Get the Facts
Q: What does it mean when you say the state has taken
money from city governments in the past?
A: Since 1991, local governments have experienced repeated financial
raids on their revenue by the state. It began with shifts of city, county
and special district property taxes to off-set state responsibilities to schools. Even in "good fiscal times," the state has opted to tinker with local revenues
rather than its own. Collectively, these practices
have resulted in destabilizing revenue losses and Byzantine
fiscal schemes that are beyond the understanding of
most Californians.
Q: Why is the state looking to borrow more money now?
A: They are looking to borrow local revenue because of
a lack of fiscal discipline and the excesses or extremes
of partisan politics and legislative procedural requirements,
along with spending driven by voter initiatives and
entitlements. Rather than make tough decisions related
to cutting popular state programs or raising taxes,
borrowing local funds and leveraging against the future
is politically more expedient. This practice forces
local governments to make cuts or raise fees and taxes
to shoulder the burden of the state.
Q: Didn't Californians pass ballot measures a few years ago
preventing the state from taking local government and
transportation money?
A: Yes, Proposition 1A (2004) and Proposition 42 (2006) were passed with overwhelming voter support largely
in response to the state's "taking or borrowing" money from local governments and transportation funds.
Q: If the state borrows money from local government this
year, would it have to pay the money back to my local
community?
A: It depends. While there are constitutional provisions
that state that repayment is required within three
years with interest, in the past state politicians
have shown there are devious ways for the state to
get around their financial obligations.
Q: Could this borrowing scheme affect city service levels
for critical servicers such as police and fire?
A: Yes, local government will be left with only a few
options. Locals can borrow from someone else like a
bank to pay ongoing city expenses, using the state
"promise" of repayment as collateral. This will result in interest
which will cost you, the taxpayer more and provide
a lower level of community services. The second option
is that local governments will be forced to cut programs
which could mean fewer police officers, fire fighters,
library officers, reductions to park maintenance, recreation
programs for kids, increase fees for services such
as building permits, utilities and more. Third, if
they have them, cities may also have to dip into their
reserve funds and destabilize its own financing to
cover when the state takes its money. A final and unacceptable
option is to raise local taxes and fees to compensate
for the state seizure of local funds.
