Julie Small
June 01, 2009
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In years past, the state government made a habit of balancing its books by raiding local governments. That's why four-and-a-half years ago, Californians voted to block the state from doing so. But that measure included exceptions - exceptions like the one we're facing now, a $24 billion deficit. Local governments are struggling to pay their own bills - and they're begging state lawmakers to leave their budgets alone. KPCC's Julie Small has more.
Julie Small: Proposition 1A, the ballot measure in question, tells the state to keep its hands off local government money. When it showed up on the November 2004 ballot, more than 83 percent of California voters passed it. But 1A included an exception: if the state faces a deficit, the governor and state lawmakers can grab about 8 percent of local property tax revenue.
This year, that's about $2 billion. The state has to pay back the money within three years. That's what Governor Schwarzenegger is proposing to help close the budget deficit. Daniel Carrigg with the League of California Cities says it's a mistake.
Daniel Carrigg: Borrowing is the type of, sort of bailing water and Band Aid-type of budget proposals that get us into this mess.
Small: Carrigg testified last week before a joint budget conference committee. He pointed out that California will have trouble borrowing even short term for cash to pay its bills this year – so he doubts the state will ever return the $2 billion to local governments.
Carrigg: Three years from now when you're sitting around here saying, "Oh wait! That loan comes due to the cities and counties," we have no confidence that you're going to be paying us back. We may be in court arguing about it.
Small: That irked State Senator Denise Ducheny, who chairs the Senate Budget Committee. The San Diego Democrat says the state government and the local governments are working from the same pot of cash.
Denise Ducheny: You know, everybody else gets state money – and then everybody says. "Gee, the state has a budget problem." Well, 90 percent of all the state money is spent by counties, cities, and school districts.
Small: Ducheny said the local governments should work with the state to solve the deficit problem.
Ducheny: We're going to have to figure out that we partners and it's not a, "We, they, gosh, gee, State! Don't take our money!"
Small: Many of the local representatives at the hearing asked that their city or county be spared from loaning money to the state government. Others seemed resigned to it. They used their time at the podium to weigh in on how that borrowing gets done.
The governor proposes a flat rate from all local governments. The state's non-partisan legislative analyst recommends borrowing more from those with more revenue sources – and less from those with little means. John Lovell with the California Police Chief's Association called that a recipe for mayhem.
John Lovell: Yeah, you could do that. But that will be the Super Bowl of lobbying as every single city and county representative comes to the legislature with the entreaty of "Put us in the hardship area."
Small: Lovell was right. At the hearing, those entreaties did come from just about everyone who came to speak for a city, a county, or a special district. That's something state lawmakers will consider as they struggle to balance the budget by the end of the month.
