S.D. County Shortchanged Funds, State Study Finds

A state legislative analyst’s report confirms what San Diego County has been complaining about for years: that the county gets less state money per person than most.

County officials said such a document was long overdue, but emphatically welcomed the findings.

“This is the first time any state agency has recognized that San Diego County has less fiscal capacity than almost any other county to carry out state-mandated and necessary local programs,” said David Janssen, the county’s assistant chief administrative officer.

Since the mid-1980s, county officials have insisted repeatedly that San Diego was not receiving its fair share of state general tax revenue, which consists primarily of property tax, sales tax, fines and forfeitures, and vehicle registration fees. Such taxes are the major source of revenue for the county.

Cries for more financial assistance, however, went unheeded, according to county officials, and as a result they initiated four lawsuits against the state to obtain more funds.

The report, which was written at the request of Assemblywoman Sunny Mojonnier (R-Encinitas), cites the state’s way of doling out general tax revenue as the primary reason for the county’s financial woes.

The county must spend the lion’s share of its state money on programs required by the state, such as health care for the poor. After it spends that money, the report says, the county is left with 31% less money per capita than the state average to spend on local programs. In fact, the report notes, in fiscal year 1987-88, San Diego County ranked 55th among the state’s 58 counties in per-capita spending.

Supervisor George Bailey, who prompted the board to initiate one of the lawsuits against the state in 1986 to change the way property taxes are allocated, said that the findings were “long overdue” but added that it “validated” the county’s claims.

“The county is increasing in size, and demand for services is escalating, but our discretionary fund is shrinking and it’s becoming a devastating situation,” said Diane Jacob, the supervisor’s chief of staff. “A lot of tax money is being paid and not enough of the tax money is coming back to serve our people’s needs.”

Mojonnier, who obtained the information on behalf of county officials, said, “I wrote to the governor even before San Diego filed its lawsuits informing the administration about the inequities, but was ignored. This information shows in black and white what’s been happening, year after year after year.”

But the legislative analyst’s document--made public by county officials Wednesday--does not blame the state for San Diego’s current financial status, which local officials describe as “grave.” Therefore, Janssen said it is unlikely the document would be used as a tool in the county’s on-going lawsuits to get more funds from the state, but added that it would be “widely circulated” to awaken state legislators to San Diego’s fiscal problems.

The analyst’s document does not describe the condition of San Diego’s finances. It simply states that the county receives less general tax revenue, primarily property tax, compared with other counties.

“San Diego County has less revenue remaining to address local needs after paying the costs of state-required programs. . . . It has less fiscal capacity to deal with local service demands and changing state requirements than most other counties,” according to the document prepared by Juliet Musso, a program analyst with the Legislative Analyst’s Office, the nonpartisan fiscal adviser for state legislators.

After San Diego County finances state-required programs--which, for example, provides residents with jails and courts, health care and social services--with general revenue funds, the county has $74 per capita remaining to pay for local programs, compared with a statewide average of $108.

A major reason for such inequity stems from the way the state reacted to Proposition 13, which passed in 1978 and reduced property taxes statewide to 1% of assessed valuation. Before Proposition 13, each county was allowed to set its own tax rates and use the money how it chose.

But after the passage of Proposition 13, the Legislature determined how much tax revenue each county should receive and also took control of how it should be spent. The Legislature’s formula for distributing the tax revenue was based on how much money each county was spending on local programs before Proposition 13 took effect, and in essence, froze it at that amount.

As a result, the counties that were taxing and spending the most before 1978 came out ahead, and counties such as San Diego, where urban problems were only beginning to take hold and government officials had not yet reacted by raising taxes to pay for new programs, came out on the short end.

“It would be difficult to place blame on somebody because the situation we’re in now is the result of reasonable decisions that were made years ago,” Janssen said. “That’s the irony of all this.

“For example, back in the mid-1970s when inflation was driving up property taxes, people were screaming to stop the rise. So our county officials responded to the will of the people and continued to cut down the property tax rate. But when Proposition 13 passed, the following action froze the property rates and since then we’ve been getting a lesser share. Who can you blame?”

Such inequities, however, have infuriated some supervisors, such as Brian Bilbray, who interpreted the legislative analyst’s document as evidence that the county has indeed been short-changed by the state Legislature.

“They can blame Proposition 13 all they want, but it wasn’t Proposition 13 that locked us in,” Bilbray said. “It was the legislators who did that. It was negligent on their part to do that, and, in essence, it punished the counties that tried to keep property taxes down.

“It’s encouraging that somebody at the state is finally admitting that there is a gross inequity and that our taxpayers are downright being ripped off,” he said. “Now, maybe we can get the politicians to recognize this and stop them from treating our residents like second-class citizens.”

Jacob, the chief of staff for Supervisor George Bailey, added: “I think the fact that the legislative analyst provides an unbiased opinion should help educate the administration and the legislators about the gross inequities that we are facing and help correct the problems.”

SAN DIEGO COUNTY FINANCES

After spending general-revenue funds on state-required programs, San Diego County is left with $74 per capita for local programs. That’s 31% below the statewide average of $108 per capita. Of the state’s 58 counties, San Diego ranked 55th.

Money for local programs from general revenue County per capita Alameda $72 Butte $75 Contra Costa $97 Fresno $97 Los Angeles $117 Orange $80 Riverside $96 Sacramento $122 San Bernardino $86 San Diego $74 Santa Clara $86 Ventura $114 Statewide Average: $108

Information based on fiscal year 1987-1988.

Source: California Legislative Analyst’s Office