stolen from cities in the past,” said Mullinax. “This would simply protect local services from being poached by state government that cannot balance its own budget.”

Staff Writer Robert A. McDonald can be reached a



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