Editorial Editorial (March 19, 2004)

Can cities, counties halt state tax grab?

Fed up with California's out-of-control tax policy, local governments and special districts, including the City of Mountain View, are taking a cue from Gov. Arnold Schwarzenegger and are asking the people to address their grievances.

If their measure gains enough signatures, the "Local Taxpayers and Public Safety Protection Act" will go before voters in November. And if voters approve, it will block the Legislature from taking local tax dollars away without voter approval. In addition, it will force legislators to reimburse local governments for any state mandates handed down from Sacramento, another long-standing complaint of cities, counties and special districts.

These local agencies have a very good point. For example, since 1992 the state has ordered local governments to pay into the Education Relief Augmentation Fund, known as ERAF. And the cost is going up. Mountain View, which is paying $4.5 million this fiscal year, may have to fork over $5.7 million next year, a $1.2 million increase.

Local governments also lose funding from sources like the vehicle license fee, or car tax, and special grants. In all, Mountain View's 2003-2004 budget has lost $6.2 million to the state, city officials say.

In recent years, state budgets have only been approved after long and nasty stalemates that permit a small number of legislators to dictate tax policy and force desperate measures to balance a budget, often using local tax dollars. Unfortunately, Proposition 56, to lower the percentage of legislators required to pass a budget, failed after being hit with a barrage of anti-tax advertising.

Not surprisingly, lawmakers in Sacramento are displeased with the efforts of local agencies since their initiative would make it more difficult for them to account for their own budget. It is also fair to say that the state should have some influence on the body of cities it regulates.

But the state does not control vital services like public safety, and it is not doing enough to protect the local government dollars that are channeled through it. Voters should be given the opportunity to say how they want their local tax dollars spent.

It's clear why this should be a priority: the governor and the Legislature have a miserable record in balancing the state budget by using the taxing mechanisms at their disposal. This dysfunctional relationship is often exacerbated by initiative-driven mandates passed by special interest groups, like Proposition 48 which requires that 40 percent of state income must be spent on education.

Now local governments and districts hope they can stake out their piece of the pie, and we predict that California voters will approve such a ballot measure. If they do, it will be another tool to prod legislators, and the governor, to balance state budgets using state -- not local -- revenue.

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