Prop. 218 May Cost County, Report Says

The tax-cutting Proposition 218 approved by voters last month could take $2.5 billion from local government statewide, or 5% of the total they raise in taxes each year, the legislative analyst’s office reported Tuesday.

Among the localities that could be hit hard is Los Angeles County, where a $59-million property assessment for fire suppression is threatened, said Marianne O’Malley, the report’s author. The city of Los Angeles also could lose money, although city officials dispute it.

Proposition 218 sought to make some local fees and taxes illegal, require votes on some existing taxes and make it more difficult for local government to raise new types of taxes in the future.

During the campaign, the independent legislative analyst predicted that it would cost local government at least $100 million. But O’Malley said Tuesday that the $100-million estimate was the minimum.

The new report “places a ceiling on the impact,” O’Malley said. “What we’re saying is no matter how you interpret Proposition 218, we could not imagine this measure having an overall impact on local government that exceeds 5%.”

The legislative analyst, a nonpartisan state entity that advises the Legislature, did not identify specific cities, counties or special districts that could face financial hardship because of Proposition 218.

But at a news conference Tuesday, O’Malley said some local governments could face losses of far more than 5%. O’Malley cited one example of a potential loser: Los Angeles’ $59-million property assessment for fire suppression could be illegal, depending on how Proposition 218 is interpreted by the courts.

O’Malley said the city’s use of money from the Department of Water and Power--a sum that totals up to $120 million a year--also could be threatened, depending on how the initiative is implemented.

“It is very difficult to say at this time with any certainty which cities will be affected, and which will not,” O’Malley said. “There are certain ones that are on the watch list: Sacramento, Long Beach, the city of Los Angeles.”

However, Keith Comrie, Los Angeles’ city administrative officer, said the transfer, which was approved by voters, is not in jeopardy.

“Our attorneys have pretty much ruled that it is not an issue,” Comrie said.

The report noted that the money that local government could lose generally pays for programs not required by state or federal law, such as parks and libraries.

The legislative analyst also raised the possibility that local government may be forced to stop providing some services, and hire private enterprise to take a greater role in such areas as garbage collection.

“I don’t really think they know the impact,” said Joel Fox, president of the initiative’s sponsor, the Howard Jarvis Taxpayers Assn. “I suppose that [the $2.5-billion loss] assumes nobody is going to vote for any new taxes. I don’t think that’s a fair assumption. I don’t think that it’s going to be that severe.”

Fox is meeting with the legislative analyst, legislative aides and representatives of local government to come up with legislative bills clarifying the initiative.