Prop. 31 would regionalize state revenue sharing

Aug. 30, 2012

By Wayne Lusvardi

Despite regionalization failing miserably in the European Union, California is proposing to adopt it as a tax-sharing policy for distributing state funds to local governments if voters approve Proposition 31 on the November ballot.

Prop. 31 is a combined new law and state constitutional amendment sponsored by the California Forward political action group.  Nicolas Berggruen, a European billionaire, is the biggest sponsor of California Forward with a $1 million donation to the pro-Prop. 31 Campaign.  Berggruen owns the IEC College of vocation schools in California and is a registered Democrat in Florida.  He founded the Council for the Future of Europe, which has proposed “fiscal federalism and coordinated economic policy” to rescue the European Union from its debts.

Regionalism Will SAP Revenues from Suburbs to Cities

Urbanologist Wendell Cox writes that “regionalism” is an emerging policy of the Obama administration, as described in Stanley Kurtz’s new book, “Spreading the Wealth: How Obama is Robbing the Suburbs to Pay for the Cities.” Kurtz is a social anthropologist from Harvard.

Prop. 31 will not result in new regionalized governments. Rather, it will end up in what Cox calls “fiscal regionalism” run by a committee.  The tax-sharing facets of Prop. 31 are:

  1. “Granting counties, cities, and schools the authority to develop, through a public process, a Community Strategic Action Plan for advancing community priorities that they cannot achieve by themselves.”
  2. “Granting local governments that approve an Action Plan the ability to identify state statutes or regulations that impede progress and a process for crafting a local rule for achieving a state requirement.”
  3. “Providing some state funds as an incentive to local governments to develop Action Plans.”
  4. “Implement the budget reforms herein using existing resources currently dedicated to the budget processes of the State and its political subdivisions without significant additional funds. Further, establish the Performance and Accountability Trust Fund from existing tax bases and revenues. No provision herein shall require an increase in any taxes or modification of any tax rate or base.”

According to Cox, regionalization strategies are “aimed at transferring tax funding from suburban local governments to larger core area governments.”  The Prop. 31 version of regionalization would not amalgamate city, county, special district and school district governments. Nor would it create new taxes. But it could authorize the state to withhold or divert taxes from local governments unless those governments adopted a “Strategic Action Plan” to distribute the revenues from the suburbs to the large urban cities.

In essence, a Strategic Action Plan, or SAP for short, would sap the wealth out of suburbs. SAPS might also sap the bond ratings from suburban communities.

Governor Would Become “Emergency” Czar

Probably one of the most controversial provisions of Prop. 31 would grant the governor the power to cut or eliminate any existing program during a “fiscal emergency.”  In essence, the governor could usurp local government decisions on where to spend state funds.

Budgets for local public schools, community colleges or cities could be cut at the whim of the governor and the funds diverted elsewhere.  The governor could conceivably use new emergency powers to divert state funds to his choice of regional Strategic Action Plans.

Why Democrats and Unions Oppose Prop. 31

Public unions have historically been concerned about granting the governor broader emergency powers.  On July 11, 1999, the Gov. Gray Davis administration called legislative committee chairpersons to inform them that the governor intended to direct the outcomes of selected funding bills without consulting their authors or the legislature.  The leaders of the legislature at that time — Assembly Speaker Antonio Villaraigosa, D-Los Angeles and Senate President Pro Tem John Burton, D-San Francisco — called Davis’ actions a “totally improper intrusion into the legislative process.” The concern was that Davis was going to kill a bill sought by labor unions to increase workers’ compensation benefits.

This explains why the Democratic Party is currently opposed to Prop. 31 giving the governor emergency powers over the budget. Also, any consolidation or revenue sharing arrangement of local governments might lead to the heads of local unions losing their jobs if absorbed into a larger union.

Why Republican Party Wrongly Endorses Prop. 31

Oddly, the California Republican Party supports Prop. 31. This is because Prop. 31 is being misleadingly advertised as a government budgetary efficiency measure.  But a two-year budget and performance budgeting do not need the approval of voters to be implemented.

