May 19, 2005

Proposition 13 blamed for state, municipal budget woes

City manager: San Jose does more with fewer resources than Detroit

By Sheila Sanchez
Staff Writer

One of Governing magazine’s recent issues revealed that although San Jose is soon to become the 10th largest city in the country it’s ranked 23rd in revenue collected and 35th in employees per capita.

From left, Peter Szego, Terry Christensen, Del Borgsdorf and Barbara Marshman were the speakers last Saturday during a budget forum at the Martin Luther King Jr. Library.

“It doesn’t matter where you cut into the city organization, you’ll find a standard lament—there are not enough of us to do what the citizens who live here expect, let alone the citizens who are arriving on a regular basis,” said San Jose City Manager Del Borgsdorf during a budget forum last Saturday morning at the Martin Luther King Jr. Library.

Borgsdorf was one of four panelists who participated in a discussion titled, “Building a Balanced City Budget: Working with Bent Nails and Warped Wood.” It was moderated by Dr. Colleen Wilcox, superintendent of the Santa Clara County Office of Education and was sponsored by the League of Women Voters San Jose/Santa Clara and the city. About 30 seniors attended.

Visiting Detroit—in the process of being bumped by San Jose from its 10th largest spot—Borgsdorf discovered that it finished last year $95 million in the red and will have a $300 million deficit this fiscal year.

San Jose, although not as much in the red as Detroit, is facing a budget deficit of approximately $60 million during fiscal year 2005-06, which begins July 1.

He also said while Detroit has 18,000 municipal employees and about 5,000 police officers, San Jose is rated well by residents in how it provides community services with 6,650 city employees and 1,450 police officers.

According to Borgsdorf, adding to the city’s own difficult budget process is a state funding process that’s complex, gives no control to municipalities and lacks timeliness and reliability. He said the city has donated about $350 million to the state in one form or another.

The city manager said he would like to see more local revenue control, more local government revenue stability and a push to fix problems created by Proposition 13, passed by two-thirds of California voters in 1978, reducing property tax rates on homes, business and farms by 57 percent.

And he warned the city is at risk of losing some of the basic components of livability because of the continued lack of revenue and resources.

San Jose Mercury News Editor Barbara Marshman joked that she was taking advantage of the opportunity to speak before the forum to vent her frustration as she tries to translate for her readers what’s happening in government.

“I just don’t know how to get across the problem that’s created when the state takes local money,” she said.

She said the state’s most outrageous grab of money recently was the swiping of $350 million from 2,300 local districts to balance last year’s budget, including the Santa Clara Valley Water District.

Marshman said the water district lost 10 percent of its revenues or $25.5 million, earned by a flood control tax, which imposed about $40 a year per homeowner.

Political scientist Terry Christensen, a professor at San Jose State University, said the cliché is that cities and counties are creatures of the state, constitutionally in an inferior position.

Christensen called cities and counties the “bottom feeders” of government because they’re “scrounging for funds.”

But, as he described it, it’s getting harder to “scrounge” because now the state is also at the bottom snatching whatever is left.

Christensen said until the state deals with Proposition 13 and its many impacts, cities and counties will remain in dire fiscal situations.

“So many things have been imposed on local governments by the voters that we really have to take some of the responsibility,” Christensen said.

He noted a lack of political leadership on fiscal reform and structure has been worsened by term limits, noting that six years in the State Assembly, eight years in the sate Senate and two terms as governor are not long enough to create long-lasting fiscal reform. “How do you deal with Proposition 13…when you’re on limited time and what’s the political payoff?” he asked.

San Jose City Manager Del Borgsdorf was one of several speakers who explained the city’s budget crisis to a group of seniors during a forum Saturday at the Martin Luther King Jr. Library. Photos by Sheila Sanchez

He said sometimes lawmakers’ hands are tied by initiatives voters approved. “It’s our fault, too. We’re the ones who tied them up in knots.”

Not helping the situation is the fact that 70 percent of state voters are Caucasian when 46 percent of the state population is Caucasian. He said the electorate is also disproportionately older than the average population voting four times in higher proportion than voters under 30 who are the most dependent on the services.

Another part of the problem, Christensen said, was that opinion makers are not communicating to voters well enough why government issues matter.

“We know what Terry Gregory had for dinner and we know what’s in the chili at Wendy’s, but we don’t know enough about these other important issues,” he said.

He also thinks more government education needs to be taught to students at the high school and college level; and that the electorate needs to be more engaged in what’s happening to their government agencies.

Christensen, however, has faith in the future minority-based electorate, which he predicted would have different attitudes about taxes, spending and government services.

Peter Szego, a longtime state legislative consultant, said because Proposition 13 helped generate other ballot measures which further constrained local and state government, voters have a “dense network of such restraints which are both politically and legally very difficult to change, almost impossible.”

Speaking about the historical perspective of the relationship between local and state governments, Szego said the tension between the two has existed for more than 150 years.

Wilcox said the number one problem for Santa Clara County teachers, besides not enough money, is lack of affordable housing, considering the average teacher salary is around $50,000 a year and the average home is priced at $800,000.

“There’s no amount of increase possible to make that a viable situation,” Wilcox said, adding that the only way to alleviate that is through high-speed travel into the city or housing programs for teachers.

Wilcox praised San Jose for being one of the first cities to begin a housing program, allocating resources and using its connections through corporations to get additional money for mortgage assistance and preschool programs.

The Commonwealth Club is sponsoring the “Voices of Reform Project” conference, 9 a.m.-5 p.m., June 10, 595 Market St., second floor, San Francisco. The conference will focus on the state budget, campaign finance, elections, redistricting, the initiative process and term limits. For more information call (415) 351-3470.