As the old saying goes, the only things guaranteed in life are death and taxes. Well, for some California municipalities local taxes may no longer be a guarantee.
With the recession making its impact everywhere, local municipalities find themselves in an ever-increasing state of financial stress, and searching for new ways to cope.
Now some California municipalities are thinking the once un-thinkable, disincorporation.
Upon disincorporation, a city or town’s powers as a municipality are surrendered to the state and county. The city or town ceases to have further duties and all of the city or town offices cease to exist.
This process could allow residents to avoid paying local taxes, escape the costs of local services and pensions, and get other services more cheaply by sharing the costs with the surrounding county.
The idea of incorporation brings residents a local government with the ability to raise money through taxes and bond issuances. It also gives them more control of zoning decisions and development, and usually provides for local services such as trash pickup and police as well. This process is practiced by all cities in California currently.
Disincorporation, however, rarely occurs. According to the California Association of Local Agency Formation Commissions, the most recent case in California occurred in 1972 when stalled growth and political instability led Cabazon to dissolve itself.
Recently, two California cities have gained national attention for their consideration of this step to escape their financial burdens.
The city of Vallejo has been rumored to be contemplating disincorporation. According to many, if disincorporated, the city would have to eliminate 38 jobs and shift its sewer services to the county.
Additionally, disincorporating would end public-safety-employee contracts, which city leaders blame for pushing the city into bankruptcy.
The idea of disincorporating came about through a statement during a council meeting over a year ago by then City Manager Joe Tanner.
Vallejo Public Information Officer JoAnne West said that Tanner just this week had his last day on the job after the council decided not to renew his contract. The council will be meeting Monday night to fill the vacancy.
Vallejo Finance Director Rob Stout said that even though there are rumbling of disincorporation, it is not a serious option.
“We are not seriously considering any type of disincorporation,” stated Stout.
“The idea came from a comment from (now former) City Manager Tanner during a council meeting—it was more out of frustration than an attempt at serious policy,” Stout said.
“Instead of disincorporation we are considering reducing city salaries and benefits—something we can do automatically with our bankruptcy status,” Stout added.
However, not everyone is taking disincorporation so lightly.
Mark Kirk is Chief of Staff for San Bernardino County Supervisor Gary Ovitt. He sees the disincorporating idea as a serious problem for counties that would then have to shoulder the burdens of the former cities.
“At the county level, we’re taking the possibility extremely serious,” stated Kirk. “We have to know what kind of impact disincorporating would have on the counties.”
Furthermore, Kirk stated that several cities are facing extreme crisis because of their lack of preparation.
“Several cities just weren’t ready for this,” stated Kirk. “The quieter a city is about their financial status, the more nervous I get about their future.”
Finally, Kirk warned that counties would be wise to prepare for disincorporation.
“Any county that is not looking at this potential problem seriously is not being diligent,” Kirk stated.
The step towards disincorporation would lead into unchartered waters for several California cities. Time will tell whether cities adopt the unconventional idea.