Consolidation funding idea a mystery

By: GIG CONAUGHTON - Staff Writer | Saturday, January 8, 2005 9:34 PM PST ∞

SAN DIEGO ---- A county supervisor has hatched a plan that would create millions of dollars to improve fire protection while fixing what she calls an inequity that requires San Diego County to pay more of its property taxes to education than other California counties.

But the possible success of the plan ---- and the question of whether it's even feasible ---- remains a mystery.

Supervisor Dianne Jacob, a longtime proponent of merging the county's many fire agencies, says San Diego County residents could create a pot of up to $270 million to pay for a consolidation by shifting a portion of the property taxes they now spend on education to a fire consolidation fund.

Fire leaders say finding money to create a consolidation is important because fire response during the devastating October 2003 wildfires that killed 16 people and destroyed more than 2,400 homes was hurt by a lack of cohesion among fire agencies.

Jacob and others say consolidation would improve protection in the county ---- the largest in the state without its own fire department ---- by unifying command, enhancing communications and giving merged agencies more financial clout to buy needed equipment and training.

Jacob, meanwhile, says her tax-shift plan would provide the money to pay for those improvements without hurting local schools.

She said that's because the state would have to pick up the tab for whatever portion is shifted.

But the county cannot carry out the plan on its own. It would need approval from the Legislature, the governor and voters.

County ed funds unbalanced

The key to Jacob's plan is her argument that it would also repair an injustice.

Jacob says San Diego County spends an unfairly large share of its property taxes on schools.

San Diego County spends 63 cents out of every property-tax dollar it gets on local schools, according to the state controller's office. The average amount spent by California's 58 counties, the controller's office said, is 52 cents ---- leaving some counties a larger share of local money to spend on other services.

Meanwhile, many counties pay far less than the state average. For example, Los Angeles County spends 44 cents out of every property tax dollar on education.

Jacob said last week that she wants to shift the 11 cents difference between the 63 cents per dollar that San Diego County residents now pay and the state's 52-cent average to a fire-consolidation fund, creating some $270 million for fire protection.

"It is a fairness issue," Jacob said. "A lot of things in Sacramento aren't fair."

But that fairness question may not be so cut and dried.

Mystery

How did California ever get a system that requires one county to pay one percentage of its property taxes on education and another county a different percentage ---- the system Jacob calls unfair?

That's a confusing question even for experts. Late last month, officials from the state controller's office and Board of Equalization ---- both of which deal with property taxes ---- struggled to come up with answers.

Jacob, a former schoolteacher, school board member and president of the California School Boards Association, said she believed the current system was implemented as part of Proposition 13 in 1978. The revolutionary tax measure proposed by the late Howard Jarvis dramatically reduced property taxes in California and capped their growth.

But Brett McFadden, a legislative advocate in the governmental affairs branch of the Association of California School Administrators, said the genesis of the system goes back to a 1971 California Supreme Court decision and the state Legislature's response.

Ironically, the case, Serrano v. Priest, was intended to make educational funding in California more equitable.

In Serrano v. Priest, the court ruled that California's historic system of using property taxes as the principal source of school funding was unconstitutional because it violated federal equal protection laws.

The court ruled that "richer" school districts and counties where the assessed value of homes and businesses were high could raise more money to spend on their students than poorer communities where properties weren't as valuable.

"Serrano v. Priest was the first earthquake in the world of school finance," McFadden said.

To comply with the ruling and to attempt to create a level playing field for all public schools, California's Legislature passed laws that created "revenue limits" that restricted how much in property taxes rich areas could pump into schools in order to equalize school funding across the state. That created a system where different counties paid different percentages of their total property tax revenues into education.

But, Jacob said, and McFadden agreed, Prop. 13 worsened the situation. It "locked in" the property-tax percentages and took the responsibility for education funding away from local communities and gave it to the state.

Today, the state redistributes local property taxes according to complicated formulas.

Jacob said because San Diego County had lower property-tax rates when Prop. 13 hit than other parts of the state, they are now paying larger percentages of their property taxes toward local schools.

"Before (Prop. 13) the counties were setting their own tax rates," Jacob said. "Because San Diego County was conservative, they kept their property-tax rates low. That played into us getting the short end of the stick."

Fight coming?

The fate of Jacob's proposal to change the system she decries as "unfair" is also a mystery, partly because of the way the system came into existence.

The state's revenue limits on education funding were created through legislation. Therefore, they can be changed by new legislation.

But the fact they were born out of Supreme Court rulings could make it legally difficult for legislators to make the tax-shift change Jacob seeks.

But even if the system can be changed, there could be a fight coming.

Jacob said it would be hard to get state legislators and Gov. Arnold Schwarzenegger to buy into the tax-shift idea. That's because the state ---- already swimming in debt ---- would be required to pay for whatever the shifted portion would be. Jacob said her proposal would allow the state to make the change slowly, in "phases." She said that could make it easier for state leaders to swallow.

McFadden said last week that one thing is for sure.

Any talk about shifting money from education would probably be met with screaming opposition from educators, despite Jacob's assertion that local schools would not lose any money.

McFadden said the already-tense education community went on high alert last week when Gov. Arnold Schwarzenegger suggested he wants to change or blow up Proposition 98. That 1988 voter-approved measure guarantees that at least 40 percent of state revenues go to public schools.

"We're locking and loading at this point," McFadden said, referring to the education community's gearing up to fight any financial incursions.

Next steps

Despite the questions surrounding the plan, Jacob said last week, she is working hard to put together a "white paper" on her property-tax-shift proposal.

She said San Diego County could court the support of other counties ---- and their legislators ---- that also pay larger percentages of their property taxes to education.

But she said that it's more likely that San Diego County will go the fight alone because of its unique situation: having to come up with money to improve fire service in the largest urban county without its own fire department.

Jacob said she has not yet approached any of the region's legislative representatives about sponsoring the plan. She said she would like to get the region's entire legislative delegation to propose and pass a bill that would allow the shift by October.

Important fight

Jacob said local officials must pursue the tax-shift idea, no matter what the obstacles, because the issue is so important to improving local fire protection.

No one knows exactly how much a consolidation would cost. A county task force estimated in January that it would cost $155 million a year to merge 28 agencies ---- roughly four times what they now spend annually. Fire officials say the increased cost is necessary because many rural fire agencies now provide inadequate protection. Consolidation, they say, only works if it improves fire protection.

Jacob, meanwhile, said she believes that county residents, and Californians, already pay too much in taxes.

This idea, she said, would scare up needed consolidation money without asking taxpayers to pay more.

"It's going to be an uphill battle, no question." Jacob said. "But in recognition that it's (tax-shift) a fairness issue I think we probably have the best chance we've ever had (of getting money for consolidation)."

Contact staff writer Gig Conaughton at (760) 739-6696 or gconaughton@nctimes.com.

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