Past Time for Reform.
The Governor’s Proposed Budget for Fiscal Year 2012 (2011-12) was released on January 10, 2011. According to the Governor’s transmittal letter to the Legislature, he believes this budget “…proposes a far-reaching realignment of government functions by restoring to local government authority to make decisions that are best made closer to the people, not in Sacramento…”
While the message is admirable and the intended actions long overdue, they fall far short of restoring local control or fixing what is wrong in delivery of government services in California. What is required is to completely realign service delivery among levels of government and to restructure revenue and finance mechanisms to support the realignment. Certainly the Governor’s consistent message that services are best and most efficiently delivered at the local level is one we support. However, despite what he describes in his budget message, there has been no substantive proposals to really restructure the revenue flow.
Currently, from a 30,000-foot level, there are three main sources of revenue for the State’s General Fund: property taxes, sales taxes, and income taxes. These are supplemented by Vehicle License Fees and other fees; and there are other sources of revenue that support State services such as transportation fees and gas tax, but which are restricted to special uses and cannot be used for general purpose government.
On the other side of the coin, property taxes and sales taxes are also the main support of general purpose local government: county, municipal, special districts, and education. These “core” taxes are supplemented by certain local taxes like Utility Users Tax or special, locally passed quarter or half cent sales taxes, some of which are available for general purpose government and some of which are restricted for such things as transportation. (For in-depth information on California government financing, refer to www.californiacityfinance.com.)
The laws governing the development, levying, and allocation of most taxes, and especially Property Tax and Sales Tax, are archaic. There remains little or no connection between the authority to levy the tax and the responsibility for delivering the services the tax supports; and no logic supporting the allocation among levels of government. Both the connection and the logic have been broken and lost over the years, warped by the tinkering, stirring, and confusion created by the State legislature and California voters.
It is way past time to make the necessary (and likely painful) corrections to the entire system: service realignment and revenue allocation – both must happen simultaneously. There will be winners and losers among same-level governments such as cities, and between layers of governments such as the state, counties, and cities. But if intelligent people put their collective heads together in a shared desire to fix the system in the best interests of the people of the State of California rather than out of self-interest or blind political alliance, it can be done. It must be done if we are to survive as a state, and regain our position of leadership within the union.
There are many other sources out there to provide varying points of view and a myriad of ideas. Simply pick your search engine and search on “California budget reform”, “California State finances”. or anything similar. There are good ideas, bad ideas, ill-informed ones, and thoughtful one. Whatever your political or social philosophy, read, get informed, think – and let’s all come together in a real and timely solution for the sake of the people we serve.
Neither the City of Hayward or I have any opinion about, support for, nor opposition to the following. These links are simply provided as a means to continue your reading and spark the conversation: http://www.californiacityfinance.com, http://www.cbp.org/, http://www.cafwd.org/, http://www.lao.ca.gov/laoapp/main.aspx, http://www.cacities.org, http://www.calbuzz.com/2010/12/the-calbuzz-plan-for-budget-reform-and-world-peace/, and http://alumni.berkeley.edu/news/california-magazine/fall-2010-have-we-got-issues/propping-californias-budget.
originally posted – January 30, 2011