Unity for Fiscal Reform

Education and health care reform have rapt audiences this year in Sacramento. But state and local fiscal reform? Well, not sexy. And any proposal to do something with the public’s money carries a suspicion that a tax increase is hidden in there someplace.

Still, there is a significant and sorely needed groundswell of support for change in Sacramento. The goal of this gathering of minds, in meetings formal and informal, is to unravel the tangled financial relationship between Sacramento and the 7,000 cities, counties and special districts in California. Advocates span the political spectrum and include special interest groups that are usually at odds, such as business and organized labor. They are able to come together now “because the situation is that bad,” one participant told Times staff writer Ted Rohrlich recently.

Bad indeed. The siphoning off of local money by the state is the major reason behind cutbacks in library hours, rundown parks, crumbling city streets and stretched ranks of law enforcement and fire protection. It is why cities and counties engage in cutthroat competition for auto malls and shopping centers, a phenomenon known as the “fiscalization of land use.” Desperation for sales tax receipts, the key tax source remaining with localities, wins out over sound planning.

With the state increasingly controlling the money, local government has lost much of its ability to deal with local problems. The money, particularly from local property taxes, goes to Sacramento and either stays or returns with strings attached. When citizens complain about poor services, local officials point to Sacramento officials and say, “It’s their fault.” Accountability declines, followed by confidence in government.

Former Gov. Pete Wilson generally avoided the subject. But his successor, Gray Davis, is interested in getting local government back on a more rational fiscal footing. Three separate studies are underway in the Legislature. And the California Governance Project, a broad-based coalition of 34 interest groups, is close to drafting a reform measure for the 2000 elections.

Before rushing to the ballot, though, these groups should coordinate their efforts so that the best ideas can be assembled into one winning ballot plan. The program should be comprehensive but not too complicated for voters to understand. It should restore a strong measure of fiscal independence to local government without tampering with Proposition 13’s constitutional cap on homeowners’ property taxes. It should revise the distribution of sales tax revenues to end the war over auto malls and Kmarts. And it should be revenue-neutral.

This year might provide the best chance for state and local fiscal reform for many years to come. The key to success lies in uniting a broad coalition behind a well-designed plan that can pass muster with voters. If such a measure is successful, there will be enough credit to satisfy every group that contributed.