What I Say

Deficits

By Frank Gruber

"Money money money money, money..." -- From "For the Love of Money," by K. Gamble, L. Huff & A. Jackson (performed by The O'Jays)

Back in the late 1970s property values were going up fast and so were tax revenues. The state was running a surplus and Governor Jerry Brown decided to sit on the money rather than give it back.

The result was the taxpayer revolt and Prop. 13.

Flash forward 20 years. The state is running a surplus. This time the governor and the legislature lower taxes and fees -- to give the money back to the people.

But the economy goes south and now the governor and the legislature can't raise taxes and fees back to where they were and so they're taking the money from local government, and cutting money to the schools, to balance the state's budget.

Would someone float an initiative to turn back the clock and put California government finance back where it was 30 years ago, when the state was the wonder of the world, with the best schools, the best infrastructure, the best social services?

To give power back to the people we elect so that they can actually govern?

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Santa Monica is in the same budget mess as the state, and the state's mess makes it harder for Santa Monica to balance its budget. The City's projected deficit is $9.1 million and going up as the implications of Governor Davis' budget balancing plans are understood. ("City Budget Gap Widens," Jan. 16, 2003)

This isn't the first time the economy has betrayed Santa Monica and it won't be the last. It wasn't even ten years ago that the City went through a budget crisis much like this one, only back then the City Council could raise taxes on its own, without voter approval.

You would think someone in charge might have learned something from 1994's budget crisis, but perhaps 1994 is beyond the memory of mortal men and women, or at least those mortals on the City Council.

The cause of the City's budget crisis is not a bad economy, or Sept. 11, Governor Davis, or any other externality. The cause of this crisis is that the City Council let the budget grow too fast during flush times.

It took 125 years, from 1875 to 2000, for the day-to-day "departmental" budget of the City to reach $99 million. It took just another two years -- 2000 to 2002, years of minimal inflation -- for it to reach $122 million.

Our no-growth council was not no-growth when it came to hiring police to direct traffic or more planning staff to make sure coffee shops didn't place tables on the sidewalk.

Those guys on the council who all the time say they represent the "residents" not only forgot 1994, but apparently they never knew anything to start with about economics. They thought Santa Monica's boom would last forever.

* * *

Of course the big issue to a lot of people is funding for the schools. I for one am not looking forward to home-schooling my seventh-grader for ten days this year if John Deasy carries through on his threat to give Henry and his friends what they think will be an extra vacation.

I used to believe that it would be unfair for wealthy cities to subsidize their schools -- unfair, that is, to poorer districts and their students. But I've learned different, at least as respects Santa Monica. Santa Monica may have a wealthy government, that collects lots of taxes from tourists and businesses and redevelopment zones, etc., but it's not a particularly wealthy community.

Or, rather, it is a community with a lot of people who are wealthy and a lot of people who are not wealthy. A lot of the wealthy people are retired, without kids at home, but a lot of the not wealthy people are families with kids in school.

There is nothing unfair about the City of Santa Monica which, as opposed to the School District, can collect taxes from tourists and businesses and redevelopment zones, etc., and waste it on traffic cops and "code enforcement personnel," subsidizing schools in which 26 percent of the students qualify for free or reduced price lunches, in a town where gangs are a real problem, and the poverty rate is the national average.

Still, it was unrealistic for the mass of demonstrators Tuesday evening to expect City Council to act immediately to increase the City's contribution to the school district. There is a process to follow.

But it's not unrealistic to ask for the money. Leaving side the money the City Council has wasted on squeaky wheels, shiny new vehicles of every description, repaving streets that don't need repaving, and their own pet projects, the City spends tens of millions of general fund revenues each year on capital projects that it could finance with bonds.

It's not that the City's capital plan is irresponsibly ambitious, but if the City had used debt more, then more revenues could have been salted away in reserves -- money that could be spent now, during the inevitable downturn.

My guess is that the City has plenty of money squirreled away in various capital accounts. Money that could still be liberated if the City uses its good credit.

Of course, it would take some will to redirect the City's spending, but then education is important -- the City's Council's self-designated "highest priority."

To paraphrase Kevin McKeown, paraphrasing James Carville, "It's the future, stupid."

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Meeting Notice:

Tuesday, January 21, 6:30 p.m., Civic Auditorium East Wing, 1855 Main Street: Scoping session for the Environmental Impact Report on the City's 2003 Update of the Civic Center Specific Plan. The City will be preparing an EIR for the revised Civic Center plan -- the issues addressed by the EIR may be limited by what issues the public raises at this meeting or in writing. A complete draft of the plan is available for review on the City's Web site.