May 7, 2004 - From the May, 2002 issue

League Of Cities Grapples With Fiscal Realities: Cities Are Without The Authority To Truly Govern?

As a contract city attorney, Michael Colantuono works in the trenches of local government, providing legal guidance and services to many cities of varying sizes and economies. In addition, Mr. Colantuono serves as Second Vice-President of the City Attorney's Division of the League of California Cities, which positions him as a policy advocate on behalf of local governments statewide. MIR is pleased to present this interview with Michael Colantuono as he discusses the challenges local governments face in the wake of Prop. 13 and the ongoing reduction in local control.


Michael Colantuono

Michael, as a contract city attorney and the Second Vice-President of the City Attorney's Department of the League of California Cities, you spend a great deal of time and have substantial experience dealing with the effects of Propositions 13, 62, and 218. Summarize for our readers what's the effect of these propositions, the nature of your work in trying to respond to them, and the policy recommendations that you are pushing to mitigate the damage that was caused, or the perceived damage that these propositions caused on local sovereignty and capacity.

The first and most important consequence of all of these voter-approved restrictions on local government finance was a fundamental shift in the relationship between state and local government. Up until 1978, and probably even up until the early 1990s, we were largely able to pursue local agendas with local resources and be held accountable at the local level. That is fundamentally untrue of the current circumstances. There is not a city manager or county administrator in the state who is in a position to say anything meaningful about their budget until the state budget is put to bed. And now fundamentally local decisions-like how should we deal with abandoned shopping carts-are not getting made in town hall, they're getting made in Sacramento. And that is really unfortunate and not a wise way to govern a state as incredibly diverse as this one.

How do you respond to the popular view that the public asks, "So what?" What's the difference whether decisions are made in a town council or in Sacramento?

By allowing all the decisions to be made in Sacramento you get "one-size-fits-all government." You get government that is very responsive to the kinds of issues that are likely to get people elected to the Legislature. So, at the moment, we have police departments that have all the money they need for equipment, but they don't have the money they need for manpower. So, as you take a department that needs to recruit people and tell them that they can have more patrol cars, that's not a good solution.

Let's turn to the litigation that's come forth in the last couple of years, altering the scope of the propositions and, ultimately, shifting the balance of power.

We have seen two big shifts. Prop. 62 was a statutory initiative passed by voters in 1986 that said that all taxes at the local level-whether general or special-need voter approval. By 1991, the courts of appeal had said that was unenforceable. Then, we got the state budget crisis in 1992-93 and 1993-94. And by 1995, when the California Supreme Court finally got around to addressing the issue, there was $300 million a year of non-voter approved taxes largely adopted to deal with money that the state took out of our pockets to balance the state budget in the early 1990s - money that has never come back.

The Supreme Court took six years to address this question and then told us, belatedly, that Prop 62 was enforceable. They then waited until June 2001 to tell us that there was no meaningful statute of limitations. So here we are in the middle of 2001, with cities and counties throughout California with $300 million of annual revenue funding police, fire, ambulances, streets, parks, etc. all of which is now at risk.

Additionally, you're seeing a growing profusion of political campaign consultants and pollsters advising local governments on how to persuade their voters to give them the revenues they need to continue the status quo-not new projects, not new solutions to growing problems, not new opportunities to address our growing infrastructure deficit, just to preserve the status quo.

There's obviously an element of frustration in your responses. Local officials are not powerless and they do have a platform. But what keeps these challenges from being well discussed? What prevents solutions from coming forward?

They are well discussed. Local government is very resourceful. And there are a lot of talented people who care about their communities and put energy into them.

The problem is that there is a finite amount of resources. And instead of local elected taking their passion and putting it toward accomplishing a particular local objective for change-a new hospital in Barstow, a revitalized downtown in Monrovia, an upgraded water system somewhere else-they are in a mode of "batten down the hatches, preserve the status quo, and God help us for what the May revise looks like in Sacramento." In that type of framework, you simply don't have a choice anymore. There's no room to say what the local objective is. That's what needs to be changed.

