Please ensure Javascript is enabled for purposes of website accessibility

Thai Fighter Jet Bombs Cambodian Targets as Border Battle Escalates

23 hours ago

California Cannot Require Background Checks to Buy Ammunition, US Appeals Court Rules

1 day ago

Wrestling Legend Hulk Hogan Dies at 71, TMZ Reports

1 day ago

TikTok Will Go Dark in US Without Chinese Approval of Sale Deal, Lutnick Says

1 day ago

Meme Stock Surge Underlines Market Froth, Mostly Centered on Retail Investors

1 day ago

Fresno County Authorities Still Searching for Missing Mother and Infant

1 day ago

California Releases Teacher Data. It Shows Big Rise in Hispanic Teachers

1 day ago

Biting a Bat and 5 Other Wild Moments From Ozzy Osbourne’s Life

1 day ago

Henry Thompson Did Wonders for Fresno Airport, Leaves ‘Incredibly Big Shoes to Fill’

2 days ago
Walters: Local Governments Are in Distress
dan_walters
By Dan Walters, CalMatters Commentary
Published 6 years ago on
November 13, 2019

Share

California’s economy has been booming for most of this decade and has generated a cornucopia of tax revenues for state and local governments.
The state has benefited most, because it collects income taxes. Californians’ taxable incomes have been soaring, especially for those atop the economic ladder, whose tax rates also have been increased.


Dan Walters
Opinion
The state has shared much of its multibillion-dollar windfall with schools, as required by the California constitution, increasing per-pupil spending about 50% in recent years.
Nevertheless, many school districts are in financial distress due to declining enrollment, unsustainable, irresponsible salary increases and, finally, state-mandated increases in payments to the California State Teachers Retirement System to offset its unfunded pension liabilities.
Last week, state Auditor Elaine Howle reported that audits of three big school districts revealed that state aid meant to enrich the educations of poor and English-learner students has often been diverted to cover budget holes.
Many school districts have asked voters for tax increases to close their budget gaps, most commonly through “parcel taxes,” which are levied on real estate. And the California School Boards Association is sponsoring a 2020 ballot measure that would hike personal and corporate income taxes to raise about $15 billion a year for schools.

The Ratings Are Based on Several Factors

Schools, however, are not the only local governmental agencies in fiscal distress. Cities, which receive almost no state aid and depend largely on local property and sales taxes, are also feeling the pinch for many of the same reasons.
Prior to issuing her report on schools, Howle released another revealing study on the fiscal health of California’s nearly 500 cities, highlighting those in the worst straits.
Generally, most in trouble are small cities, either in rural areas or in urban cores, whose residents have low incomes. No. 1 on the list is Compton, whose travails have been well documented over the years.
However, there are also a few larger cities that Howle highlighted, such as Oakland, No. 13 on the statewide list, and San Diego, deemed to be one of the top three “fiscally challenged” cities in its region.
The ratings are based on several factors, including liquidity, debt burden, financial reserves, revenue trends and retirement obligations. It’s clear that the last one looms very large.
The California Public Employees Retirement System saw its trust fund plummet in value during the Great Recession as its pension obligations mushroomed, leaving it with only slightly more than 70% of the assets needed to fully pay promised pensions and — so far, at least — unable to recover fully from its investment losses.

Cities Have Asked Their Voters for Tax Increases

Therefore, CalPERS has been ramping up mandatory payments from local governments to reduce what it calls its “unfunded actuarial liability.” Cities get hit the hardest because they employ large numbers of police officers and firefighters who have the highest pensions and therefore the highest pension costs.
It’s not unusual for contributions for employees in so-called “safety systems” to reach 50% of payroll, and CalPERS has told city officials they will continue to climb.
Throughout the state, cities have asked their voters for tax increases, usually sales taxes but sometimes parcel taxes, to close their budget gaps with mixed results. But tax increases are particularly difficult to pass in communities with large numbers of low-income residents.
Howle’s report not only shines some much-needed light on municipal finances but includes an Internet portal for Californians to check on their own cities. And sunshine is the best disinfectant for bad management.
CalMatters is a public-interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.
[activecampaign form=31]

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Israeli Columnist Alleges Ethnic Cleansing Plan in Gaza

DON'T MISS

US States to Get $608 Million From FEMA to Build Migrant Detention Centers

DON'T MISS

Trump: Strong Dollar Sounds Good but ‘You Make a Hell of a Lot More’ With a Weaker One

DON'T MISS

US Appeals Court Rejects Challenge to Washington Laws Concerning Transgender Minors