Budget analyst John Decker in his book, “California in the Balance: Why Budgets Matter,” draws on an example from the Schwarzenegger administration to explain why a voter initiative is not needed for Prop. 31, except for the tax sharing provisions:

“Amid much fanfare the year after his election, Governor Schwarzenegger announced the results of a year long internal effort to find efficiencies in government known as the California Performance Review.  Though most of the recommendations made could be implemented administratively, few were actually taken in the form proposed.”

Local governments can form “joint powers authorities” in California without Prop. 31 and make their own decisions about revenue sharing.  In an email to this writer about Prop. 31, Wendell Cox stated: “State law permits Joint Powers Authorities and this is all that is needed.”

Tea Party Rightly Opposes Prop. 31 Despite Paranoia

The proponents of Prop. 31 may say that the Tea Party and those opposed to fiscal regionalism are over-reacting to its provisions.  But why are the proponents trying so hard to sell Prop. 31 as a budget reform and government performance measure with little mention of its tax-sharing provisions?

The East Bay Tea Party has more accurately perceived the dangers with Prop. 31 as the creation of a “super” layer of government that cannot be held accountable by local government elections.  Unfortunately, the paranoid Tea Party also fears that Prop. 31 would measure the “performance and accountability” of local governments by United Nations Agenda 21.

No doubt this sort of paranoia reflects the powerlessness and political marginalization of the Tea Party’s members in California. But such paranoia gives the opponents of the Tea Party reasons to discount them as “wing nuts” not to be taken seriously.

California Forward Hides Tax Sharing Part of Prop. 31

California Forward is selling Prop. 31 to the public as “trustworthy, accountable for results, cost-effective, transparent, focused on results, cooperative, closer to the people, supportive of regional job generation, willing to listen, thrifty and prudent.” The touted provisions of Prop. 31 call for a “two-year budget cycle” and for “performance budgeting.” Prop. 31 is officially titled “The Government Performance and Accountability Act.

California Forward makes no mention in its filing or in its official ballot argument in favor of it that Prop. 31 will socialize state revenue sharing.  And the analysis of the California Legislative Analyst is so neutral and narrowly focused that it is does not help the public understand the importance of the tax-sharing aspects. The ballot arguments in favor and against Prop. 31 also ignore that it would socialize local government taxes by regions.

Commentariat Mislead About Prop. 31

It is amazing that California’s journalistic commentariat has, thus far, only been concerned that Prop. 31:

* Is a Trojan horse that would result in “tweaking” environmental regulations;

* Prescribes an “aspirin” instead of “surgery”;

* Is a “virtuous budget reform package that falls short;” but

* Would “restore our state to greatness.”

Wendell Cox is one of the few that has caught the magnitude of the problem of regionalism to our democratic form of government when he wrote, “[D]emocracy is a timeless value. If people lose control of their governments to special interests, then democracy is lost, though the word will still be invoked.”

In an email, Cox further wrote:

“In general, the idea of tax sharing is negative. This breaks the connection between local governments and taxpayers, as tax sharing governments are, by definition, not accountable to the taxpayers of jurisdiction with which they share taxes. Milton Friedman was right in saying something to the effect that people are more careful about with their own money than they are with other people’s money. This would be a very bad step for California, which already is suffering significant ill effects from insufficient fiscal responsibility.” 

Prop. 31 is Ripe for Abuse 

Safires’ Political Dictionary defines “tax sharing” as “collection of revenues by the (state) government, returned directly to the (local) governments without (state) control of expenditures.”  Prop. 31 would go beyond merely returning tax revenues to local governments without controls and conditions attached.  It would be prone to abuse for funding political cronies and political earmarks.

When former President Clinton proposed a form of revenue sharing in an economic stimulus bill, Republicans described it as political pork and successfully blocked it.  But in the California Legislature, the Republican Party no longer has any blocking power.  Prop. 31 would be prone to abuse because there are few checks and balances anymore in California’s new “Fusion Party.”

History indicates bureaucratic agencies have a way of not ending up as policy makers intended. There is no way of knowing whether Prop. 31 would end up as some form of “Tennessee Valley Authority” that would usurp local governments and would be self-perpetuating without any sunset provisions.

Voters on both sides of the political spectrum should be concerned about the implications of Prop. 31.


