Dan Walters: California's state and local finances intertwine

dwalters@sacbee.comMay 27, 2013 

One of Proposition 13's unintended consequences was to intertwine state finances with those of cities, counties and school districts.

The syndrome is very evident in schools because the state took on the lion's share of their financing after Proposition 13, which reduced local property taxes, passed in 1978. The system was later enshrined in the state constitution.

The interconnection of the state budget and those of more than 400 cities is less apparent, because cities get almost no direct state aid. But when the state has experienced budget problems, it has reached into city coffers.

An obvious example, two years ago, was elimination of city redevelopment agencies and seizure of their reserves on the grounds that they had been skimming property taxes from schools, thereby forcing the state to spend an extra $2 billion a year on schools.

The state's 58 counties have always occupied an odd place in the hierarchy of government. They are local governments providing local services such as sheriff's patrols and fire protection, as well as agents of the state in running health and welfare services for the poor and infirm.

Scarcely a legislative session passes without some major new issue in the state-local relationship arising.

Two decades ago, as the state coped with a major budget crisis, then-Gov. Pete Wilson and the Legislature created something called the Educational Revenue Augmentation Fund and forced local governments to shift billions of dollars in property taxes to schools, thus allowing the state to reduce its school aid.

Since then there has been a dizzying series of shifts of property taxes, sales taxes and vehicle license fees back and forth between the state and local governments (one dubbed "the triple flip").

There were also partially successful efforts by local officials, via ballot measures, to protect themselves from state raids, and several rounds of "realignment" of responsibilities between the state and counties.

Under the latest and largest of those maneuvers, with a multibillion-dollar price tag, counties have assumed responsibility for incarcerating and supervising low-level felons, thereby allowing the state to reduce its illegally overcrowded prisons.

That shift is still a work in progress, but this month, a new point of friction between the state and counties emerged. Gov. Jerry Brown proposed that the state indirectly take several hundred million dollars a year from counties on the assumption that they will be saving money because many of the medically indigent will be covered by the new federal Affordable Care Act.

Counties protest that the shift is unfair. Their lobbyists are hammering legislators not to approve that aspect of the governor's budget.

No matter how that turns out, however, there will always be another issue.

Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters. Follow him on Twitter @WaltersBee.

The Tribune is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service