Well, Speaker Villaraigosa appointed a commission following the state Constitutional Revision Commission and others, all of which come up with arguments that are very responsive to your concerns and yet nothing seems to have changed. So, connect the dots for us. Why is it so difficult for local talent and state blue ribbon commissions-who seem to be on the same page-to change the status quo re: the balance of power between state and local government?

At the risk of sounding very cynical, local government officials go into the power politics of Sacramento with one huge disadvantage-we can't generate campaign donations to candidates for the Legislature. When the League of Cities competes with the California Teachers' Association about how deep into our back pocket the legislature can go to fund legislative priorities, we are going to lose. We simply can't compete with the CTA.

But, the League of California Cities is working hard on an initiative to amend the state Constitution to separate our budget from their budget-local revenues will stay local, state revenues will stay at the state level.

That initiative is not going to be on the ballot in the fall. And why is that initiative not going to be on the ballot in the fall? Because the Legislative Analyst's Office and the Attorney General's Office generated a ballot title, summary and fiscal analysis which said that this proposal would take billions of dollars out of the state's pocket. The logic of those state level officials' arguments is that effectively all local money is already theirs and giving any of it back to us is a loss of state funds.

If the LAO and the Attorney General's Office are seemingly creating roadblocks to your progress, who are your allies as you struggle to change things?

The first set of allies that we have are other interest groups with a stake in this debate. The Howard Jarvis Taxpayers Association, who gave us Prop 13 and put us in this mess, admit that they did not intend to shift power from town halls to Sacramento and that allowing the Legislature to apportion the property tax pie was an unintended consequence. So, that's an ally and one that we value.

Other allies are the associations that represent local employees: the cops' association, the firefighters' association, the SEIU, the Teamsters, and the other traditional labor organizations that represent our employees.

Our last set of allies is the Republican leadership in Sacramento. They tend to be more in favor of local control than the Democratic side of the legislature. It's mild irony that urban California is looking to the Republican leadership and the Howard Jarvis Taxpayers' Association for alliances in this battle.

Michael, you talked about the campaign consultants involved in local government. One looks at the gubernatorial race and state legislative races and one doesn't sense that the discussion and debate between the candidates will be about who is the most sensitive to returning power, authority, and responsibility to local government. Given that the neighborhood and "place" is becoming the dominant meta-story of our political life, why isn't that the issue? What's missing in the connection?

Before last year's annual League of California Cities conference, the mayors of the ten largest cities in California were invited to endorse Gray Davis' re-election campaign. And, if I recall correctly, all but one or two of them did. Gray Davis attended the League of California Cities' Association conference this year and announced, very clearly, that he would not be taking the VLF (vehicle license fee) backfill away from cities.

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So the Governor staked out fairly early in his campaign, and fairly early in a tough budget year, that the most important revenue source we have at risk is off the table. And he has kept that promise. So, part of the reason that we're not doing a partisan campaign about localism is that this Governor got ahead of what was most likely to cause political heartburn this year.

But let me press you a little bit more. What about the legislative races? How is it that when candidates return to their constituencies in their local communities, this isn't an issue? If this is such a powerful phenomenon that's dissipated the power of local electeds, why aren't they talking about it?

Part of the problem is that the average citizen doesn't care who provides services; they just want the services provided. So they're typically happy to vote for a candidate who says, "I'll make your streets safer" without answering the question, "How?"

I don't want to let you off the hook because the League of Cities has always been fragmented when it comes to legislative proposals. Let's take the Steinberg Bill 680, or Assemblywoman Wiggins' FARE bill, that both talk about swapping revenues and returning capital to the local level. The League seems to be split between its contract cities and its non-contract cities, and is sending a mixed message to the Legislature about what the reforms ought to be. When does that ever get rectified?

We are creatures of our own diversity. Like the rest of California, it's tough to make simple, unified positions on complicated issues. The thing about the League is that we are as diverse as California - we're Republicans, Democrats, Green Party members and non-affiliated; we're big towns and small towns; we're in the North and the South. So, the League membership is extremely diverse and can be hard to get on the same page and move in the same direction on issues that divide us.