Write a comment
  1. Stanley K.
    Stanley K. 30 August, 2012, 08:59

    I had no idea that more centralized government and wealth distribution was a part of Proposition 31. This is NOT GOOD. The measure has been advertised as “the 2-year budget proposition,” something that of course a lot of us would like to see. I wonder if this other part of it is generally known.

    Reply this comment
  2. BobA
    BobA 30 August, 2012, 09:41

    This is California carrying through on Obama’s promise to “spread the wealth”.
    In truth, the plan is to concentrate the wealth into the hands of the politicians so they can redistribute it to the special interests of their choice (i.e., public employee unions, political backers, etc.).

    One thing is for certain, if you’re a state official or a public employee, life is great in California because you ARE the ruling class.

    California is beginning to look more like a 3rd world country with each passing day. The sick part of it is: some people think this is a good thing.

    Reply this comment
  3. Ulysses Uhaul
    Ulysses Uhaul 30 August, 2012, 09:46

    This “WONK” stuff could drive you nuts.

    We get it. Only PACK AND SHIP is the remedy!

    -by the way…we received amazing participation for our recent packing supply specials-

    Thank you all , to wherever you all moved.

    Labor Day Blow Out……all boxes 30% off our everyday high(oops) low low prices!

    Reply this comment
  4. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 30 August, 2012, 11:17

    all good points on the wonk stuff u haul.

    Reply this comment
  5. Rosie
    Rosie 30 August, 2012, 12:19

    Prop 31 is exactly the reform California needs right now. Required auditing of departments means no more secret Parks Department slush funds. No more last minute, backroom gut and amend bills means less special interest control over Sacramento. Required specification of funding sources means less out of control spending. EXACTLY What Sacramento needs right now!

    Reply this comment
  6. Jordan
    Jordan 30 August, 2012, 12:28

    Proposition 31 would be extremely beneficial to California. It will make California
    government more transparent by requiring all new laws be made public,
    in print, well before they are voted on. This will eliminate last minute games in the
    Legislature. It will also root out fraud and inefficiency by auditing EVERY
    state program at least once every five years.

    In addition, it will curb out of control spending in Sacramento. When creating a new, they must explain where the money will come from, and why money from the budget should be used for their specific program. They will be held more accountable for their spending, making them think through spending decisions, instead of frivolously spending our tax dollars.

    Overall it will do a great deal to make Sacramento more accountable to the people.

    Reply this comment
  7. Wayne Lusvardi
    Wayne Lusvardi 30 August, 2012, 14:38

    Rosie and Jordan
    I assume you are both from California Forward but refuse to identify yourself. Why?

    There are existing laws on the books that require transparency and accountability and performance. You have not made your case to the public that yet another layer of such laws is needed while masking the tax sharing aspects of Prop 31.

    If you are for transparency why are you covering up the tax sharing facet of Prop 31?

    I think the answer is obvious to most voters.

    Reply this comment
  8. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 30 August, 2012, 15:06

    I agree with Rosie and Jordan and fully support 31. I for one Wayne am tired of the same old special intrest crowd with their gut and ammend tactics!


    Reply this comment
  9. Ulysses Uhaul
    Ulysses Uhaul 30 August, 2012, 15:23

    Sweet sorrows or does hope spring eternal!

    Read some Browning and Pope and relax.

    Nothing changes for the sheep.

    Reply this comment
  10. Obamanator
    Obamanator 30 August, 2012, 17:26

    Robbing the suburbs to pay for the cities is Agenda 21, Nancy Pelosi brought this to CA, she supports this bs always has. Only reason unions are fussin is cause it gives politicians more control then it does unions. For u to say it’s only repubs who support this is a LIE…Democrats have been supporting UN Agenda 21 for over 30 years…U will all be living ontop one another soon, the rich left such as Soros/Pelosi will be the only ones allowed to own farms/country property…Go ahead vote democrat.

    Reply this comment
  11. Rosie
    Rosie 31 August, 2012, 00:59

    Wayne: What’s California Forward? I’m being serious, I’m not familiar with the group. I’m just a PoliSci student from UC Davis.

    The existing laws are CLEARLY not doing a good enough job. Are our departments audited? No, and look what they found in the parks department. Is our legislative process transparent? No, gut and amend bills are exceedingly common, as is backroom special interest legislating. Are specified funding sources required? If they are, that law is being ignored. Prop 31 could help save California from the early grave we’ve dug ourselves into.

