Still another finance study

By Dan Walters
The Sacramento Bee (Published May 1, 2000)

One could construct a coffee table, perhaps even a dinette, out of the studies and reports on the financial crisis of California's local governments that have been produced during the last decade.

Thousands of printed pages and hundreds of thousands of words have been generated by legislative committees, blue-ribbon commissions, academics, consortia of local government officials and private think tanks. They are so numerous, in fact, that later ones quote heavily from earlier ones, thus becoming a self-perpetuating phenomenon.

Not surprisingly, given the heavy cross-pollination, these tomes tend to come to similar conclusions about both the problem and what could -- or should -- be done to resolve it.

The problem is that after Proposition 13 slashed property tax revenues to schools and local governments in 1978, the state assumed a greater responsibility for financing them. But governors and legislators played games with that support and left counties with very little discretionary income to finance such local services as police and fire protection, and left cities dependent on sales taxes, thereby encouraging them to favor auto malls and other tax-generating forms of development.

The almost universal solution being proposed is to rejigger state aid to counties, giving them more control of their finances, and alter the mix of sales and property taxes to bring more equanimity to cities' finances.

The latest version of the many paeans to reform comes from a commission appointed by Antonio Villaraigosa, the just-departed speaker of the state Assembly.

The time-worn proposals in the Villaraigosa commission's report include a swap of sales and property taxes, a restoration of the property tax revenues that the state grabbed from local governments in the early 1990s, and a regional approach to land use decision-making to curb the tendency to favor income-generating commercial development.

"This is an effort to empower those communities to have more local control over those decisions and their quality of life," said Villaraigosa, who is now running for mayor of Los Angeles.

Much of what his commission recommends is commendable, but it's been praiseworthy for a long time. The question is whether the current governor, Democrat Gray Davis, and the Legislature are willing to stop talking about local government reform and start doing something about it -- and whether local governments themselves are willing to shake up the status quo.

The prospects for change at the gubernatorial level are not bright. Davis is notoriously reluctant to cede authority to anyone, particularly those lower on the political food chain. It would be difficult to imagine Davis, the monarch of micromanagers, simply agreeing to grant cities and counties more fiscal discretion.

Term-limited legislators tend to come from local government, and the Villaraigosa report echoes their enhanced interest in changing the status quo, but pounding that latent interest into a cohesive program is another matter. Villaraigosa's successor, Bob Hertzberg, talks about doing it, but whether he can muster the will is problematic, especially since he'll be speaker for just two years.

And there are local governments themselves. They may want more money, especially discretionary money, but are they willing to give up or even modify their jealously guarded land use powers? And are they willing to trade the known for the unknown through a swap of property and sales taxes?

The Villaraigosa commission report is merely the latest, not the last, of the papers on this issue that will join a very tall stack of dust-catchers.

DAN WALTERS' column appears daily, except Saturday. Mail: P.O. Box 15779, Sacramento, CA 95852; phone: (916) 321-1195; fax: (781) 846-8350; e-mail: dwalters@sacbee.com