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Office of the Chancellor / Public Affairs
Monday, June 9, 2003
 

Daily Bulletin 6-7-03

Opinion: State's budget woes leave cities in fiscal jeopardy
By Llewellyn Miller

 

California's fiscal collapse has interest groups protecting their funds from a desperate state capitol. The race to the July 1 budget deadline places a premium on political clout, not just legitimacy. But one group will have a harder time than others -- financially stressed cities with concentrations of low-income residents.

Cities of every type and advocates of every human service and infrastructure project, all living on the financial edge, are hoping that Sacramento will somehow overlook them. They all have legitimate cases for claiming victimhood at the hands of the governor and the Legislature.

But not every group is equally competitive or vulnerable. The following antics serve to increase the disadvantage of the poor living in towns with weak balance sheets.

Although California cities and counties have long lacked control over local tax base and spending discretion, we are rudely reminded of our impotence as we watch legislators propose swapping revenue streams like baseball cards.

Some of these proposals, like Sacramento Democratic Assemblyman Darrell Steinberg's AB 1221 are thoughtful, but have the potential for serious unintended consequences. And there's the unspoken assumption that no one will tinker with this solution once deployed.

These ideas are like proposing marriage to Jennifer Lopez -- they have obvious immediate appeal but there is little evidence to convince me that they will work in the long run, or that something even more seductive won't come along right after.

The Bush administration is continuing the Reagan ''New Federalism'' strategy of sugar coating budget cuts by promising increased discretion to state capitals in the way they scatter money across the state. Translation: More state administrators will develop ever more elaborate hoops for cities to navigate to get fewer dollars. Medicaid and HUD Section 8 housing subsidies are the latest candidates.

Sacramento is audacious in its willingness to borrow its way out of its bad decisions and justifies it with optimistic assumptions about a robust economic recovery and a receptive bond market. Two years ago, it was the electricity crisis that prompted using a mortgage to pay the electric bill.

This time we're issuing bonds to pay for items usually met by general funds while raiding city checking accounts to make the state's debt service payments. What do we expect this to do to the credit ratings or the economic development plans of weakest links in the chain?

Structural fiscal reform is a favorite buzzword in Sacramento. It usually means agreeing that Proposition 13 is the source of most evil but, for very real political reasons, we can't do much about it. So it comes down to adding another layer of complexity to the maze already composed of AB 8, the 1991 Realignment, ERAF and Proposition 218, among many others.

Almost everyone in Sacramento has a favorite new thing. But as we grasp for solutions to the short-term budget mess and the long-term financial imbalance, we should watch to see if the impact on growing numbers of the poor and their cities are at least considered, even without representation at the negotiating table. We especially should not contribute to the income inequality already shamefully high in this state. --Llewellyn Miller is a member of the Claremont City Council.