Costa Mesa leaders backing effort to hold tight to taxes

Deirdre Newman

Newport Beach and Costa Mesa city leaders are fed up with the state

legislature siphoning local tax funds.

They have decided to throw their support behind an effort by the

California League of Cities to place an initiative on the ballot to

allow voters to decide whether local tax funds may be taken, shifted,

diverted or otherwise used to fund state government operations.

In the past decade, Costa Mesa has lost about $55 million in tax

funds and Newport Beach has seen about $48 million go to the state.

The Costa Mesa City Council unanimously approved a resolution

supporting the initiative Monday, and the Newport Beach City Council

will consider a similar resolution Tuesday.

“It’s a good idea to support this,” said Costa Mesa City

Councilman Chris Steel. “I think we need to retain these funds and

maintain local control.”

But the councils’ hands are tied after approving the resolution

because cities can’t expend any staff time or financial resources and

can’t use public facilities to push the initiative.

Rallying residents to support the initiative is key, said Costa

Mesa City Councilman Mike Scheafer.

“It’s really going to take a big effort on our parts as elected

officials to get the word out about the initiative,” Scheafer said.

“There will be a lot of negative stuff that comes from Sacramento,

but the citizens of Costa Mesa need to understand that by passing

this initiative, it will let us accomplish what they want us to do.”

The initiative also would clarify that the state must reimburse

local governments for new mandated programs or higher levels of

services, and make sure revenues that have previously been allocated

to local governments are reallocated or redistributed to a

state-created fund.

The League of Cities is sponsoring the ballot initiative in

response to the latest projection of the state’s deficit of at least

$8 billion for this year’s budget. A move by the legislature that

redirects one half of the local share of cities’ sales tax revenue to

the state in exchange for a five-year “promissory note” of

replacement property tax revenue is the latest in a series of actions

to balance the state budget at the expense of cities, critics say.

This maneuver places $18 million of Costa Mesa sales tax at risk.

Dipping into city coffers and the attitude that goes along with it

has to stop, Scheafer said.

“I think it’s important that we, as a city, be able to get the

funds that we’re entitled to and use them for our programs,” Scheafer

said. ‘It’s almost as if [the legislature] thinks their programs are

more important than ours. But we’re the ones that are right in the

trenches. We know what streets need to be paved and the legislature

doesn’t really understand that.”

The ballot initiative started before the recall and it may be a

while before the Attorney General finalizes the initiative for

placement on the November 2004 ballot. No petitions can be circulated

until the initiative is finalized.

Leaders in both cities are also waiting to see if Gov.-elect

Arnold Schwarzenegger follows through on his campaign promise to

rescind the car tax. Cities depend on revenue from the car tax and

could lose out if the tax is rescinded and no effort is made to

replace that revenue.

If the car tax is rescinded, both cities stand to lose a little

more than $4 million.

“I think that is a litmus test that [Schwarzenegger] is going to

have to remain true to his word,” said Newport Beach City Manager

Homer Bludau. “At the same time, we’re hearing that he wants to

provide local government the same revenues that they would get from

the car tax, even if it is repealed. So the question is, ‘How do you

do that when he’s facing another huge budget deficit next year?’”

Costa Mesa City Manager Allan Roeder said the challenging part is

trying to deal with the timing -- if the car tax is rescinded.

“We have no idea when that may happen and as time passes and we

get further and further into the budget year, we’ll have less

opportunity to offset that loss,” Roeder said.