Monday, July 11, 2011

California Cities: The Latest Victims of the "War of All Against All"

Over at the Sacramento Bee, Dan Walters writes about the "zero sum game" known as the state budget: unless Sacramento can tax its way out of trouble, budget politics inevitably have winners and losers. Of course, this is exactly what Jerry Brown warned of back in March, in the event that his proposal for tax extensions wasn't put to the voters. Brown predicted that special interests on both sides would respond with a flurry of ballot initiatives in what he referred to as a "war of all against all." What Brown overlooked (and Joe Mathews at Fox and Hounds pointed out) is that Prop 13's centralizing of taxing power in Sacramento has made the war of all against all a more-or-less permanent feature of California politics. What seems to be new, this time around, is that city governments are some of the biggest losers.

The munis will bow before us.
The most recent budget cycle did, of course, have the usual set of winners: teachers' unions, prison guards, and the county governments that will draw funds through Brown's prized "realignment" effort. And it had the typical losers: higher education and community-based social services. What was more unusual this time around is that the cities were absolutely hammered by Sacramento, and the Legislature continues to keep them in their crosshairs. In likely violation of Prop 22, the cities have been asked to cough up $1.7 billion from their redevelopment agencies into state special funds, and are also having their vehicle license funds raided, to the consternation of many localities in Orange and Riverside counties. While these money grabs have been tough for many cities to swallow, they may only be the beginning of what the Legislature has in mind. AB 506, a measure to make it more difficult for insolvent cities to declare bankruptcy, is currently stalled but not dead. Walters also notes a number of bills we weren't aware of: SB 931 (prohibiting cities from hiring labor relations consultants); AB 455 (requiring that half the seats on local civil service commissions be held by union members); AB 438 (making it harder for cities to contract for private library services); AB 710 (restricting car parking to promote public transit use); a number of new accounting and auditing regulations, meant to prevent a repeat of the Bell scandal; and, of course, AB 46, which would forcibly disincorporate the city of Vernon.

We made an argument similar to Walters' a couple weeks ago, after observing the deep cuts to services and personnel that many California cities made to fix their broken budgets before July 1, cuts that were not mirrored at the state level. If you want to know how far the traditional recipients of Sacramento's largesse are willing to go to preserve the status quo, this might be your answer. California's public finances are in such sorry shape these days that those who live by plunder are starting to turn on one another. With some of the heaviest (and simultaneously most regressive) taxes in the country already in place, there's not much more that can be looted from private citizens. During the most recent budget cycle, two California cities stood out to us for their willingness to directly and courageously confront the fundamental unsoundness of their finances: San Jose and Costa Mesa. San Jose's debt situation is so dire that it's facing a choice between a legally risky move to claw back employee pensions and effectively dissolving itself; Costa Mesa, while not at the cliff's edge, is nonetheless moving aggressively to prevent a pension-debt problem from becoming a crisis. Whether you're a libertarian, a conservative, or a liberal, this is what you should want from your government: making difficult and politically unpopular choices for the overall good of the community. Instead, both Costa Mesa and San Jose have been vilified by organized labor and Democrats in Sacramento, and reforms in both cities are in doubt. Taken in the broader context that Walters suggests, however, it's less than surprising. If Sacramento is willing to raid city coffers to the tune of billions, is willing to push distressed cities over the edge on behalf of their union handlers backers, and is even willing to forcibly disincorporate a disfavored city, all while ignoring the corruption in cities like Montebello and Hercules, and ignoring the fiscal disasters looming in cities like Los Angeles, San Diego, and San Francisco, they're probably going to come down hard on anyone trying to do the right thing.


  1. Restricting car parking statewide is just what businesses need to succeed in California.

  2. Exactly. People will shop more once they can take light-rail trains that leave them half a mile from the store.