Local Tax Revenues


Summary: Under current law, the state has the authority to shift tax revenues from cities and counties into the general fund. These propositions would limit the state’s ability to do so. Under Proposition 1A, the state could borrow money from local governments, but would have to repay the loans.

Supporters: Proposition 1A is the result of an agreement between various city and county government associations and Gov. Arnold Schwarzenegger. Other supporters include many police, fire and other emergency services agencies. The local government agencies originally pushed Proposition 65 for the ballot, which would have gone further in restricting state finances. They now urge voters to reject Proposition 65 and pass 1A instead.

Opponents: Proposition 1A’s chief opponent is state Board of Equalization Chairwoman Carole Migden, who argues that the measure gives local governments too much fiscal flexibility without enough oversight.


Impact: More than 5,000 local government agencies in California get money from property taxes, sales taxes and vehicle license fees. The state has frequently diverted some of that money to help cover the cost of state programs, particularly when receipts from the income tax, which is the main source of state revenue, are lower than expected. Supporters of Proposition 1A say the constant raiding of local government tax funds makes it impossible for local officials to run programs efficiently. Opponents say that, because there is only a fixed amount of money, any measure that puts local government funds off-limits will lead to greater state cutbacks.