California Raids City Funds → Washingtons Blog
California Raids City Funds - Washingtons Blog

Saturday, August 8, 2009

California Raids City Funds

The mayor and city manager of Lafayette, California, have spilled the beans about how California balanced its budget.

It was not done through aggressive cost-cutting alone, but by raiding city funds:

Last week, the state Legislature passed a devastating take of $2.05 billion from
local redevelopment agencies as part of a 30- bill package that purports to
close most of the state's current budget deficit. Because the state is too broke
to meet its Prop. 98 obligations to schools, the Legislature chose to hijack
redevelopment funds from cities and use them to pay the state's bills instead.
The Legislature also voted to "borrow" $1.9 billion from cities' property
tax revenues...We don't recall being asked by the state to borrow our money, and we've yet to meet another mayor or city manager who believes the state will make good on their debt within three years.

In total, the budget deal amounts to nothing less than an unwanted and aggressive molestation of California's already- suffering cities...

In 2004, 84 percent of California's voters passed Proposition 1A, which sought to prohibit the Legislature from raiding local funds. Since 84 percent of Californian's can't typically agree on the color of an orange, that passage should have sent an
crystal clear message to the state that local governments should be left untouched. Yet, not even five years later, state lawmakers are at it again, disregarding the clear direction of voters while picking local pockets to bail themselves out from their own irresponsible actions. Democrat and Republican lawmakers are equally guilty. It's no wonder that legislators are held in such low esteem...

Local officials now believe that cities, counties, school districts and special districts must chart a radical path that makes them fiscally independent from state government. There have been too many raids for too many years by the too-dysfunctional state Legislature.Total and complete fiscal independence appears to be the only way to avoid future molestations by an unfettered and irresponsible state government.
Given that California is a bellweather state, and the richest state in the nation, I predict that other states will follow suit by raiding city funds.

And note that Lafayette's mayor and city manager seem to almost be talking about secession when they mention "a radical path that makes [cities] fiscally independent from state government" and "total and complete fiscal independence".

As I wrote in December:
One precipitating factor in the [potential] break up of the U.S. may be the bankruptcy of the states. California, Connecticut, Florida, Hawaii, Illinois, Massachusetts, Michigan, Nevada, New Jersey, Ohio and Wisconsin are all in really big trouble, and on the verge of defaulting. The rest of the states won't be that far behind as the financial crisis intensifies. If the federal government isn't helping them in their most dire crises since the founding of the country, and if the feds impose the heavy hand of martial law without any benefit to the states, they will have less incentive to remain a part of the union.
I was discussing the Federal government failing to help the states, but California's raiding of city funds - is the same idea, and the town of Lafayette does not seem to be taking it lying down.


  1. Yay! I so look forward to the breakup of this union.

    Divorce DC!! DC is a serial cheater (and worse).

  2. there is a prediction (from a russian source quoted on CNN) that predicts USA splitting up. With this kind of news ( not in mainstream in europe yet) one wonders where is united states of america heading? Sad yet Ron pauls idea of pulling all tropps from other countries (saving money!) is not supported in any big way by the generall public so maybe it's time that USA reforms and get back to basics willingly or not? i feel for my friends in USA for what could be their future not to far from now. im hoping this will not happen. Everone in the world will hurt if USA breaks up yet we will not be there during the conflict it self.

    To the blogger here - please look for signs this is not gonna happen.Write about them.

  3. Meanwhile these same city officials keep millions, sometimes billions, in off budget slush funds.

  4. Desperate times, calls on desperate measures, by the desperate. Which will fail.

  5. All 50 states should seceed from the Union and we should form a new federal government. Let the Communists who have hijacked our country pound sand. Or maybe we should rub their faces in the sand. Or maybe we should lead them all to a cow pasture and rub their faces in something else. Give them a taste of their own BS.

  6. I presume the author means "secession", not cessation.

  7. This tactic is not new. North Carolina's Governor Mike Easley declared a fiscal emergency in his first term after the Internet bubble burst and tax revenues were way down. The State years before had provided a service to collect sales tax revenue for all taxing authorities in the state. All funds were confiscated as I recall. Cities and counties were forced to raise saled tax rates.

    Now with the latest tax revenue shortfalls, the State is increasing income and sales tax in a more ethical move. But the sales tax that resulted from the theft of local sales taxes remains. Mecklenburg County and Charlotte, NC will not have sales tax rate of 8.25%, I believe.

    So, for once, California did not lead the nation. The east coast state of NC has that cubious distinction from 8 years ago or so.

  8. The federal govt's responsibility is to print the money, guard the borders and pave the highways. That's it. They have failed miserably.

  9. I talked with an older woman in the local supermarket I shop at here in Southern California. She was a fifty year resident of the city and said she lamented what has happened to California a once prosperous state, largely built up by Republican and destroyed by Democratic administrations. She said her street was crumbling and in desperate need of repair. After a brief pause, I said, Mamm, take a good look at your street, because they will never repair it at any time in the near future. California under the Democratic Party is so broke that the birds are leaving the state. Even parks are closing due to "lack of funds". For one thing, all the money gets sent by the Democrats to support illegal aliens and their families. This isn't a mean comment, it is a true comment.


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