COMMENTARY ON REVENUE : State’s Tax Grab Will Come Back to Haunt Local Governments : Officials want to shift billions to Sacramento, hoping local entities will take up the slack. The gambit won’t work.

On May 20, Gov. Pete Wilson released his “May Revise” of the state budget plan calling for the transfer of $2.1 billion in property tax revenue from counties, special districts and cities to schools. If approved, this would mean a $200-million “tax grab” of Orange County’s property taxes to fund the state’s deficit. This latest seizure of property tax revenue rides on the heels of the $1.3 billion taken by the state last year.

A key element of the governor’s plan is to allow the existing one-half cent temporary sales tax to expire and hold a November election in each county to adopt a local half-cent sales tax to replace the expired statewide half-cent tax.

It is a risky strategy to bet that the cuts to special districts and counties are so deep that boards of supervisors will be forced to support a local sales tax to make up the deficit. The State Board of Equalization, which administers sales-tax collections, has advised counties that under current regulations, a sales tax approved in November wouldn’t become effective until April, 1994--nine months after the fiscal year begins for counties. Furthermore, the local support needed to pass such a tax is a long shot.

Orange County is not alone in its outcry. The response from county officials throughout the state and from the state’s legislative analyst, Elizabeth Hill, is that this latest proposal is flawed and should not be considered a viable option for counties and special districts.

In fact, Hill has stated that if this plan is adopted, one half of California’s counties could go bankrupt. Fortunately, during the past four years, we have worked hard to manage our Orange County budget to deal with the recession and our reduced revenue. While Orange County is not facing such a dire outcome as other counties in the state, the latest round of proposed tax shifts will result in devastating cuts in public service--cuts that will affect all in Orange County.

Budget reductions in fire services will include closing fire stations, laying off firefighters, increasing use of volunteer on-call firefighters and charging a subscription fee for paramedic services.

Effective July 3, county libraries will reduce their operations by three hours per day. If the governor’s plan is approved, all county libraries will be forced to close one or two days a week.

Budget reductions under consideration for the Sheriff’s Department include a reduction in jail beds and layoffs of deputies.

Cuts in health care include a reduction in AIDS health education programs, reduced water quality monitoring, reduced occupational health investigations, reduced child guidance contracts, reduced adult state hospital beds for severely mentally handicapped cases, reduced indigent medical services funding for contract hospitals, cancellation of some nonprofit mental health clinic contracts and a 4% cut in State Supplemental Income (SSI) for disabled citizens.

Special districts such as water, sewer and sanitation districts have indicated that loss of property tax revenue will lead to increases in water and sewer rates and special assessments. The cost of maintaining the infrastructure for these utilities will require replacement revenue that can only be obtained through rate increases.

Loss of tax revenue for Harbors, Beaches and Parks will require park closures, elimination of our urban parks program, gate- and use-fee increases and reduced staffing,

So what is the solution to this unpopular “tax grab”?

First, the state should drop the idea of solving the deficit on the backs of local government.

Second, the state should adopt a multi-year budget approach that includes a budget spending cap. It is obvious that it is not possible to solve a multi-year budget problem in one year without devastating law enforcement, firefighting, emergency services, mental health, services to seniors and the disabled, and public library services. Holding state expenses to the same level as this fiscal year would force our state leaders to re-prioritize expenses, cut unnecessary and duplicative state programs, streamline state government and eliminate red tape.

Such an approach is no different from the fiscal management that local government has exercised. It is time for state government to meet its responsibilities without shifting the problem to the local level where it affects every resident of the county.

Instead of rearranging the deck chairs on the Titanic, the governor and our state Legislature must keep the ship from sinking. Our elected representatives in Sacramento need to go back to the drawing board and devise a plan that works. The reality of dealing with the budget deficit and the cost of providing basic services to the public must be dealt with. Time is running out, and Sacramento should not bet our future on shifting property tax revenue to the state and hope that the ensuing chaos will force local voters to approve sales tax, user fees and special assessments as replacement funding.

A tax is a tax is a tax, no matter who imposes it.