We’ve been robbed…by Sacramento

Diane Harkey Board of Equalization Member Diane Harkey Leave a Comment

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This op-ed originally appeared in the Orange County Register

While Assemblyman Jose Solorio (D-Santa Ana) whines about being robbed by his campaign treasurer, Orange County was in fact, robbed of $48 million in the June 2011 budget deal. While the tax grab may have occurred with or without his vote, Mr. Solorio was the only OC member to vote for approval. While feigning to correct the egregious wrong, the reality is he showed no urgency and apparently has no power to influence — without a statewide tax increase.

You may have heard, most non-rural cities were negatively impacted by the Governor’s and Democrat’s June 2011 budget. In particular, the Vehicle License Fee (VLF) allocations to urban and suburban cities were slashed, impacting Republican suburban districts, and Southern California population centers in general. These VLF allocations often fund public safety at the local level.

But Orange County received a double hit, as the governor’s budget also neglected to fund an agreement made between the state and the county, whereby Orange County swapped $48 million of property tax revenue for a like allocation of state VLF funds. The swap, requested by Wall Street, was supposedly to assign a more “stable source” of funding to repay the Orange County debt stemming from the 1994 bankruptcy reorganization. The swap was to remain in place until the debt was repaid.

Due to prudent financial management, Orange County has prepaid and restructured the bonds with more favorable terms and an expedited final repayment date of 2015. Current debt service is approximately $79.6 million per year and principal outstanding is $243,675,000. The state’s funding of this particular VLF swap was reserved for bankruptcy bond repayment only, and scheduled to revert back to property taxes once the debt was paid.

Solorio had 2 bills in print to return the $48 million to Orange County:

1.) The first, ABX141 would require an additional VLF fee of 0.15 percent in addition to the current 0.65 percent of the vehicle market value, or a tax increase statewide to fund the governor’s public safety “realignment.” The tax was unfortunately foisted upon taxpayers “temporarily” as part of the February 2009 budget deal, and did nothing to cure our state’s financial woes. In June 2009, voters soundly rejected extending the tax at the ballot box.

During the June 2011 budget battle, Governor Brown tried to gain approval for this tax, but there simply were not enough Democrat (and no Republican) votes to approve, or place the measure on the ballot (requires 54/80 Assembly votes and 27/40 Senate votes). Open primaries and new districts are affecting what used to be easy Democrat party-line votes.

2.) The second bill ABX143, proposed by Supervisor Bill Campbell, addressed the real issue and did not affect nor require a state or county tax. It merely reversed the 1990’s VLF swap agreement, thereby returning our share of base property taxes. The funding was carved out of excess property tax receipts this year (estimated at $75 million over the state’s projection) that would normally be distributed elsewhere from state coffers. After much effort, the bill passed the Assembly by 11 p.m. on the final night of session, only to be buried in Senate Rules Committee.

While Orange County is in good financial shape, we cannot afford another surprise, an unnecessary $48 million hit, forcing a lay-off of 250-plus employees. We have streamlined services, already cut staff and worked out some concessions on pension reform with collaboration of the O.C. public employees union. The irony is the threatened employees are members of the same public employee groups that supported the election of Solorio and the governor. As the only Democrat Assemblyman in Orange County, and the only OC member who voted for the governor’s budget, we were looking to him to help us protect his county and people. Unfortunately, he has no “juice” with his party, and is no Senator Lou Correa.

The county will probably sue to recover the funds, but in the meantime must absorb the traumatic shocks inflicted upon local government by the Democrat’s June budget. All residents (especially Democrats the next time the elites come fundraising in Orange County) must send a loud and clear message to Sacramento, “Don’t look to us for more money. We’ve been robbed.”

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