In my February Western City column, I looked at the League’s strategic priorities and examined the infrastructure priority in detail. This month, I turn my attention to another of the League’s priorities — protecting funding for vital community services.

California and the nation are grappling with the effects of a significant economic downturn. Widespread foreclosures on homes have hit our communities hard, resulting in reduced property tax revenues. Lean times mean less income tax revenue for the state. But this is not the first time we have had to deal with this kind of situation. In the early 1990s, under similar circumstances, the state shifted property tax and other local revenues away from cities and counties to help balance its budget. In response, local governments took action and worked to get Proposition 1A and Prop. 42 passed by the voters to protect property taxes and transportation revenues from state take-aways during the kind of economic downturn we are experiencing now.

Coping With a Weak Economy

Gov. Schwarzenegger has called for immediate 10 percent across-the-board cuts at the state level to help address the state’s shortfall. Many of the actions taken in response will directly affect local governments and communities, including:

• Early prisoner releases;
• Park closures;
• Health and welfare cuts;
• Community Oriented Policing Services (COPS) funding and booking fees reduced; and
• Education cuts.

The downturn in the economy is hit ting all budgets, both local and state. All cities are facing challenges associated with reduced revenues from property taxes and other local sources. When the state sneezes, local governments usually catch a cold. In San Diego, we have been forced to make budget cuts in some of the areas that hurt residents the most — cutting parks and recreation services, reducing branch library hours and fixing fewer streets and potholes. Our neighborhoods are seeing significant reductions in sidewalk repairs, tree trimming, graffiti abatement, code compliance inspections and follow up. These cuts have a direct negative impact on the quality of life for all our residents.

How Local Services Make a Difference

The services that local governments provide to their residents and communities are vitally important, in terms of both public safety and quality of life. Police, fire, health and human services and emergency services save lives and protect our residents’ well-being. In addition, the quality of life for our families and children, teens and young adults, seniors and people with disabilities is enormously improved and directly impacted by local services such as parks and recreation, after-school programs, libraries and cultural arts programs. And local governments are involved in many environmental protection activities that are not fee based, such as clearing brush. Cutbacks to these activities can have long-term impacts, especially on our ability to prevent fires in wildfire- prone areas of California.

Furthermore, cities are actively engaged in programs to stimulate economic growth, support the development of new jobs and opportunities for our residents, and ensure that development proceeds in the way that best meets the community’s needs.

Protecting Local Revenues

While some state General Fund dollars come to cities, in times of economic crisis it’s natural for the state to reduce that amount. However, it’s critically important that we protect our local revenues. Cities have their own budgets and thus must protect their local sources of funding.

In his annual State of the State address on Jan. 8, 2008, Gov. Schwarzenegger told legislators that it is time for the state to face its budget demons. He outlined a series of proposals, including a constitutional amendment, intended to provide permanent structural changes to stabilize the state’s chronic budget imbalance between revenues and expenditures.

In his speech, Gov. Schwarzenegger pointed to past years when revenues rose dramatically, spurring an increase in ex penditures that could not be sustained when revenues fell. He also acknowledged that previously, in times of budget shortfalls, the Legislature took money from local governments, transportation, bonds and pension funds. However, those avenues are now limited due to several voter-approved initiatives. Throughout his address, Gov. Schwarzenegger expressed a willingness to work with the Legislature to resolve the budget problem.

It’s encouraging to witness a substantial discussion in Sacramento about fixing the state’s budget problems in a way that doesn’t involve taking money from local governments and transportation (although some funds for mass transit are still a tar get), such as we’ve seen in the past. Cities are also making hard decisions about their local budgets as local revenues decline due to the economic downturn. The voters expect both state and local governments to balance their individual budgets with the revenues available to them, if at all possible. For most elected officials, tax and fee increases should be considered only as a last resort, but under certain circumstances they can be considered part of any budget solution to protect the vital services of our state, counties and cities.

While we thank the governor for not initially trying to balance the state budget shortfall on the backs of local government, his proposed budget for FY 2008-09 also has a number of severe impacts on our communities. How the state comes to terms with its economic and budget problems has yet to be seen. We recognize that big cuts at the state level have an impact on our communities, but the governor has not proposed taking our property tax or other local dollars.

Looking for Solutions

As responsible administrators, we have to make painful cuts at the local level, just as the state is doing. And it’s critically important that we do so without losing local revenues. The League is closely monitoring the state’s situation as it unfolds, and we will keep you informed about new developments. For the latest news, be sure to read Priority Focus, the League’s electronic newsletter.

In the meantime, California is the most innovative state in the nation, and that innovation — along with solid leadership and a focus on what’s best for our cities and residents — will help us forge a path through these hard times.

This article appears in the April 2008 issue of Western City
Did you like what you read here? Subscribe to Western City