Budget shell game is getting old Budget shell game is getting old (January 21, 2004)

Although city council members and supervisors know it is terrible public policy for the state to once again raid local property taxes, many public officials last week seemed resigned to the maneuver by Governor Schwarzenegger that deftly plucks more than $1.3 billion in local property taxes to balance his proposed budget.

In the proposed budget, K-12 schools didn't take as big a hit as was feared, but other local losses are significant, though not overwhelming. Menlo Park stands to lose about $326,000, and Atherton, about $172,000. Woodside and Portola Valley would lose more modest amounts, as will the Menlo Park fire district. The action prompted fire board member Peter Carpenter to call the governor's "no new taxes" campaign pledge "a lie if it means you just take property taxes away from local government and leave the local governments to figure out how to raise their taxes or cut essential services."

San Mateo County faces a huge revenue loss -- almost $50 million, officials say -- which will come out of programs that primarily serve the poor, disabled, and the elderly. Board of Supervisors President Mark Church said the county will work with other agencies around the state to pass a constitutional amendment that will assure cities, counties and school districts enough revenue to carry out their legal responsibilities. "We can no longer tolerate this shell game," he said.

Mr. Church hit the nail on the head. And no wonder he and other county officials are outraged about budget tactics. Since 1992, San Mateo County has lost more than $700 million in local property taxes to the state, much of it siphoned off to support schools. And it is no surprise that counties are hit the hardest, since it is their mandate to protect and care for the poor, disabled and elderly, who have virtually no political power.

Another shell game: the governor's canceling of the vehicle license fee to keep a campaign promise, then saying he would make up the revenue lost to local governments when they threatened to blame him for massive cuts in police and fire services. But the promised reinstatement, known as a backfill, has local governments worried. Menlo Park has failed to see the backfill yet and City Manager David Boesch fears that the revenue is gone for good.

And now there is the possibility that the major linchpin of the governor's proposed budget -- passage of a $15 billion bond issue in March -- is in trouble. According to the latest Field Poll, 40 percent of those surveyed would vote no on the bond issue if the election were held today.

At a recent conference of incoming legislative leaders, state Sen. Don Perata, the Oakland Democrat who will take over leadership of the Senate from John Burton of San Francisco, again called for additional taxes to close the budget shortfall, a plan the governor steadfastly refuses to accept. But Mr. Perata urged the governor to send the Legislature a tax package that could be put on the ballot.

It is time for local governments to be treated fairly at the state level, but that will never happen if the state is perennially out of money. The governor's budget appears to be another short-term fix. It will not assure long-term revenue streams for local governments to carry out the health, social, and court programs they are required by law to provide.

Some political analysts believe that if the governor's $15 billion bond issue fails, it will force him to take another look at increasing taxes, and perhaps agreeing to put a measure on the November ballot. Many voters remember that incoming California governors Ronald Reagan and Pete Wilson both approved tax increases shortly after they were elected, with little political fallout. Maybe Gov. Schwarzenegger will see the wisdom of paying as we go, and call off raids on local government revenue. It makes a lot more sense than saddling the state with $15 billion in debt that will threaten the state's solvency, and take years to pay off.

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