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Local Government Stiffed Again

January 25, 1998

There are lots of winners in Gov. Pete Wilson's proposed state budget now that California is flush with revenue, but local government is not one of them. The Republican governor and onetime mayor of San Diego has given a figurative back of the hand to the cities, counties and special districts that are seeking repayment of billions of dollars in property tax revenues usurped by the state.

This money, still going to Sacramento at a rate of $3.4 billion a year, was initially seized by the state during the recession days of 1991 and 1992 to help offset a massive deficit in the state budget. Wilson insisted during last summer's budget impasse that the state use virtually all of its surplus money to pay back the $1.3 billion borrowed from the state employees' pension fund in the early 1990s. With that move, the governor preempted a bipartisan effort in the Legislature to begin returning to the localities a small part of the lost funds.

This year Wilson seems to be saying he no longer wants to hear local government's complaints about the lost money, now totaling some $14 billion. When he was asked about the debt during his budget briefing last week, the governor retorted: "Were you here last year?"

What happened last year was that Wilson and the Legislature agreed as part of a last-minute grand compromise that the state would take over $450 million a year in trial court costs from local government. The counties will get a net saving of about $300 million and the cities about $62 million. In addition, the state is providing $100 million, appropriated on a year-to-year basis, to cities and counties to augment their public safety budgets. And since 1993, cities and counties have gotten about $1.5 billion a year in sales tax revenues to finance law enforcement programs. This was intended to be partial reimbursement for the lost property taxes.

But even if you count all those programs as payback, local governments still wind up short by about $1.5 billion a year. And much of the money they have received is restricted to police and sheriff's departments and cannot be spent on such decimated programs as parks and recreation, libraries and street repairs.

The locals have vowed to try again this year to get the state to honor part of the debt. To keep Wilson from stiffing localities once more, the legislative leaders should make this issue one of their highest priorities, perhaps linking its fate to something Wilson wants badly. The governor's been playing hardball on this issue. They need to play hardball too.

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