Council urges vote for Prop. 1A Council urges vote for Prop. 1A (October 29, 2004)

Measure would block state local tax grabs
by Jeb Bing

The Pleasanton City Council has endorsed Proposition 1A, one of 16 major initiatives on Tuesday's ballot, which would block the state from dipping into local tax revenue.

Joining with the League of California Cities and other organizations, the council urged a favorable vote on the proposed amendment to the state Constitution. The measure would reduce the Legislature's authority over major local government revenue sources. These prohibit the state from claiming part of local property taxes, sales taxes and vehicle license fees to help fund state budget shortfalls.

"What it's intended to do is to give permanent protection to city finances," explained Finance Director Sue Rossi. "We've had frequent 'raids' by the state over recent years where they've taken revenues away or borrowed money and never returned it. For Pleasanton, that has now amounted to $40 million that's been taken away by the state, with another $7 million being grabbed this fiscal year."

In fact, for the last 12 years the state has appropriated more than $40 billion in local property taxes from cities, counties and special taxing districts throughout California. Rossi pointed out that often these "appropriations" are made long after the June 30 budget year deadline imposed on local governments when the Legislature finally wraps up its budget, sometimes not until after Labor Day. That forces cities to go back to their own budgets and make the necessary cuts months after their fiscal year is under way.

"What's important for any city is long term financial stability, and you just can't plan on it if the state is going to take money away during the budget year," Rossi said. "We have never known from year to year just when or if the state will take millions of dollars away from us, as it has been doing. We're always at the mercy of the state."

Although it would prohibit the state from reducing local tax proceeds, the measure would also allow the provisions to be suspended if the governor declares a fiscal necessity and two-thirds of the Legislature approves the suspension. But the suspended funds must be repaid with interest within the following three years and no other borrowings could occur during that time.

Proposition 1A has the support of Gov. Arnold Schwarzenegger, cities, counties and most taxpayer groups.

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