has received increasing feedback from public administrators throughout the state. Last week’s editorial, “Don’t Be Afraid to Use Prop1A,” led to a flood of e-mails to the PublicCEO inbox.

Here’s a sample of what our readers are saying:

Proposition 1A (2004) was an attempt by local governments to stymie additional ERAF-type takeaways.  With California now planning on implementing Prop 1A, many local governments are still feeling the pinch of other takeaways in past years, while realizing that the state may not have the ability to repay the property tax diversion in future years.  If the budget continues to bleed, and the state cannot repay prop 1A, there is always the concern that additional funds, revenues, etc., will be diverted.

John Stroh, Manager
San Joaquin County Mosquito & Vector Control District

I’m writing to respond to your editorial today “DON’T BE AFRAID TO USE
PROP1A,” which showed limited understanding of the importance of these
funds for local government and missed several important points.

Given the State’s chronic inability to resolve its substantial fiscal
problems, there is little evidence to support the notion that
Proposition 1A funds will actually be repaid in three years, as required
under the provisions of the Constitution. Simply put, counties have no
confidence the state will follow through on repayment. Saying that
“local governments get paid back at some point” brings no comfort to the
many counties and cities that are dealing with their own budget deficits
and truly don’t know how they will continue to provide vital services to

I also challenge the notion that budget negotiations at the state level
are an “either/or” proposition.  With the state’s deficit mounting
daily, legislators are under tremendous pressure to resolve a gaping
budget hole; what makes the Editor believe that local agencies will not
suffer the consequences of both fates?  Yes, the loss of the Highway
Users Tax revenue will be devastating to counties and cities.  Yes, that
loss will likely never be repaid.  But also clearly within the realm of
possibility is that the State will not have sufficient funds for a
Proposition 1A repayment in three years or that local agencies will not
be able to access the credit markets to cover the loss.  We are
operating in the very real environment of declining revenues,
skyrocketing caseloads, dramatic reductions by the State, a credit
market that is essentially frozen, and, now the issuance of IOUs in lieu
of state payments.   To be clear, given current and past experience, we
don’t have confidence in the state’s ability to resolve its budget
problems in a meaningful way.

Frankly, we’re surprised that the staff at do.

Paul McIntosh, Executive Director
California State Association of Counties

You are missing the whole point … Are you part of the financial problem?

Simply, any taking of 1A funds increases the state’s debt, postponing the needed changes to fiscal policies and reforms. Borrowing from Paul to pay Peter is how we got to where we are now.

Mark Bryant, CEO
Garberville Services District

Cities have the same economic circumstances to deal with as Sacramento and by in large have managed to balance their budgets by making deep and painful cuts. 

The voters made it clear in the last special election that Sacramento should balance its budget by not spending more than it receives.  Borrowing is the antithesis of that mandate.

Carl Hilliard
Del Mar City Councilman

The difficulty I have with using Prop 1A now is simple.  Local governments all across the state have been responsible and have worked hard for many years to build up reserves in case of economic downturns or disasters – and now, thanks to the state – when the cities need their own reserves more now than ever, will have to borrow money to balance their budgets. Yet others will declare bankruptcy and lay off city employees, which, by the way, will create even less revenue for the state because of all the unemployed local government workers paying far less property or sales taxes).

The state should balance its budget like everyone else does and make the hard decisions within the state budget.  I can’t balance my personal checkbook by stealing money from my neighbor, so why should the state steal or borrow from its cities and counties?  The whole notion that you can balance a budget by wreaking havoc on the budgets of cities and counties – which are not responsible for creating the state budget shortfalls – is a very bad one and teaches our children that personal responsibility is simply not required.  What kinds of ethics exist and why do we continue down this path?  It does nothing but leave a very bad impression of government in general.

One other thought that no one is willing to talk about is that Prop 13 has created all of these problems, which are just magnified in a recession.  Cities and counties are hurting too and Prop 13 hurts cities and counties as much, if not more, than the state.  So the whole notion you can borrow or steal from cities and counties that get their revenues from the same places as the state is ridiculous.

I was not able to balance my budget this year based on the projected revenues.  Cities are laying off employees and borrowing from their reserves just to stay afloat. Then to have the state take 8 percent on top of that is creating a severe hardship for many cities.

Michael Rock, Town Manager
Town of Fairfax

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