Speaker's Commission
State Seal
Unsnarling Local Government

Los Angeles Times
April 17, 2000

The verdict is in from yet another study of the fiscal snarl that hobbles local government in California, and the conclusion is no great surprise: It's a mess and needs to be fixed. The problem, of course, is how.

The 34-member Speaker's Commission on State and Local Government Finance has offered some small but significant corrections that can be made now. The obvious first step is for the state to give the cities and counties back some of their traditional property tax revenues in exchange for a portion of the sales taxes the state now collects and turns over to local government.

The idea is a good and just one and should be enacted by the Legislature. The transfer would return to the cities and counties some of the independence the state took from them in the wake of Proposition 13, the 1978 property tax limit initiative. Also, it would ease the compulsion of local governments to compete for giant retail establishments because of the sales tax revenues they bring in.

But the commission knows that far more is needed to repair the damage done to state and local fiscal affairs in the past quarter-century. The unintended consequences of Proposition 13 have robbed local governments of their ability to make important decisions affecting the health and well-being of their communities. When things go wrong, no one knows whom to blame.

The other major recommendations dealt with governmental accountability, reporting more clearly to the public who is responsible for what service. This could be helpful, but it falls short of what is urgently needed--a dramatic restructuring of local government, how it is financed and how it operates.

To that extent, the commission, established by then-Assembly Speaker Antonio Villaraigosa (D-Los Angeles), offered some suggestions but not formal recommendations. The most significant dealt with the need for a regional growth policy incorporating environmental, economic and socioeconomic equity. The California Constitutional Revision Commission attempted this sort of restructuring several years ago but failed to agree on how to make it work.

A major impediment to change is that legislators are politically loath to support any proposal that might be interpreted as undermining the sanctity of Proposition 13 or be suspected of containing a hidden tax increase. But some of the comments of Joel Fox, a commission member and the president emeritus of the Howard Jarvis Taxpayers Assn., suggest that lawmakers may be unnecessarily wary of change.

For one, Fox said the best way to develop regional solutions may be to replace the traditional county system with some sort of directly elected regional body. Fox insists that existing regional agencies composed of local government officials or their appointees don't work because they are not accountable to voters.

Another surprise from Fox was the possibility of increasing the property tax on commercial property from Proposition 13's constitutional limit of 1% of actual value. The 1% rate, which applies to all property, does not accurately reflect the ever-increasing value of business property in comparison to homes.

Fear of political reprisal has led Sacramento officialdom to think that only incremental change is possible, if that. Perhaps that's an excuse for doing nothing. But the work of the successive study commissions indicates that only dramatic, far-reaching reform will in fact correct the ills of the state-local fiscal tangle. What's needed is the political leadership and will to get the job done.

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Speaker's Commission on State/Local Government Finance
in collaboration with the
Metropolitan Forum Project
811 West Seventh Street, Suite 900
Los Angeles, CA 90017
(213) 629-9019