49. Cynical and contemptuous

Cynicism and contempt. Isn't there anything new? In an annual Sacramento ritual, cynical appeals to ideology substitute for real solutions to California's increasingly desperate financial condition. And Sacramento's contemptuous disregard for the rest of us doesn't stay in Sacramento. What happens in Sacramento stays in your neighborhood.

When cities were obliged to backfill a large part of the state's deficits in the 1990s, most of them cut social services and park programs and put off needed infrastructure maintenance. Not many of those programs and services were ever replaced. Streets and water systems deteriorated. Neighborhoods suffered.

Cities have now been told to be ready for more suffering.

On the likely expectation that the propositions on the May 19 ballot won't pass, the Governor's budget is expected to include an option for borrowing 8 percent of property tax revenues from cities to close part of the state's deficit. The impact on local governments "? and your neighborhood "? is estimated at just over $2 billion.

According to the League of California Cities, Los Angeles would be forced to loan the state $67.7 million. Long Beach would give up $6.6 million. The county would be particularly hard hit, losing as much as $250 million.

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Taking 8 percent of property taxes would force deep cuts in the services and programs delivered by your city, already battered by the recession. Worse, a property tax shift fixes nothing. It only worsens a structural deficit. The state is obligated to repay borrowed property taxes "? with interest "? in three years.

Kicking the deficit down the road makes cynical sense for termed-out legislators and even Governor Schwarzenegger (who once said that he opposes borrowing from cities). In the meantime, the state will have dug itself a deeper hole from which it's less likely to recover.

Supporters of the proposal point out that cities have the option to borrow against the state's constitutional obligation to repay. This, they say, should mitigate the impact. But that seems an unlikely fix. Finding short term financing in the current the market will be difficult for local governments. And if they become borrowers, cities will have to impose loan costs on their residents through new fees for services or service reductions.

Where they can, some cities would backfill the state's borrowing from whatever federal stimulus funding they receive this year and next. Instead of creating jobs and preserving neighborhoods, local governments will get from Washington and give to Sacramento.

If local borrowing can't replace lost revenue or if stimulus funding can't be shifted under federal regulations, local governments would still have to cut services and programs.

The condition of local government in California is already critical. Cities have begun mandatory work furloughs, laid off employees, threatened public safety jobs, and cut back on park and library programs just as summer begins. Some cities are in even worse shape. Privately, there is talk among city managers that as many as 60 of California's 480 cities may be teetering on the edge of insolvency. Some have already gone over the cliff. Forced lending to the state would send a few more over.

The California Department of Finance estimates that property taxes collected by local governments will decline by an average of 4 percent after growing only 2 percent last year. Sales taxes have already declined by about15 percent from the previous year. In recognition of local government's fragility, the Department of Finance delicately suggests that forced lending begin after December. Any sooner and some cities and counties simply could not pay.

The obligation to lend to the state is a provision of a proposition voters approved in 2004. Between 1991 and 2003, in both good economic times and bad, the state had shifted more than $40 billion from cities, counties, special districts, and redevelopment agencies in order to pay for state programs and services. California voters who overwhelmingly voted for curbs on extractions from local government in 2004 probably thought they had put a firewall between their neighborhood and the cynical and contemptuous authors of the state budget. It turns out that the wall of separation is a dangerously porous one.

A neighborhood is as intricate a social eco-system as a tropical rainforest. Your trash is hauled away. Your street is swept. Someone replaces the darkened streetlight. Needs you don't even know you have are met by the people in local government. The fabric of neighborhood life "? a web of interdependencies "? is tearing; the people who hold it together are running out of options; and cities and counties are about to be run over by a state government bankrupt of ideas.

The image on this page was taken by Flickr user Marshall Astor. It was used under a Creative Commons license.

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