YOU ARE HERE: LAT HomeCollections

Proposed Constitutional Amendment Takes Aim at State Budget Reform

July 12, 1987|BOB WILLIAMS | Times Staff Writer

School officials in the South Bay, still reeling from funding losses in the state budget signed by Gov. George Deukmejian last week, say they will take a close look at a proposed constitutional amendment aimed at ending the Legislature's chaotic, 11th-hour method of adopting budgets each year.

The amendment, authored by Assemblyman Dave Elder (D-Long Beach), would radically alter the way taxes are allocated and restore local control over major revenue sources--a power that shifted to Sacramento when Proposition 13, the 1978 Jarvis-Gann Initiative, limited property taxes that had been a primary source of income for schools, cities and counties.

Instead of the Legislature dividing up the tax pie in an annual ritual of political maneuvering and intense lobbying, local agencies would be given a constitutional right to specified shares in income, property and sales taxes, according to Elder.

Predictable Financing

The result, he says, would be "permanent, predictable" financing for California's 1,029 school districts, 545 cities, 58 counties and more than 4,000 special districts--not to mention hefty revenue increases for education and local government.

Elder's measure, a product of five years of work by the Democratic lawmaker and his staff, will debut in the Legislature Monday in a hearing before the Assembly Revenue and Taxation Committee.

The idea of lifting Sacramento's fingers from the budget purse has not inspired a lot of enthusiasm in the capital. "State government would lose a lot of money," observed Pete Schaafsma of the Legislative Analyst's office. He said his agency will not take a formal position until the proposed constitutional amendment advances further up the legislative ladder.

According to Elder, the net loss in the general fund would be about $900 million--compared to a total state budget of $40.5 billion this year, for example--but state government could carry on with its share of income, sales, banking and corporation taxes.

Administration May Be Wary

Jim Miller, an analyst in the state Department of Finance, said his agency hasn't adopted an official position, either. But he said the Deukmejian Administration may be wary of incorporating budget decisions into the Constitution. "Our feeling has been that funding decisions should be made annually," he said.

Elder, whose district includes Harbor City, San Pedro, Wilmington and Long Beach, said he was well aware that his proposal has virtually no chance of making it to the state ballot through the legislative process. But he predicted that many of the state's most powerful constituencies will get behind an initiative drive as the potential benefits of his measure become better understood.

"The present system is not working," he said. "In fact, it's a total mess. I believe that people are in a mood to look at some radically different ways of using tax money to finance public services."

School officials contacted in the South Bay and elsewhere expressed virtually unanimous enthusiasm for Elder's idea of removing budget decisions from the political arena in Sacramento. Most said, however, that they had little detailed knowledge of how the plan would work and how their individual districts could be affected.

"If Elder can pull it off, his ideas may become a shining light for the schools," said Ed King, business manager for the South Bay Union High School District. "We are in desperate need of a new approach that provides stable, long-term financing."

Among changes that Elder's measure would bring to California's tax landscape:

- Elementary and secondary schools and community colleges would be given a constitutional right to 75% of personal income tax revenues and 47% (or 2.8 cents) of sales taxes. They would also continue to receive all of the state lottery's profits. According to Elder's calculations, that would increase funding for education by about $2.5 billion.

- Similarly, counties would have constitutional rights to 55% of property taxes, while cities would get the other 45%, and the state government would have no part in collecting or allocating the money. Instead, the allocations would be based primarily on population. The state would continue to collect sales taxes and keep 2 cents on the dollar, but the rest--after the 2.8 cents for education was deducted--would go right back to the cities and counties--again, on the basis of population.

The net effect would be a boost of $347 million in income for cities and $625 million for counties, according to Elder's estimates for the last fiscal year ending July 1.

By basing allocations on population, rather than on collections from the various tax jurisdictions, the measure would particularly help urban areas and counties that are "rich in people and poor in taxable property and retail sales," and thus continually looking to Sacramento for extra handouts, Elder said.

No Incentive for Housing

Los Angeles Times Articles