Back in January, Gov. Gray Davis promised that he would not sign a budget this year without true reform to the deeply flawed ways in which California finances its government.
Assemblyman Darrell Steinberg, D-Sacramento, has given the governor that chance. Davis should seize it.

Steinberg has proposed that cities and counties give up a half-cent of the sales tax they now collect in return for receiving a greater share of the property tax. The goal of the tax swap is to reduce local government's dependence on the sales tax.

This dependence has distorted land-use decisions by giving cities and counties a reason to compete for retail development, which generates sales tax, while shunning housing, which produces property tax. The result has added to urban sprawl and gridlock on California's freeways.

Although Steinberg's proposal has merit by itself, it might also be useful in breaking the state's budget stalemate. Legislators from both parties have agreed to finance the state's accumulated deficit with a bond measure to be repaid over time.

Republicans, however, have said they won't vote to raise taxes in order to do this. Steinberg's tax swap, while not raising taxes, could be used to create the kind of dedicated revenue source that lawyers say is necessary in order to assure investors that the bonds will be repaid.

The California League of Cities, understandably skeptical of any state move to change the way local government gets its revenues, has been cool to Steinberg's idea. Now the assemblyman has called their bluff by suggesting that the tax swap be voluntary. That way, only cities and counties that think they would be better off with the property tax revenue than the sales tax would have to participate. Steinberg predicts the lion's share would do so.

This is a moment that cries out for leadership from the governor's office. By expressing support for Steinberg's proposal, Davis would not only help end the budget stalemate, but also help win passage of the very kind of reform he pledged to enact this year. The governor, of course, isn't known for bold leadership. Now would be an excellent time to change that.