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When Rhetoric Detaches From Facts to Back It

Debate about the financial impacts of breaking up Los Angeles is being clouded by assertions for which there is little--or no--basis.

May 16, 1999|SHIRLEY SVORNY | Shirley Svorny is professor of economics at Cal State Northridge

Informed debate over the proposed detachment of the San Fernando Valley from Los Angeles requires certain facts. Politicians have jumped the gun by making statements about the financial impact of detachment that are based on incomplete and often unreliable data.

On his "Ask the Mayor" radio show, Mayor Richard Riordan said, "The Valley has been getting its fair share since I've been mayor." How does he know? City budget managers have not kept track of revenues and budgetary allocations by region. When both Cal State Northridge's San Fernando Valley Economic Research Center and the Daily News queried the city about its spending in the Valley in 1996, they found that a substantial portion of the budget could not be tracked by service region. Of the portion that could be tracked (not a simple or clear-cut task), it appeared that approximately 30% had been spent in the Valley.

The mayor was quoted in The Times as saying that his proposed 1999-2000 budget would give the Valley its "fair share." Just what share would that be? According to Greig Smith, City Council member Hal Bernson's chief of staff, the administration has proposed no substantial increase in the Valley share; good economic times have made it possible to increase spending citywide.

On the revenue generating side, an October 1996 presentation by then-city Budget Director Chris O'Donnell pegged the Valley's overall contribution to city tax revenues at about 33%. But what was the source of this figure? It couldn't have been more than an educated guess. In the mayor's first term, a study was commissioned to assess regional contributions to city tax revenues. But the study used council districts as defining areas, which precluded pulling out the Valley's contribution because several districts are only partially in the Valley. Also, the information to correctly assign utility taxes was not available. The study results were never made public. A similar analysis, based on community plan areas, or CPAs, of which there are 14 in the Valley, is said to be underway but was not available in 1996. In the interest of informed debate, and until they are able to present the underlying data to the community for public review, city leaders should refrain from making statements regarding the Valley's contribution to city revenues.

The mayor has said that taxes would increase if the Valley were to detach. Again, there are no data to support this contention. Studies of municipal costs find no evidence of economies of size in the provision of municipal services. This means that, at the least, it would cost no more--on a per capita basis--to provide services in the Valley than in the city as a whole. And that is the worst-case scenario. The more likely case would be that residents would benefit from lower taxes or more services. Less overhead and bureaucracy would reduce the costs of providing services. For example, the Police Department is already in the Valley; in a detached city, the Valley portion would just split off. And residents of the new, smaller cities would be able to choose the level of taxes and services they desired.

Finally, the mayor has said that detachment would hurt poor communities. He has been quoted as saying that it would amount to abandoning a "God-given obligation to the poor."

Is the mayor saying that, under the current budget, poor communities get subsidies from wealthier areas of the city? Most of the visible money in the inner city--for social programs--comes from the federal and state governments. And given the relatively low political profiles of poor communities, I'd be surprised to find large subsidies from other areas of the city. Without reliable data on city revenues and spending, we can't know.

In any case, poor communities are protected in a detachment by state law, which requires revisions to municipal boundaries to be revenue or "fiscally" neutral. And poor communities would benefit from local control, just like everyone else.

To many residents, the fair share and tax arguments, even the argument about the poor, are irrelevant; they want local government. But there are those who will be swayed by such arguments. If the city government has statistics to back up its statements about spending and revenues, then it should make this available to the public. Otherwise, city officials should refrain from clouding the debate over municipal boundaries with statements based on unreliable data.

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