Proposition 22: Local Revenue Protection

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Recommendation

NEUTRAL

What is it?

In the past, California voters passed measures to restrict the state from borrowing local government funds, and to dedicate gasoline taxes to transportation and public transit. Despite this, to meet state budget shortfalls, the State Legislature has found ways to borrow and take billions in local government, transit and redevelopment funds. For example, the State Legislature borrowed about $2 billion in property taxes from local governments to balance the state budget for 2009/10. In total, the 2009/2010 state budget takes about $5 billion in city, county, transit, redevelopment and special district funds.

If passed, Prop 22 would close loopholes in existing law and prevent the State Legislature from borrowing funding earmarked for local public safety, transportation, transit, redevelopment, and other local government services. In the future, the State could not take locally imposed taxes that are dedicated to cities, counties and special districts, and gas tax funds for transportation and transit improvements could only be used for those purposes.

MIV Analysis

Prop 22 is a symptom of the imbalance between revenues and expenses in the California state budget. In the absence of sufficient revenues, the State Legislature has used a series of maneuvers to balance the budget, including borrowing, delaying pay days, raiding pension funds, approving bonds, and redirecting funds.

There are compelling arguments on both sides of this proposition. Supporters point out the unfairness of current practices, which enable the bigger state government to take funds from smaller local governments while working around laws that protect such funds. Diversion of local funds to the state budget does not represent a long-term solution for revenue shortfalls. Ongoing raids of funds for transportation and affordable housing can have long-term adverse effects on the state’s core economic and social infrastructure. Local services like police, fire, transportation, and redevelopment projects (that include significant funding for low income housing) are necessary for local communities.

On the other hand, funds for state services such as food stamps, health care, job training, and welfare are also necessary—and some say, more necessary than local services in that they provide lifeline support for vulnerable people. If it passes, Prop 22 would eliminate a significant source of funds to pay for these critical services. Prop 22 would also have a significant impact on education funding, eliminating $1billion immediately, and $400 million each subsequent year. If the state is restricted from taking funds from local governments, it will have to either raise taxes or cut spending. In the past three years, spending cuts nearly double tax increases in the state’s attempt to avoid a budget deficit. If Prop 22 passes, there will likely be more cuts to state programs and services that directly impact low-income and immigrant communities. Finally, opponents are against the “ballot box budgeting” that Prop 22 represents, and argue that such propositions lock the Legislature into funding formulas, preventing state elected officials from making the tough choices that are part of their job.

Supporters and Opponents

Key Supporters include The League of California Cities, California Police Chiefs Association, California Chamber of Commerce, California Transit Association and California Redevelopment Association.

Key Opponents include the California Teachers' Association, California Nurses' Association, and California Professional Firefighters.

For more information

Support for this initiative can be found at www.saveourlocalservices.com.


Paid for by We Are California, sponsored committee of Mobilize the Immigrant Vote and Partnership for Immigrant Leadership and Action. 4100 Redwood Rd, Ste 10 #145, Oakland, CA 94619. FPPC# 1332307.
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