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In Proposition 22, a Cautionary Tale of Piecemeal Reform

Original post made by Resident, Another Palo Alto neighborhood, on Oct 19, 2010

In 2008, with the state budget facing another huge deficit in the wake of the financial crisis, the state borrowed local property taxes. In addition, lawmakers noticed that Proposition 1A covered only city and county governments -- but not the redevelopment agencies that these local governments control. So, to balance the budget and protect schools, the state shifted property taxes that would normally go to redevelopment agencies to local school districts.

Proposition 22 would close this loophole, prohibiting the state from taking further redevelopment tax increment. It would also amend Proposition 1A, no longer allowing the state to borrow local property taxes at times of fiscal distress.

What Proposition 22 does not do, however, is say how the state legislature is supposed to balance the state budget, provide funding for all of the important programs the state pays for, and also give voters the kind of schools they want. In short, while local governments may win, someone else is going to have to lose. State lawmakers will certainly find some other loophole or some other revenue source not covered by Proposition 22 -- because the alternative, cutting basic public services, is both unattractive and highly unpopular among voters. [Act V]

So, no matter what happens this November, stay tuned for Act VI.

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Vladimir Kogan


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