The Realignment, or "9 Fellows Walk Into a Bar... (Pt. 3)"

“Yes, you’re right to think this is a bunch of bullshit.”

Such was the political sentiment in Sacramento, a town that only exists because of indecisive planners, cheap land and shady 19^th century business deals.

The rest of our afternoon was filled by meetings with various bureaucrats and politicos including Assemblymembers Ma and Ammiano, Senator Leno and Senator Leland Yee’s Chief of Staff. As is often the case, our time with the staff was the most educational, as they were more familiar with the technical challenges of legislation and the Sacramento political process. Nonetheless, all of the reps were engaging and outspoken about otherwise sensitive political issues. Fiona Ma shared her perspectives on transitioning from San Francisco politics to Sacramento, which mostly boiled down to “omg there are real Republicans here” and that old adversaries from the City are now political allies. It turns out that outside of San Francisco our representatives don’t actually differ that much on wider issues, and indeed agree on 95% of all matters addressed by the state. Relativity. Huge surprise.

Perhaps the most interesting bunch that we met with on our trip to the capitol was a budget consultant group called Lynn Suter & Associates. Their relatively few staff members are experts on a plethora of state issues with no particular partisan alliances and no interest in running for office, and they're mostly from San Francisco. They are California’s technocrats.

Several speakers jumped at redevelopment off the bat, and they reframed the issue of dissolving Redevelopment Agencies as part of a wider discussion about the “Realignment” between state and local governments. The act of dissolving RA’s is itself not unconstitutional, they suggested. A handful of laws do prohibit the State from transferring local funds away from local governments, as Sacramento had done in the past with great zeal. HOWEVER, the State is not actively “transferring funds” with a directive, per se – it is just dissolving a fiscal mechanism, which would de facto re-route funds through other channels.

This was an absolute “….OOOOOOOOoohhhhhh!” moment for us. It explained why people were still arguing about it (and still ARE arguing about it) even when the League of California Cities was so ardent in its claims that the act is strictly unconstitutional. that is to say, it's more complicated.

But then the same question that we heard over and over inevitably rises: If you’re just moving money around, then how does this actually save money in the budget?

The short answer seems to be “shut the hell up!”, but with some caveats.

“The Realignment”

"We kind of just make the rules up around here, or change them when we want something else. But some of those laws, they're worse than worthless, and they're lodged in like a barb in everyone's ass."

California entered this fiscal year facing a $26 billion deficit, out of a two year budget of about $84 billion. If you’re not familiar with imaginary accounting and behemoth numbers are too removed from anyone's daily experience to seriously wrap your head around, don’t worry – it is indeed a whole shit-ton of money! And on top of that, it's money we don’t actually have!! Some of you from you of state may be wondering, wtf Luke, how does California miss the mark by that much? Well, it’s a combination of a lot of silly things mixed with a lot of forward thinking progressive ideals that were never really thought out. Even more so, we come back to the issues inherent in Prop 13’s capping of property taxes and citizen initiatives that mandate (often with constitutional amendments) ridiculous programs and laws modeled by upset citizens instead of rational experts. (take for example, CA’s infamous 3-Strikes law that imprisons people for 15+ years for stealing cereal boxes as their 3^rd offense). So now even the State constitution plays a role in the problem, and that deserves a full-capital [WTF?!].

When Jerry Brown was sworn in as the governor – again – he did something very unusual; he immediately began proposing budget changes. And according to our speakers, ever since January 10 “it’s been one long forced march uphill”. The new governor usually gives the legislature a few months to settle in, but Brown had shit to get done and didn't want to wait till April. He hasn’t been pulling his punches much, and since publicly declaring that he has no interest in a second (fourth?) term, he really doesn’t have any incentive to either.

However, the first draft of the governor’s budget was a little more than surprising. Indeed, its changes were so radical that it actually violated a handful of constitutional requirements. Oops, missed the memo on that one, eh? Subsequent drafts have been more realistic, though by no means tempered, and he and his staff have apparently been very good about getting players to the table.

What has been happening since is reminiscent of the fiscal crisis that California faced in 1991 (we have them every few years), in which the State shifted the responsibilities of many public agencies down to local governments so that Sacramento would not have to bear the burden of actually managing them. The gaggle of services now on the table is pretty eclectic, but it is mostly comprised of corrections, health services, fire services (including parts of CalFire), and other Human Services. This “Realignment” of services would shift approximately $6B in services onto counties or cities. San Francisco lucks out because we’re both a City AND County, which means two times the services :D !

Two BIG questions need to be asked now. Firstly,

Where does all of this money come from in a fiscal crisis?

About two years ago, CA voters approved by ballot several temporary tax hikes to help cover the deficit, but the measure was only for a two-year stint. If these taxes are extended as the governor proposes, the majority of the revenue generated would go towards funding those same local services for an additional 5 years through a “special fund”. This last piece is critical for schools in particular, because they are assured 40 % of General Fund levels. By designating a special fund, much of the revenue will go directly toward education spending on top of the General Fund levels, instead of schools receiving a marginal increase from the overall bump in the general fund. They understandably don’t want to rely on that alternative, as Sacramento has already withdrawn so much money that the state is below or in conflict with statutory requirements, and is actually being sued for violations of its constitutional obligations.

To make things trickier, though, tax increases must be approved by the citizenry. This cannot happen until a 2/3 supermajority vote of support in the legislature, thanks to Prop 26 >:( This means that the Democrats need to persuade 2 WHOLE REPUBLICANS to support putting the extension on a June ballot, and they are only courting 4 for the moment. (more than 2/3 of CA voters pulled in a recent survey would like to see these taxes on a ballot, but the majority of them would also support the new taxes - hence CA Republicans are wary, because they would lose)

Beyond the increase in revenue, the state will be required to pay for some of the new services administered by localities. Wait, says Concerned Citizen with the second question,

if Sacramento is just going to pay for the services while they’re administered by someone else, how will this actually save any money?

The short answer is that it probably won’t save much. There will be some State savings in the short-term because they will inevitably under-compensate municipalities. Yes, that’s right, they are expecting to pay less for comparable services by simply paying less for them to be administered. Not surprisingly, the League of Cities is pushing legislation and even another constitutional amendment to ensure that cities and counties are properly compensated.

The real idea though is that local institutions that are closer to their people and to the issues on the ground can manage services or react to issues more efficiently than can Sac, and those marginal savings will eventually add up to really big savings. That is generally consistent my own experiences, but it also depends on the issue and its scale.

Local healthy services in a built out county, for example, may actually improve with the Realignment, but those same counties may not have the expertise or capacity to effectively absorb the proposed 40,000 state prisoners and parolees that may be transferred to their corrections programs. They'll also have to start letting inmates go after they reach their maximum capacity, or else they get slapped with state AND federal lawsuits.

POSTSCRIPT: For more information about the newest trend of Realignment nationwide, I offer you Governing Magazine's April article "States Handing Off More Responsibilities to Cities".