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Prop 22 and the critical issue of unfunded local mandates

by Mytheos Holt, published

With all the excitement over the Gubernatorial and Senatorial races, to say nothing of the fireworks currently brewing over Propositions 19 and 23, it’s easy for Californians to forget that there are, in fact, other measures on the ballot.  One such measure is Proposition 22, a fiscally-oriented constitutional amendment which, after Proposition 13, would quite possibly be one of the most structurally significant adjustments to California’s state budgeting process ever devised. That it has received so little attention relative to other propositions is, to say the least, troubling.  

First, some background. In the status quo, money that is slated and (in some cases) even outright collected by local authorities to fund local projects and local government can be taken by the state government at any point, for any purpose. In effect, what this does is permit the state government to retroactively make any function it has imposed on local government (or any function local government has imposed on itself) an unfunded mandate, while freeing up more revenue for state-level expenses, and giving more budget flexibility to legislators.  

Enter Proposition 22, which if passed, would ban this practice in part, keeping property tax and gas tax money that has otherwise been reserved to state governments locked into that status, and not allowing the state government to appropriate it for other ends at the last second. In other words, it creates a lockbox for local government funding that politicians cannot open.  

The obvious way to analyze this issue would be to suggest that Proposition 22 breaks down along the same lines as the similar debate currently taking place nationwide about Federalism. That is, the major question is whether the needs of the macro-level authority (the State government) should take precedence over the needs of the micro-level authority (the local government). If this were the only lens of analysis, Proposition 22 would have easily defined partisan implications – conservatives (who tend to support greater local autonomy) would support it, while liberals (who tend to trust more cosmopolitan – and thus more centralized – power structures) would oppose it.  

To some extent, this partisan expectation has been borne out – Meg Whitman has endorsed Proposition 22. However, the similarities stop there given that in the case of California, and also given the structural differences between state governments and the Federal government, the Federalism debate is arguably an oversimplification. For one thing, state governments provide services that the Federal government is often Constitutionally or otherwise structurally prohibited from providing, and which local governments are fiscally incapable of providing. State police is one obvious example, as are state-funded public schools, which receive their funding from the state even if their school boards are local.

To make matters more complicated, California’s budget crisis is so severe that confining the state’s funding sources has bipartisan groups of people worried, given that local governments would receive even more unfunded mandates in the absence of a state government to pick up the slack. These two differences have made it such that bipartisan forces have lined up both for and against Proposition 22.  

The bill’s likelihood of passing is as yet undetermined. However, voters should be aware of it and have every reason to inform themselves about its structural components.

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