DON'T MISS

Tesla to Roll out Bay Area Robotaxis With Safety Drivers, Report Says

DON'T MISS

Trump Says He Has Not Considered Clemency for Ghislaine Maxwell

DON'T MISS

Fresno Police Arrest Felon in Connection With Drive-by Shooting

DON'T MISS

US Clears Way for $8 Billion Paramount-Skydance Merger

DON'T MISS

Thailand and Cambodia Exchange Heavy Artillery Fire as Border Battle Expands

DON'T MISS

Trump Says US May Not Have a Negotiated Trade Deal With Canada

UP NEXT

No One Controls MAGA, not Even Trump. The Epstein Files Prove It

UP NEXT

A Pro-Trump Community Reckons With Losing a Beloved Immigrant Neighbor

UP NEXT

Why American Jews No Longer Understand One Another

UP NEXT

Masked Raids and Impersonators Driving Force Behind Terror Campaign Across Nation

UP NEXT

I’m Not Leaving Measure C and COG Can’t Make Me: Brooke Ashjian

UP NEXT

I’m a Genocide Scholar. I Know It When I See It.

UP NEXT

California Is Finally Adopting Phonics, Fulfilling a Grandmother’s Dream

UP NEXT

New CA Budget Papers Over $20 Billion Deficit, Ignores Day of Reckoning

UP NEXT

Trump Is Winning the Race to the Bottom

UP NEXT

Why California Ag Is at Odds Over Converting Land to Solar Farms

US Appeals Court Rejects Challenge to Washington Laws Concerning Transgender Minors

1 hour ago

Tesla to Roll out Bay Area Robotaxis With Safety Drivers, Report Says

1 hour ago

Trump Says He Has Not Considered Clemency for Ghislaine Maxwell

1 hour ago

Fresno Police Arrest Felon in Connection With Drive-by Shooting

2 hours ago

US Clears Way for $8 Billion Paramount-Skydance Merger

2 hours ago

Thailand and Cambodia Exchange Heavy Artillery Fire as Border Battle Expands

2 hours ago

Trump Says US May Not Have a Negotiated Trade Deal With Canada

2 hours ago

Netanyahu, Trump Appear to Abandon Gaza Ceasefire Negotiations With Hamas

3 hours ago

Valley Crime Stoppers’ Most Wanted Person of the Day: Julian Jay Haymon

3 hours ago

Trump Says There Is a 50-50 Chance of Trade Deal With EU

3 hours ago

Israeli Columnist Alleges Ethnic Cleansing Plan in Gaza

In a sharply critical opinion piece, Israeli columnist Gideon Levy draws parallels between the Holocaust and Israel’s reported plans to forc...

9 minutes ago

Palestinians inspect the damage at an UNRWA school sheltering displaced people that was hit in an Israeli air strike on Sunday, in Gaza City, June 30, 2025. (Reuters/Mahmoud Issa)
9 minutes ago

Israeli Columnist Alleges Ethnic Cleansing Plan in Gaza

An aerial view shows "Alligator Alcatraz" ICE detention center at Dade-Collier Training and Transition Airport in Ochopee, Florida, U.S. July 24, 2025. (Reuters File)
21 minutes ago

US States to Get $608 Million From FEMA to Build Migrant Detention Centers

President Donald Trump speaks after disembarking Marine One, as he departs for Scotland, at Joint Base Andrews, Maryland, U.S., July 25, 2025. (Reuters/Evelyn Hockstein)
53 minutes ago

Trump: Strong Dollar Sounds Good but ‘You Make a Hell of a Lot More’ With a Weaker One

Family members and advocates gather inside the Lutheran Church of the Reformation near the U.S. Supreme Court after justices supported a Republican-backed ban in Tennessee on gender-affirming medical care for transgender minors, during a rally in Washington, D.C., U.S., June 18, 2025. (Reuters File)
1 hour ago

US Appeals Court Rejects Challenge to Washington Laws Concerning Transgender Minors

A Tesla robotaxi drives on the street along South Congress Avenue in Austin, Texas, U.S., June 22, 2025. (Reuters File)
1 hour ago

Tesla to Roll out Bay Area Robotaxis With Safety Drivers, Report Says

Jeffrey Epstein associate Ghislaine Maxwell stands at the podium to address Judge Alison Nathan during her sentencing in a courtroom sketch in New York City, U.S. June 28, 2022. (Reuters File)
1 hour ago

Trump Says He Has Not Considered Clemency for Ghislaine Maxwell

2 hours ago

Fresno Police Arrest Felon in Connection With Drive-by Shooting

Paramount Global logo is seen in this illustration taken December 17, 2024. REUTERS/Dado Ruvic/Illustration
2 hours ago

US Clears Way for $8 Billion Paramount-Skydance Merger

Help continue the work that gets you the news that matters most.

Search

Send this to a friend