Almanac

News - November 10, 2010

Rich Gordon: 'People don't understand where taxes go'

by Dave Boyce

Rich Gordon, the outgoing San Mateo County supervisor who was elected Nov. 2 to the state Assembly, opposed state Proposition 22, which voters approved on Nov. 2 and which restricts the ability of state government to redirect local property tax revenues away from cities and towns.

It's a county government concern because the state requires counties to pay for public health services. In tough times, when Sacramento looks for creative ways to balance the budget, the Legislature takes on a responsibility to protect a county's tax-based funding mechanisms. Because Prop 22 limits the Legislature's flexibility, county supervisors may have the unpleasant task of trying to comply with unfunded mandates.

As a supervisor, Mr. Gordon would have had to deal with the mandate side of things. But with his election to the state Assembly, he is now on the other side of that interaction.

"The less freedom that the Legislature has to deal with financial issues, the greater impact it could have for the county to deliver health and welfare services," Mr. Gordon said matter-of-factly in an interview.

But has it been fair for the Legislature to descend on cities and towns and use heretofore unchecked power to extract property tax revenues? "I happen to believe that we need to find a way to change some of the tax structure of California," Mr. Gordon replied.

Property tax revenues have the patina of being local, but in many ways they are not, Mr. Gordon said. Proposition 13, which voters approved in 1978 to limit local government's control of these tax revenues, effectively redirected them to Sacramento.

The picture of taxpayer views is fairly black and white, he said. Voters approved Proposition 26, which checks a local government's ability to charge fees, and they rejected Proposition 21, an $18 surcharge on vehicle license fees to benefit parks and wildlife conservation. With all tax increases requiring approval of a two-thirds majority of voters, "the likelihood of an increase in taxes is almost nonexistent," Mr. Gordon said.

Government obligations being what they are, it may be time to look at the tax structure. "There's a really interesting opportunity available at the moment. Government could be more efficient, more effective and more accountable," he said. "I think that this is the kind of thing that has a great possibility for discussion in Sacramento."

Prop 25

"Enough is enough," voters said about annual budget stalemates in Sacramento. Proposition 25 now allows the budget to be approved with simple majorities in the Legislature instead of the two-thirds majorities that have stalled things seemingly every year.

So what are the consequences? The dynamic between Democrats and Republicans is likely to change, but exactly how remains to be seen, Mr. Gordon said. He does not expect higher taxes, though, because nothing has changed as to the two-thirds majority needed to raise them.

Future budgets could be harsher and "reflect efficiency by necessity" because there won't be enough money to go around, Mr. Gordon said.

Prop 26

Proposition 26 includes provisions that require a local government to treat some fee increases like tax increases: obtain the approval of a two-thirds majority of voters before raising them. The fees targeted by the measure generally concern public health.

A measure like this was in the cards, Mr. Gordon said, noting that "the line between taxes and fees has been obfuscated by local governments."

Push eventually comes to shove, he added. In Burlingame Hills, a majority of residents protested a new fee to clean up sewer discharge. The result: the community that refused to pay to clean up the discharge is now fined for the ongoing discharge.

"People don't understand where their taxes go," Mr. Gordon said. "They feel like they paid their fair share, (in essence saying), 'Use the money I already gave for sewers. Don't ask me for more.'"

What if the Legislature were to connect the dots for taxpayers as to where their taxes went? "It would be a very positive step," Mr. Gordon said.

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