Over all our hopes for the year ahead hangs a dark cloud . . . the unsettled state economy, the lingering costs of the electricity deregulation debacle, and the “black hole” of the huge state budget deficit.

State Budget Takeaways

Early indications are that the state may once more try to take money out of local governments to cover a reported $12 billion deficit in the next fiscal year, which starts July 1. In fact, the city council just returned from Sacramento from the California Contract Cities Association legislative seminar, after meeting with a number of legislators and the Governor’s staff. In those meetings we learned that revenue targets weren’t met in December, so now we are looking at a $14 billion deficit.

While I welcome the Governor’s recent pledge to oppose efforts to divert vehicle license fee replacement income, I am alarmed by those in the Legislature who want to keep “all options open,” including once again raiding city revenues . . . our local revenues, your revenues.

We have good reason to be suspicious. After all, city and county budgets have been raided before. The recession of the 1990s resulted in a hemorrhage of billions of dollars in local revenue to cover increased state spending and some state funding shifts.

Despite promises to restore the takeaways when good times returned, the state legislature returned only token amounts during the years of budget surpluses that came with the “dotcom” boom. And now the state budget has a gaping, $14 billion-dollar hole that must be filled somehow, some way, and soon.

Still, I am encouraged by Governor Davis’ pledges – made twice, so they must be true –that he wants no reduction in the motor vehicle license fee revenue that makes up 14 percent of this city’s general fund budget.

But, let’s “do the math.” The Governor promised not to cut the education budget, which is over sixty-two percent of state spending. He promised not to cut VLF for cities, which reflects about five percent of state revenues. He promised not to cut a few other popular state programs. And, he pledged not to raise state taxes.

The Governor proposes that the deficit hole be filled with a combination of cuts, revenue accelerations, and accounting “magic.” This may work, but only if the recession ends soon and a strong recovery begins immediately after.

Where will the cuts fall? We fear on cities. And we’ve already seen the first signs. The state legislature, which allocated $550,000 for needed improvements at Mae Boyar Park last year, is expected to take back the funding. The funding takeback would stall the replacement of the park’s 2,700-square-foot park activity building and diminish plans for the San Gabriel River projects that Mayor Wagner noted earlier.

Worse news may come later this spring, if the economy doesn’t improve. We’ll see legislative proposals for cuts in funds earmarked for local street repairs and other, high-priority, local infrastructure needs.

Equally disturbing is a movement among state legislators and so-called “smart growth” advocates to junk the current system of sales tax allocation based on the “site” of the sale.
Lakewood gets more than 30 percent of its general fund revenue from taxable sales at Lakewood Center and the city’s other, much smaller neighborhood retailers.

There are ways to make runaway retail development less cutthroat and to encourage residential and industrial development, but draining revenue from cities like Lakewood isn’t one of them.

These threats are real and the state takeaways may come without hearings or legislative debate, as they did in the 1990s. We may simply wake up one morning and find that city revenue is gone and Lakewood’s quality of life significantly degraded, if the economy is slow to improve.

NPDES and City/State Relationships

At the heart of the local government funding crisis in California is a vacuum of understanding. California voters don’t know how state and local governments work and – worse – they don’t seem very interested in finding out. That’s the only conclusion I can draw from a recent opinion poll conducted for the League of California Cities.

Frankly, even I sometimes get confused because of the haphazard organization and oddball statutes imposed by the state on matters affecting local government.

Voter apathy, term limits, the legislature’s time-honored practice of passing the buck, and the delegation of regulatory responsibility to a crazy quilt of special-purpose regulatory boards – none of them accountable to voters – are putting your city at risk . . . again.

In the past, I’ve warned you of the antics of other special purpose agencies: the wasteful Water Replenishment District, the empire-building Santa Monica Mountains Conservancy, the regulation-bound Air Quality District, and many others.

The current example is a little-known regulatory agency called the Los Angeles Regional Water Quality Control Board. Its members are appointed by the Governor and confirmed by the state Senate. It is the newest candidate for “The Government Agency Taxpayers Should Fear Most.”

The water board, in response to the federal Clean Water Act, has issued new regulations that have a hefty price tag for cities already hard pressed to pay for traditional municipal services, and an even bigger cost for businesses.

Among other things, the regional water quality board has adopted new “storm water permit” regulations that require cities to put restrictions on property owners to control the amount of storm water that runs off of new developments and existing properties that have been redeveloped.

The regulations achieve this goal by requiring property owners to build “retention basins” (that is, ponds) to hold storm water on-site. But that’s the least of the problem.

Four reports, by the state and by independent auditors, show that the cost of compliance just for Los Angeles County will be over $53 billion dollars. Remember when your city council rose up against FEMA on overly restrictive building regulations and mandatory flood insurance when a study from USC showed economic harm to the region of $2.6 billion? This is 20 times that!

That’s equal to a 70 percent increase in your property tax or a sales tax rate of almost 13 percent, and that doesn’t include the added costs to owners of residential or commercial property under development.

Do any of you--as L.A. County residents and business owners--really want to pay more than $50 billion dollars in a new “storm water tax?” I don’t. But, frankly, I’ve heard not one voice from either the business community, realtor associations, community betterment or taxpayer groups on the cost implications of storm water permit requirements that were imposed on Lakewood and most other Los Angeles County cities in December.

The Press-Telegram actually applauded the new permit as a “beach cleanup” measure. This is the same paper that once stood up for cities against the WRD and against FEMA when those agencies were jacking up costs for residents.

If you want to pay a $53 billion-dollar “storm water tax,” just remain confused, disinterested, and uninvolved on the issue affecting the communities you reside in or where your business is located.

If the permit imposed by the water quality control board is not enforced by cities, the affected city is vulnerable to a citizen's lawsuit, plus penalties of up to $27,500 per day. … and the “right” to pay all the attorney’s fees.

The permit also orders mandatory inspections for manufacturing facilities, restaurants, automotive businesses, and other commercial sites. In some cases, the new storm water permit appears to require that the city adopt regulations that will violate property owners constitutional rights against illegal search and seizure.

The permit criminalizes the accidents of everyday life – not one toothpick, not one cigarette butt, not one paper cup can enter the storm drain system. I suppose if your children or grandchildren drops an ice-cream cone in the street, they are violating the permit.

One week ago, Lakewood joined with the Los Angeles County Economic Development Corporation and several other Los Angeles County cities in appealing the new permit requirements. The State Water Resources Control Board has 270 days to act, or repeat what they did in San Diego, and reject all appeals for commonsense regulation.

Cities are prepared to do the right thing for the environment. We are just as concerned as you about environmental protection, meeting the requirements of the federal Clean Water Act and cleaning up beaches.

But let's not kid ourselves. Making the San Gabriel and Los Angeles Rivers “fishable and swimable” is an absurd and costly plan. Having the water treated that goes into the giant flood control channels to “drinking water standards” is equally absurd. No community pumps water from the “river,” and it is illegal to trespass – fishing and swimming are prohibited.

I can assure you, Lakewood is not ready to impose tens of millions of dollars of additional taxes on you to make the storm drain system a pristine water source. Nor are we ready to pay the millions it may cost to defend against an army of lawyers waving citizens' lawsuits.

The Governor says he won’t raise taxes. But the water quality board he appointed is preparing to levy a “storm water tax” of $53 billion dollars or more. Does that make any sense to you?

Remain disinterested at your own economic peril. And, get ready for a business busting, family budget busting “storm water tax” brought to you by the unelected and unaccountable members of the once-obscure water quality board.