What the raid means

As long as the Legislature fails to come up with new revenues, the state will keep dipping into local treasuries

There no doubt was much gnashing of teeth, metaphorically speaking, at Chico City Hall Monday, when the city—acting as the Chico Redevelopment Agency—was forced to turn over $9.2 million of its accumulated RDA money to the state of California.

The money was intended for local revitalization projects—construction of a new fire station, various road and street improvements, infrastructure upgrades at the airport, and several community art projects. It would have created jobs and stimulated the local economy during tough financial times.

It would be naïve to think that these raids of local funds will stop anytime soon. They have become a handy source of revenue for an under-funded state government whose Legislature is incapable of finding alternatives. Because the Republican minority in the state Senate can block any tax increase, no matter how reasonable, the state has to raid local treasuries to balance its budget. That’s nuts.

There are other ways to raise money without hurting local communities. For example, Assemblyman Tom Ammiano, a Democrat from San Francisco, has introduced AB 2492, which would correct a loophole in Proposition 13 that allows corporations to avoid reassessment on transferred properties, thereby dodging the tax increases ordinary folks must pay when they buy homes. Because of the loophole, the state loses as much as $7.5 billion annually in tax revenue, according to a recent study by the California Tax Reform Association.

Rather than argue the merits of the bill, however, the anti-tax ideologues are scaring homeowners by calling Ammiano’s bill the first step toward abolishing Proposition 13 altogether.

At a candidates’ forum in Chico last week, Democratic Assembly candidate Christina Billeci was refreshingly candid in supporting other revenue-generating options. She mentioned taxing Internet sales, extending the sales tax to services, and charging the oil companies an extraction fee, something every other oil-producing state does. That alone would bring in more than $1 billion a year.

History shows that when we invest in California—in its schools, its highways, its neighborhoods—we prosper. There are more jobs, and incomes go up. Now, instead of investing, we’re raiding local treasuries—which is exactly the wrong thing to do at a time when the state should be creating jobs, not killing them.