January 14, 2013

Restore state funding for new Inland cities

By The Press-Enterprise Editorial Board | The Press-Enterprise

The Legislature needs to correct a budget blunder from two years ago that left new cities in fiscal jeopardy. Legislators should restore local money for newly incorporated cities and annexations. There is no good reason for the state to discourage the creation or expansion of cities.

Sens. Bill Emmerson, R-Hemet, and Richard Roth, D-Riverside, this month introduced legislation to replace lost funding for four new cities and new annexations. The senators have not yet fleshed out the details of the bill, but legislators have explored the issue in similar bills over the past two years. This year, the Legislature should at last concede the folly of the state’s current approach and revive the funding.

The state budget in 2011 shifted $153 million in annual vehicle license fees — the “car tax” — away from cities to pay for a local law enforcement grant program. All cities lost money, but the change hit especially hard at newly incorporated cities. State law had provided new cities with higher-than-typical license fee money for five years to help cover startup costs. The funding shift also effectively made annexing already populated territory financially impractical.

The state’s four newest cities, Eastvale, Jurupa Valley, Menifee and Wildomar, collectively lost $14 million the first year as a result of the diversion, blowing huge holes in city budgets. Jurupa Valley, which incorporated just before the state yanked funding, was particularly slammed. The city has lost more than $13 million in revenue in the past two fiscal years — in a city where the current general fund budget is only about $18 million. Jurupa Valley expects to run out of money by June 30, and city officials have been scrambling to find a way to prevent financial woes from leading the city to disincorporate.

Restoring the license fee money — which is local revenue, after all — would make a substantial difference: Wildomar, which operates on a roughly $6.6 million budget, would see an additional $1.6 million a year. Menifee, with a $23.8 million budget, would get another $3.9 million.

There is no conceivable public benefit in hindering the formation of new cities or the annexation of populated areas. Nor should the state abandon cities that incorporated based on Sacramento’s promise that startup money would be available. If legislators really believe that providing extra help to new cities is the wrong approach, they should make that change going forward, not apply it retroactively.

Gov. Jerry Brown last year vetoed legislation to replace the funding, citing the state’s “current fiscal uncertainties.” But the state’s financial picture has improved since then. And in any case, the state’s fiscal worries do not justify a raid on local government coffers.

Making incorporation and annexation financially infeasible is mindless policy for a fast-changing state. Reversing the 2011 budget blunder would not by itself give California a thoughtful approach to city financing. But neither will the Legislature reach that goal by treating local needs with cynical indifference.


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