Let's move on from that discussion to whether we have the forms of government we need in California to grapple with the problems associated with population growth. I'm referring specifically to Speaker Emeritus Hertzberg's Commission on Regionalism, the report which came out in January. The genesis of that report was a blue ribbon report done for Pat Brown in 1960 on metropolitan government, which said, in essence, we were a state of 14 million on our way to being 30 million by the end of the century and local government had little capacity to manage that growth. That was before Props 13, 62, and 218. We now have 33 million people and we are projected in 25 years to have 50+ million, what's the capacity of local government, as it's presently structured, to grapple with the problems of growth that we anticipate?

The only honest answer is that regional solutions to regional problems cannot be generated in town hall. And, without a regional approach to address those problems, there isn't a solution.

A very good example is the politics of affordable housing. No one denies that we have a housing affordability crisis in California. And our current structure to figuring out how to deal with that is located in the Department of Housing and Community Development in Sacramento. And how do they deal with the problem? They pick a number out of the air as to how many housing units are needed over the next 5-year cycle and they give it to a council of governments and make them apportion it among their constituency.

That system creates a difficult political problem for the regional council. And as a result, the process grounds to a halt and we have a number of lawsuits pending. So, I will be the first to admit that local government standing alone cannot solve regional problems. Having said that, I would also say that if you try to solve regional problems at the state level, you will get a backlash.

Michael, you've talked about the two extremes – state and local government. But, you have not talked about the regional solutions that were part of the Speaker's Commission recommendations. Is there no third way?

Obviously, there must be. We all learned in the fairy tale Goldilocks that if something is too big and something is too small, we should look for something that's "just right." California does have regional entities, but they are mostly single-purpose and because of that, coordinating their activities has been a challenge.

Willie Brown, when he was Speaker, proposed elected regional government, and that sent a thrill down the spine of lots of people committed to public service. There have been other proposals for taking existing regional entities with appointees from cities and counties and enhancing their power-I read the Speaker's report to view that as the most viable option.

Let me turn to other issues and conclude the interview. Since you don't have a boat in this race secession in Los Angeles. As a phenomenon with not merely statewide but national implications, what is the significance of what is going on here?

Secession is a challenge to everyone involved in local and state governance. It is an expression of dissatisfaction with the status quo. It is an expression of discontent and a lack of confidence in the existing institutions to make the situation better. All of us, no matter what title we have, need to know that the folks we serve-or at least a significant portion of them-have concerns about our ability to be effective. The irony of all of this is that, at the same time that we know how dissatisfied our customers are, our customers are busy in the ballot box stripping us of the ability to solve the problems they want solved.

So, at some level, our electorate can do wildly irrational things. I worry that dividing Los Angeles into four components will merely create four cities filled with people who are still dissatisfied with their local government's ability to enhance their quality of life.

Last question, Michael. Every organization, like the League of California Cities and its City Attorney branch, is influenced by its leadership. Give us a sense of who the leaders are of your branch and what impact you see them having on the agenda and capacity of the League and this entity to be successful.

We are led this year by Peter Brown, City Attorney of Carpinteria. Our First Vice-President is Valerie Armento, City Attorney of Sunnyvale. And, I am the City Attorney of Barstow and La Habra Heights and serve as Second Vice-President.

The three of us are focused on, in addition to being a resource for practicing city attorneys-education, collaboration, networking-we also want to be a potent and focused legal advisor to the League itself.

We are thinking hard about the League's desire to restore fiscal home rule, address the housing affordability crisis without sacrificing local control over land use decision making, and the desire to establish a grass roots coordinators program to marshal grass roots pressure on the Legislature. We want to aid those mandates and provide some legal "umph" to the policy agenda of the League. The coming election of Oakland City Attorney John Russo as President of the League's Board will also help harmonize the League's legal and policy teams.

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