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Put Power in Local Hands—Carefully

By Mark Baldassare, president and CEO of the Public Policy Institute of California.
This commentary appeared in the Sacramento Bee on January 29, 2012.

For related commentaries and content, please visit the Untangling the State-Local Fiscal Relationship page.

Californians of all political stripes are convinced that state government is broken and it is time for local governments to take charge. At a time when Sacramento's partisan battles stymie the search for solutions to serious problems, it is an understandable view.

In a December Public Policy Institute of California poll, Californians were in agreement that the state government wastes too much of our tax money, is "pretty much run by a few big interests looking out for themselves," and can be trusted "only some of the time" to do what is right. State elected officials are generating low approval ratings for their job performance.

Not surprisingly, then, residents are eager to have someone else in charge of governing California. Large majorities of residents favor a shift of tax dollars and service responsibilities from state to local government. Support is fueled by the public's relatively positive views of their local governments and a belief that local officials are in the best position to deliver services to residents. Californians express confidence that their local governments are up to the challenge.

With the state budget facing a multibillion-dollar deficit into the foreseeable future, state officials are more than happy to oblige. Last fall the state began to shift some convicted felons from prisons to county jails. The governor's new budget proposal makes clear that he would like to build on this first step. Dismantling the state government bureaucracy—and letting tax money flow directly to local governments—is an idea gaining favor in policy circles.

Yet history tells us that effectively changing the state and local balance of power is easier said than done. After the approval of Proposition 13 in 1978, state government made up for a sharp decline in local property taxes by taking on more responsibility. When the economy hit the skids in the early 1990s, state government asked local governments to provide more services. This shift—which occurred without the financial resources or political structure in place to get the job done—caused severe fiscal strain on cities, counties, schools and special districts as they were asked to do more with less.

Before going too far with today's realignment plans, we need to change the state's rules for governing localities or we are doomed to repeat the failures of past. These five changes are at the top of my list:

  • More flexibility: Local governments need to have more control in spending and raising local money. For starters, let's seriously consider providing block grants from the state to local governments, with no strings attached. At the same time, expand the ability of local governments to ask their voters if they want new taxes—so that local residents can determine if they want to live in a place with high taxes and high services or low taxes and low services.
  • Greater accountability: The local government structure is too fragmented for the voters to know where the buck stops—and the state-local finance system is so convoluted that only a few experts can follow the money. Local governments need a centralized power structure so that the local voters know who is in charge when it comes to budget issues. County governments and city governments should have mayors elected at large, and urban school districts should be the responsibility of big-city mayors.
  • Increased certainty: The state must create simple, transparent and reliable ways to provide local funding. Many local officials lack the deep knowledge and experience for effective budgeting. The state controller should play an active role in the annual oversight of local government budgets and the state treasurer should advise on long-term issues such as public employee pensions and debt obligations. Important ideas to pursue include returning local property taxes to local governments, targeting vehicle license fees to transportation-related purposes and creating a more stable local sales tax base for local governments.
  • More regionalism: Local officials must recognize that Californians live, work, travel and play in geographic regions larger than the political boundaries of their localities. The state should make it easy for local governments to actively coordinate and cooperate between—and within—counties, so that local public services, such as transportation, can be delivered in the most efficient, effective and equitable manner. Local governments have thousands of branches, and the state should enact laws to encourage more mergers, consolidations and joint operating agreements.
  • Greater engagement: As local officials take on greater responsibilities, local elections will carry higher stakes. But voter turnout is lowest in municipal elections. When local voters make big decisions at the local ballot box, a small and unrepresentative slice of the population should not decide the future of localities. We need to move more local elections to November in presidential years, and find ways to use the Internet and mobile phones to expand the voter pool and turnout in local elections.

California is poised to make a dramatic shift from state control to local government power. Change of this scope will not be easy. But with proper groundwork, a state and local realignment in the 2010s can provide a solid foundation to engage all Californians in reinventing their government.