Ballot preview: Proposition 22 would limit state’s ability to shift tax revenue

October 24, 2010

One in a series of brief analyses of the measures on California’s November statewide ballot.

To see our other ballot prop analyses:

Proposition 19, go here.
Proposition 20: Congressional districts.
Proposition 21: State Parks.

Proposition 22: Local government revenues

Background:This measure is the latest in a series of ballot propositions over the past decade that have sought to lock in the distribution of tax revenue among the state and local governments, and other special funds such as that for transportation construction. The measures flow from the ongoing state budget crisis, as lawmakers have sought to shift money around in order to soften the blow on any one part of the budget.

In 2004, voters restricted the ability of the state to shift property tax revenue among cities, counties, special districts and the schools. In 2006, the voters restricted the movement of revenues that had been dedicated to transportation. Proposition 22 would further restrict the state’s ability to direct the flow of these funds.

There are two ways of looking at this issue.

One is to say that once a particular revenue source — the property tax, or gas tax, for instance — is directed at one priority or level of government, it should not be shifted to another. Under this view, the division of property tax among cities, counties and schools remains frozen. State lawmakers are unable to shift money from, say, city government to the schools, a shift that has the effect of freeing up money in the state budget that had been going to K-12 education and allowing that money to be used for other priorities instead.

The other view is that while each Californian lives in a county and most also live in a city, each person is also a resident of the state. Under this view, a state “raid” of money that had been going to local government can be seen as simply a shift of priorities. Rather than locking in revenue formulas, this approach allows each generation of lawmakers, within limits, to react to changing circumstances.

What Proposition 22 would do: Proposition 22 prohibits the state from redirecting property tax now going to redevelopment agencies, eliminates the state’s authority to temporarily redirect city, county and special district property tax revenue, and prohibits the state from using vehicle license fee revenues to pay for state-mandated local programs. The measure would also further restrict the state’s use of fuel tax revenue, prohibiting borrowing from the transportation fund and limiting the state’s ability to change the distribution of the gas tax money, even if all the money were still spent for transportation programs.

Who is for and against Proposition 22?

Proposition 22 is supported by local government officials, cities, counties, transportation and water agencies, local government labor unions, and dozens of business groups, including the California Chamber of Commerce and the California Farm Bureau.

Proposition 22 is opposed by education groups, including the California Teachers Association, some health care groups, including the California Nurses Association, and many law enforcement groups and unions representing state public safety officers.

Bottom line:

Vote Yes on Proposition 22 if you think the current distribution tax revenue should remain in place and that the state Legislature should be further restricted from setting spending priorities on a year-to-year basis.

Vote No on Proposition 22 if you think the state should maintain its current level of flexibility to shift tax revenue to meet changing needs.

–Daniel Weintraub

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