This nasty practice of taking local funds to pay state bills began in 1991 when Sacramento began to shift city, county and special district property taxes to fulfill the state's responsibilities to schools. This shifted the burden to cities, which then frantically worked to reconfigure their budgets.
Voters responded by passing Proposition 1A in 2004 and Proposition 42 in 2006 to try to stop the state from taking or borrowing money from local governments and transportation funds. But somehow it has again become an option.
The state is treating its 480 cities like credit cards, and the League of California Cities launched www.cutupthecard.com on July 31 to demand this practice stop, saying: "It is time for the state to stop its borrowing binge." So far the state has taken $8.7 million from the Town of Danville, and although it is required to repay the money within three years with interest, in the past state politicians have found ways around this mandate.
Danville has been fortunate not to see the drastic decline in property values that has plagued other communities. But we don't see an end to the state budget crisis for the next several years and fear state politicians will take even more money from the town. In this case, Danville would have to go into its reserve funds, which would change its carefully constructed financial plan.
State leaders need to realize they are not solving financial problems by transferring money from cities to the state to make up for shortages. They must address the state's budget problems using their own income, as municipalities do - not to mention households. In this case, the borrowing not only defers the crisis, it creates problems for the unwilling lenders.