‘Wilson Shift’: Making the Worst of Things : The governor’s plan to solve the state budget crisis by transferring property tax money to schools will be ruinous to county government agencies. And it won’t help the schools.

Have you heard of the “Wilson Shift�? No, it isn’t a new football play, dance step or piece of women’s clothing. Instead, it’s Gov. Pete Wilson’s latest proposal for solving the state’s budget crisis, and Orange County stands to get hit hard. Not surprising, given how we usually fare in Sacramento.

Obviously the state’s in trouble again, and somehow the huge deficit needs to be covered. The governor doesn’t want to raise taxes. But, in fact, raising taxes--on everybody in California equally--would be preferable to what’s about to happen to Orange County’s local governments, special districts and schools as a result of the governor’s proposal to shift more of our property tax revenues into the schools. Sounds innocuous enough, doesn’t it? But here’s how it really will work.

All our property tax dollars return to us in one form or another. None stay in Sacramento. However, Sacramento controls the allocation of those dollars to county government, schools, municipalities and special districts.

In 1978, shortly after the passage of Proposition 13, formulas for the allocation of property tax dollars were established for all 58 of California’s counties. For historical reasons, at that time a small allocation was provided to Orange County to support county government, and a relatively large allocation was established to support schools. Since the state is obliged by law to support our schools at a level per student that is the same for all counties, whatever is not covered by our property taxes is made up for by an allocation from Sacramento out of monies collected via sales and income taxes.

That’s our money too, but since Orange County contributes so much more to the state’s general fund that we get back, and because the state is not obligated to provide minimum funding levels for local government and special districts, the tax equity imbalance we already suffer will be exacerbated by the governor’s proposal.

Orange County’s total contribution to the state’s general fund from sales and income taxes is second only to Los Angeles County’s. Yet we are third lowest of the 58 counties in per capita assistance from the state for all purposes.

Our schools are supposed to be funded at a level per student equal to that of other counties. But in 1990-91 Orange County received $874, or 28%, less than the average amount of state funding and $136 less than the average in total funding per student, amounting to a $50-million shortfall in our education budgets.

Transferring more property tax dollars into schools does not help them, since the state offsets the increase by reducing its contribution. The real bad news is that the schools will be charged a fee for collecting the additional property taxes and will face higher water, sewer, and possibly utility rates. This is because the commensurate reduction in the property tax allocation to special districts and local governments must be made up by higher fees and special assessments.

And the impact on our county government promises to be devastating. The county budget now faces a $93-million deficit, $19 million of it coming from the governor’s proposed property tax shift to schools.

The rest of the county budget shortfall results from inadequate federal revenues to support the exploding public assistance caseload coupled with a 5% reduction in property tax collections as assessed values decline.

Orange County’s special districts are targeted to lose an additional $41 million under the governor’s plan.

Finally, our city governments plus city and county redevelopment agencies are slated to lose $71 million more, for a total countywide loss of $131 million in funds shifted to the schools.

The key to real fiscal reform in California is to revise or eliminate many of the constitutional constraints that limit state and local spending flexibility--and to increase local control over the distribution of local revenues.

This long-term goal should not be made even more difficult to achieve by a solution to the immediate 1993-94 state budget crisis that increases tax inequity among the counties.

Both San Diego and Orange counties, with the second- and third-largest populations in the state, are similarly disadvantaged by the existing property tax allocation formulas. San Diego is, in fact, suing the state over this issue, but it will take time to reach a conclusion.

At this moment, Gov. Wilson should be sensitive to how his reelection chances are going to be affected by the differential and negative impacts his proposal will have on two counties that were crucial in his successful 1990 campaign and will be again in 1994.