Cities to State: Stop Picking Our Pockets

The state government of California has begged, borrowed and, according to those who have to govern the Golden State's cities, essentially stolen billions of dollars from localities to balance budgets for the last 18 years. Cities and their finance managers now say they have had enough.

A long list of local governments, public safety organizations, chambers of commerce, and transportation authorities are banding together to pass an initiative that would stop the state from continuously picking their pockets.

"The state needs to own up to its responsibilities," said Scott Miller, Chief Financial Officer for Beverly Hills, one of three cities spanned by Sunset Boulevard. "I understand the state is in a pretty bad mess financially, but they can't throw it off on to local governments."

California owes the city of Beverly Hills about $2 million for spending on projects it forced the city to make over the years, Miller said. That's a tough pill to swallow as his city seeks to cover a multi-million dollar budget deficit for the second year running.

Since the early 1990s the state has extracted an estimated $10 billion from local governments through the use of arcane budget tricks with insidious sounding names like ERAF and the Triple Flip. The governor and the legislature have also approved large raids on redevelopment funds that are being challenged in court.

The state's continued borrowing and diverting of local tax dollars to help fill its own projected $20 billion deficit, comes as mayors and county executives confront huge deficits of their own, forcing thousands of layoffs and jeopardizing the credit ratings of hundreds of cities. Los Angeles' credit rating was lowered in early April for the second time in as many months.

Municipalities across the state will be releasing proposed budgets in the coming weeks that are sure to cut basic services like library and park hours, and in some cases public safety. The city of Los Angeles is staring at a $485 million projected budget deficit for the fiscal year that begins July 1. The mayor and city council have threatened to eliminate as many as 4,000 city positions, many of which will come in the form of layoffs.

"The idea that the state could come in and take local revenues to fund the state budget is extremely troublesome and frustrating for elected and appointed city officials and their constituents, who really look to local governments for the most important services they get," said Chris McKenzie, executive director of the California League of Cities.

McKenzie and the league are heading up a process to put the Local Taxpayer, Public Safety and Transportation Protection Act before voters in November. If passed, the constitutional amendment would prohibit the state from borrowing local revenues that typically go to fund transit, redevelopment and other basic city services.

"I think people are coming to the conclusion that we have gone too far in the direction of empowering the state of California to do whatever it wants including taking the revenues of local governments and making it much harder to deliver community services," said McKenzie.

In addition to the financial burden of being owed money by the state, city officials from Beverly Hills, Los Angeles and West Hollywood have said the state's erratic budgeting has made local financial planning extremely difficult. They say they can't predict when and how much the state plans to borrow and when or if it will pay money back.

Plus, McKenzie said the state's continued borrowing of local revenues from cities and counties is exacerbating a larger, and perhaps deeper problem in California. It's creating a public, he said, that is increasingly disillusioned with the very idea of public services. "Eventually voters are going to figure it out," he said. Why would they approve new taxes when the state can come take the money?"

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