Cities Brace for Tighter Budgets After Prop. 218

In their lopsided approval of Proposition 218, California voters gave the go-ahead to the most significant tax-cutting initiative in a decade, prompting local officials statewide Wednesday to warn that services from libraries to police could be cut.

In Los Angeles, City Councilwoman Jackie Goldberg called for the city to file a lawsuit to have the initiative, which restricts the ability of local governments to increase or impose general taxes, declared unconstitutional. The League of California Cities announced that an emergency meeting would be held this month to sort out the proposition’s implications.

The measure won by almost 13%, a margin that surprised even its promoters, the Howard Jarvis Taxpayers Assn.

Proposition 218 targets all local levies--general taxes such as those imposed on hotel occupancy, fees for services such as street sweeping, and special property assessments for libraries, police and fire suppression. It requires a majority of voters to approve new taxes and those imposed since January 1995. The votes must be taken by November 1998.

The legislative analyst’s office has estimated that it would cost local government $100 million a year. But local officials believe that the figure may be more than $300 million.

“Do people have a secret wish that they don’t want government to work? I don’t know,� said Daniel Wall, lobbyist for the California State Assn. of Counties.

On Wednesday, cities from La Palma to Palmdale to Inglewood confronted the prospect of holes in their budgets as they noted a provision that could invalidate some taxes now on the books.

In La Palma, $500,000 raised annually by a special lighting and landscaping assessment would have to be put to a vote. That’s “a pretty big chunk when you consider our budget is only $5 million,� City Manager Daniel E. Keen said.

“We don’t know how 218 will eventually be interpreted,� Keen said. “I don’t think we can turn off the lights, and I don’t believe the community would tolerate it if we don’t maintain our park. Practically speaking, we have to find $500,000 in the general fund, and it’s just not there.�

More than three-quarters of the municipal budget goes for police services and to maintain the city’s park, Keen said. With a population of 15,900 and an area of only 1 3/4 square miles, La Palma is Orange County’s smallest city in geographic size.

In Huntington Beach, city officials were bracing for the worst, said City Administrator Michael T. Uberuaga. The city is in danger of losing spending discretion on $3.3 million in revenue it has collected annually since 1959 from utility payments made to the water fund and transferred to the general fund.

City officials believe they may need voter approval to continue transferring the funds.

“We’re looking at the impact as possibly being retroactive,� Uberuaga said. “But nobody knows for sure just what 218 mandates. Some believe we can continue the practice as long as the money is used for water projects only.�

Uberuaga said the city’s $43-million water master plan approved by voters in 1995 is also in limbo until 218’s provisions are sorted out.

Orange County tax measures didn’t do so well on Tuesday.

A $10-million measure for storm drain construction, for example, was defeated by Cypress voters. The local initiative had no organized opposition but still failed to get the necessary two-thirds vote for approval, failing by less than 4 percentage points.

“All the money was going to go to storm drains. There were no administrative costs,� said City Manager Mark J. Ochenduszko. “It was just one of those things where people had an opportunity to decide. We never thought about ‘what if it doesn’t pass?’ I have no idea where we go from here.�

Other tax measures rejected by county voters Tuesday included a proposal in Placentia that would have raised annual taxes by $29 on homes and $24 on apartments for five years to restore the Placentia library’s budget to its 1993 level, and a measure in Huntington Beach to tax residents $24 annually for 10 years to fund the construction of new recreational facilities.

Lest the California electorate be viewed as predictable about taxes, voters also approved several local spending measures designed to improve parks and schools. “Taxpayers do vote for taxes,� said Joel Fox, president of the Howard Jarvis Taxpayers Assn. “In Los Angeles, they passed the [$319-million] park bond. What they’re saying is they want to take part in these decisions. Sometimes they say yes, and sometimes they say no.�

Fox named the latest initiative the “Right to Vote on Taxes Act,� a catchy title for a measure that deals with a mind-numbing subject.

However, Garden Grove City Manager George Tindall said that the measure’s “practical effect is to take money out of one pocket and put it in another.�

“But what happens if the new pocket has a hole in it? The concept of 218 was OK, but the measure took a sledgehammer approach to what some view as a problem,� Tindall said. “I want the people who promoted this proposition and the newspapers who endorsed it to now tell me where I’m going to get $1.8 million for our lighting and landscaping assessments.�

If 218 survives a court challenge, the city will have no choice but to bill the Garden Grove School District $130,000 annually for its share of street lighting, Tindall said.

In one of its most controversial provisions, the measure says only property owners have a right to vote on certain assessments. Under a so-called weighted voting provision, owners of large properties would cast more votes than owners of smaller properties. Renters could not vote.

One of the measure’s targets is special assessments, a tax levied on property owners to pay for specific services such as libraries, landscaping, police and fire. Supporters believe assessments for services that are generally available, such as libraries and police, are illegal under the measure.

As a result, a Los Angeles County analysis says, the county’s $9-million-a-year levy for libraries could be in jeopardy.

In Los Angeles, officials say a business tax surcharge that generates about $10 million a year must go before voters for approval by 1998.

Even as city officials worried about the impact of Proposition 218, voters in several locales approved spending measures.

Anaheim voters approved Measure B, to raise hotel bed taxes in order to enable the city to borrow enough money to finance the new, $1.4-billion Disney’s California Adventure theme park.

In Los Angeles, Measure K, allotting $776 million to improve facilities and programs in city parks, was leading narrowly, with some votes yet to be counted.

In Moreno Valley, voters approved a 6% utility users tax. Had the measure not passed, officials said, there could have been tremendous cutbacks.

But several other measures in Southern California failed, despite receiving more than 50% of the vote. They did not garner the necessary two-thirds approval required under past Jarvis-inspired initiatives. Voters refused to give the needed two-thirds majority to tax and bond measures for public safety agencies in Long Beach and Santa Monica, and for a library tax in San Diego County.

Statewide, voters also rejected the $700-million jail bond, by 41% to 59%. Political experts note that although voters generally support spending for schools and parks, they oppose spending on prisons. In 1990, voters rejected a $450-million prison construction bond, the last time they voted on a jail measure. Voters also turned down Proposition 217, which would have raised income taxes for the highest-earning Californians and shifted the $700 million raised to local government and schools.