Half a Cent May Make a Big Difference

California voters will make a key decision Nov. 2 on local government finance.

They will decide at a special statewide election called by Gov. Pete Wilson whether to make permanent the temporary half-cent state sales tax increase that was imposed by the Legislature and governor in 1991 to help the state offset a massive state budget deficit.

This year, the state budget was balanced by shifting $2.3 billion in property tax revenues from local governments, using the money to cover state obligations to finance public schools.

To ease the blow on local governments, the budget extended the half-cent sales tax from June 30, when it had been scheduled to expire, through the end of this year, with the revenue going to cities and counties.

If voters approve the surcharge, it will become permanent as part of the state Constitution. The levy is projected to yield $1.5 billion a year for counties and cities.

As a means of making the tax more palatable to voters, the proceeds would be dedicated to a variety of law enforcement and public safety programs. The official title of the ballot measure is the Local Public Safety Protection and Improvement Act of 1993.

Nothing, however, would keep counties and cities from using the sales tax money to displace funds currently going to law enforcement. A like amount of money then would be available to spend on other programs that otherwise might be cut.

The tax will pass or fail on the basis of the statewide vote. But for any county to benefit from the proceeds, either that county’s board of supervisors must have ratified it or the county’s voters must have favored it by a majority in the Nov. 2 vote.

If a county board does not approve the tax and the county’s residents also vote against it, the tax still will be collected in that county but the county would get none of the revenues. Several counties have put separate sales tax proposals on their ballots to serve as a backup in case the statewide measure fails.

Should the tax lose statewide, Wilson and the Legislature most likely would have to develop an emergency plan early in 1994 to keep cities and counties solvent.