    Reply this comment
  12. John Steele
    John Steele 31 August, 2012, 07:50

    This IS part of Obamas plan to get even with people who have fled the cities because of crime and failing government schools and took their tax money with them. He blames suburbanites for the inner city problems and the people of California are dumb enough to go along with it. Somebody needs to smack the Repubs up side the head for their support of this bone head idea. Obama wants the money back and this is the vehicle to used to to steal money from the suburbs and waste it in cities, usually rn by Democrats…

    Reply this comment
  13. Bill - San Jose
    Bill - San Jose 31 August, 2012, 08:07

    Most bills look really good at first glance, right?

    Same gig here. Bait and switch effect Rosie. Let’s revisit the proposition that set a limit on our state budget back in the early 2000s. Some years later (2008 I think?) we as residents of California voted yes on highway funds and thus eliminated the original limits set by the earlier leglislation.

    Do not trust this Rosie. Also, let’s talk about the state raising any taxes for any reason while businesses are facing increases in workers compensation rate increases of up to 35% this coming year. This according to three providers I received quotes from this past July.


    Reply this comment
  14. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 31 August, 2012, 08:41

    John– When you say Obama, do you mean President Obama?

    Reply this comment
  15. Robert
    Robert 31 August, 2012, 11:01

    This is misinformation. Plain and simple. Read the materials from the Secretary of State here:

    Reply this comment
  16. Stanley K.
    Stanley K. 31 August, 2012, 16:18

    What are you talking about, Robert? What the author refers to is in there.

    Reply this comment
  17. Ron Kilmartin
    Ron Kilmartin 1 September, 2012, 17:49

    What were the Republicans smoking at their convention? Prop 31 is right out of Kurtz’s new book, noted above. The idea for this is conceptually the same as the Chicago-Alinsky-Obama “Build One America” playbook for the suburbs, and for the same reason: socialistic redistribution of wealth. It is organized theft of suburban wealth, as well as an attack on property, liberty and freedom.

    The Republicans were blind-sided and should go to the woodshed.

    Reply this comment
  18. Sue Schimandle
    Sue Schimandle 3 September, 2012, 11:28

    Interesting article regarding Prop. 31. I’m not a member of the Tea Party, but have done a lot of research about UN Agenda 21. Mr. Lusvardi is completely uninformed in the area of Agenda 21 and its tentacles in our local, state and federal govt.’s I suggest that he do some homework before he makes such misleading statements regarding a group of people(the Tea Party). They are far more knowledgeable about what is really taking place under Mr. Lusvardi’s naive nose.

    Reply this comment
  19. Wayne Lusvardi
    Wayne Lusvardi 3 September, 2012, 22:36

    Ms. Schimandle:

    Here is the link to the text of Proposition 31:

    Go to Edit and then Find on your menu buttons on your browser and see if you can find the words United Nations Agenda 21 in the text of Prop 31. As far as I can find it is not contained in the proposition.

    Best regards,

    Reply this comment
  20. robert
    robert 14 September, 2012, 09:59


    Reply this comment
  21. Deanna
    Deanna 23 September, 2012, 18:44

    I was able to track the funding for this to George Soros. (ballotpedia-California Forward-California Common Cause)It is incredibly important to stop it. What do we do?

    Reply this comment
  22. "Paranoid"? 20 October, 2012, 22:23

    ‘Unfortunately, the paranoid Tea Party also fears that Prop. 31 would measure the “performance and accountability” of local governments by United Nations Agenda 21.’

    On what basis are YOU “diagnosing” the Tea Party as paranoid? Just because they didn’t take the time to trace the entire linkage to prove their assertion does not make it false out of hand.

    By accusing the Tea Party of paranoia it is YOU who are quite unfairly marginalizing them!

    I encourage you to keep an open mind and learn more about the comprehensive nature of the U.N Agenda for the 21st Century and how it relates to so much of what is happening from the White House to our neighborhoods. The price of liberty is eternal vigilance.

    Other than your unwarranted condescension, this is a terrific and crucial article. Thanks for writing it.

    Reply this comment

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