If San Francisco and other cities and counties are hurting worse than ever this year, they’re going to howl at any budget solutions that even hint at dumping more state obligations on local government. And when local mayors and supervisors speak, smart politicians in Sacramento – those who want to stay in Sacramento – typically listen.
Owners of some of San Francisco’s best-known properties are seeking huge cuts in their tax payments, according to a story in Sunday’s San Francisco Chronicle. If the claims stand, the already cash-strapped city could lose more than $115 million in property taxes.
San Francisco isn’t alone. For the 2009-10 fiscal year, the state’s total assessed value dropped by $107 billion, or 2.4 percent. That’s the first decline since the state Board of Equalization began keeping record in 1933.
The assessed valuation, the basis of property taxes, fell by 10.5 percent in Riverside County, 7.2 percent in Sacramento County and 7 percent in Contra Costa County. That translates into instant budget trouble for the cities that depend on that money to meet their budgets.
That was for the current year, but there’s no one out there waving banners and blowing air horns to celebrate the impending end of the real estate slump. In Los Angeles County, for example, Assessor Rick Auerbach is reviewing the assessments on nearly some 500,000 homes purchased between July 2003 and June 2008, with most likely to see their tax bills lowered.
Commercial property owners across California, who continue to see rents drop and vacancy rates soar, are also going to be looking for big-time tax relief, and quickly. In San Francisco, for example, the owner of downtown’s upscale Crocker Galleria is looking to have his assessment slashed from $370 million down to $142 million.
Now California doesn’t normally share in the property tax bounty, but that doesn’t mean it won’t affect the budget talks. That’s where the politics come in
(Note: Sure, the Legislature did take $1.9 billion of that money in a shotgun loan from local governments last year to help balance the 2009-10 budget, but by law they can’t do it again until the money’s repaid.)
In the past, the state has been more than willing to balance its budget on the backs of cities and counties, raiding local funds to shore up state’s finances. The idea has always been that local government will be able to find the money somewhere.
Last February, for example, when state Controller John Chiang suspended most payments to local government because of a cash crunch, it was assumed that counties would pick up the $270 million in missed payments for welfare, food stamps, foster care and other social service expenses. If, instead, counties had just locked the doors to the welfare office and told their clients “Tough luck, go complain to Arnold,” the system could have collapsed.
But as property tax revenue joins sales tax dollars in the dumper, cities and counties won’t have the extra money to serve as piggy banks for the state. And if the Legislature makes deeper cuts in social services, local government isn’t going to be able to pick up the slack.
That’s the message that’s going to be sent to Sacramento and it’s one legislators are likely to listen to. Many legislators got their start in local government and know exactly the type of problems cities and counties face.
Darrell Steinberg, the Democratic leader in the state Senate, was on the Sacramento City Council. Democrat Noreen Evans, chair of the Assembly Budget Committee, was a councilwoman in Santa Rosa. All three of San Francisco’s legislators – state Sen. Mark Leno, Assemblyman Tom Ammiano and Assemblywoman Fiona Ma – were on the Board of Supervisors.
There are plenty of other former councilmen, supervisors and planning commissioners in the Legislature. Just as important, there are many more legislators who know exactly how necessary the local elected officials are to their political futures in this era of term limits.
There’s a reason, after all, that when angry city and county types started working the phones last July, a number of legislators quickly lost any taste for taking $1 billion from local highway funds.
Figure on an even earlier reprise of that show of force by local government when the Legislature starts looking for ways to trim another $20 billion from the budget.
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