Fiscal relations between California’s state and local governments have been contentious for the past three decades. The conflicts in intergovernmental relations can be traced back to Proposition 13, approved by the voters in 1978, as well as to subsequent state ballot initiatives that have fiscally constrained state, city, and county governments. By giving the state government more control over local revenue and also limiting state and local taxing and spending power, the voter measures have engendered a “zero-sum” political atmosphere in which fiscal considerations have dominated intergovernmental policymaking. However, many of the problematic aspects of the post-Proposition 13 local fiscal system have been the product not of ballot initiatives but of government actions or inactions. Within voter-imposed fiscal constraints, California’s state and local governments have had substantial room to shape fiscal and governance outcomes. This paper traces the evolution of the state-local relationship in California since Proposition 13 and concludes that California governments need to move beyond fighting over fiscal resources and to focus instead on the core problems facing the state.
