ALAMEDA, Calif. — The war between California’s state and local governments over money is probably not over — and may be exacerbated by the grim budget picture painted this week by the Legislative Analyst’s Office.
The LAO reported that the budget for fiscal 2012 is $25.4 billion out of whack.
If current revenue and spending commitments are unchanged in the fiscal year that begins July 1, the general fund will be $19 billion out of balance in fiscal 2012, the LAO said. To that, the office added the $6 billion deficit it projects the state will run during the current fiscal year.
The $25 billion deficit figure landed like a bombshell at the state capitol, where officials were publicly estimating a deficit problem in the $12 billion to $15 billion range.
The LAO releases a budget outlook report every November, and this week’s announcement was probably less surprising to anyone who remembers last year’s, when it projected structural deficits in the $20 billion range for fiscal 2012 and beyond. Things have changed so little that this week’s report in places reads like a copy-and-paste of the 2009 outlook.
“The solutions we adopted this year are overwhelmingly one-time in nature,” legislative analyst Mac Taylor said Wednesday.
Voters approved several ballot measures this year that change the budget process and budget math. They will add more than $1 billion a year to the general fund deficit, though the full effects won’t be felt until fiscal 2013, the LAO said.
Voters passed Proposition 25, allowing budgets to pass the Legislature on majority votes — while also passing Proposition 26, making it all but impossible to increase revenue without a two-thirds vote.
Voters also passed Proposition 22, to ban fund shifts to the state from local revenue sources.
That may prove to be a Pyrrhic victory for locals, according to Joe Mathews, a New America Foundation fellow and co-author of this year’s “California Crackup,” a book analyzing the state’s structural governance problems.
“When you do something that makes it so much harder for state government to balance the budget, it becomes open season on local government in every other legal way,” Mathews said Thursday.
Senate president pro tempore Darrell Steinberg reiterated his support for moving many programs — and their associated costs — from state to local responsibility.
“We must fundamentally restructure government by bringing government closer to the people so they can make clear and more direct choices about the services they want and how to pay for them,” the Sacramento Democrat said in a statement.
“I think there’s going to be a definite attempt to push down to locals more responsibility,” Mathews said. “It polls well when you talk about it.”
In the abstract, people like the idea of local control. But such changes would require a rethinking of Proposition 13, the landmark tax-limit initiative of 1978, because it effectively put local property-tax revenue under state control.
As a result, city councils and school boards have the power to spend, without responsibility for taxes, Mathews said. It is something he believes needs to change.
“Put the power to tax and the power to spend on the same level; California does a terrible job of that,” he said. “It has to happen. The question is, how bad does it get before we do it?”