A key question has raged in California for more than one year, ever since Gov. Jerry Brown first proposed two of his key tactics in the ongoing battle against seemingly perpetual state budget deficits.
That question: Who do tax dollars really belong to? There are also these corollary questions: Are taxes collected by cities the exclusive property of those cities? Do dollars sitting in special state funds earmarked for particular uses belong to all the people, thus implying they could be used for anything state legislators think best?
These questions are in the forefront of debates over state finances today because of the storm over the summertime revelation that the state Parks Department was sitting on more than $30 million in a special off-road vehicle fund, plus another $20 million in its Parks and Recreation Fund even as park units were threatened with closure.
They are valid questions, with good arguments on many sides. For some special funds get their money from virtually all taxpayers and/or utility customers, while others are funded strictly by one type of user.
The Beverage Container Recycling Fund is an example of the latter. Only people who buy certain kinds of drinks pay into this fund. Purchase only milk, bottled wine and hard liquor and you won’t help fund reimbursements of bottle and can deposits, nor will you help pay for the education and outreach effort that has caused a remarkable 85 percent of all recyclable containers to be turned in. That was 17 billion containers out of an eligible 20 billion in 2010-11. At a nickel or dime per can or plastic bottle, reimbursements are supposed to use up almost nine of every 10 dollars paid into the fund.
But state controller’s records showed at midsummer that the fund had an unreported, uncommitted balance of $113 million. Should that money be available for other state programs or should it simply sit in a bank account and draw interest?
That’s a key question now, when some other special accounts like the Energy Resources Surcharge Fund – all utility customers pay a little into this one each month – also have multi-million dollar balances that are not spoken for.
Brown’s view and that of the majority of state lawmakers plainly is that these excess money in these pots of tax or fee dollars should be open to uses other than what they were collected for, if only because it’s almost impossible to refund some of those dollars because there’s no way to track who paid into the funds. Beverage recycling money is a classic example of this.
Which brings the discussion to the two Brown tactics that started the discussion: His move to disband local redevelopment agencies, with the bulk of their funding going into state coffers, and his prison realignment effort, which is sending tens of thousands of supposedly low-risk convicts from prisons to county jails, where many have been paroled because of space problems and county budget shortfalls.
No, neither of these moves has led any city into bankruptcy, despite the claims of some that the demise of redevelopment agencies would lead to disaster. In fact, the main reason for city defaults has been the collapse of the housing market, which led to lower property taxes, lower sales taxes as homeowners stopped remodeling, swimming pool and air conditioning purchases, while greatly diminishing virtually all other forms of city revenue.
Brown’s idea was that the increased property taxes paid on newly redeveloped property should not be used just to buy up more land for redevelopment, but rather that those tax dollars belong to everyone. So far, courts have upheld this concept by going along with the redevelopment cuts.
But cities won’t stop bleating. Their advocates write op-ed pieces claiming lack of redevelopment money has caused most of the immediate troubles of Stockton, Compton, San Bernardino and other cities nearing bankruptcy.
That, of course, ignores the reckless pension contracts agreed to by those cities and their public employee unions, plus myriad other forms of mismanagement. When housing activity was healthy, all that was papered over, and maybe it will be again someday. But not just yet.
Meanwhile, neither Brown nor any state lawmaker has yet paid any political price for what they did to redevelopment agencies.
Which means Brown may have tapped into a previously unknown public sense that all taxes and all state, city and county monies belong to all Californians.
As things are now going, only a voter initiative appears likely to reverse the trend of tapping both wealthy special funds and local tax dollars for uses the Legislature and the governor deem higher priorities than those for which they were originally collected.