California Special Districts: Hiding in Plain Sight

Los Angeles Metro TransitSpecial districts in California are the unnoticed variant of local government entities. Although they spend over $42 billion annually, most taxpayers don’t give these ubiquitous agencies much thought. They vary from modest vector control districts to behemoths like the Los Angeles Metropolitan Transit authority, an agency that has a billion-dollar budget and, despite declining ridership, continues efforts to suck ever more pennies from every dollar spent in Los Angeles County.

The problem with these semi-autonomous agencies is that it is extremely difficult to determine whether or not taxpayers are receiving good value for every one of the billions of dollars being spent by agencies that, in many cases, are governed by unelected political appointees. Even when these boards are directly elected, many special districts do not receive the same level of scrutiny as do city and county governments.

Most taxpayers support local control, but they also want to see local governments and special districts maintain maximum transparency, follow the Brown Act and post important fiscal information on their websites. This information is a valuable asset to those who want to look over the shoulders of elected officials and bureaucrats to make certain that funds are appropriately spent. Sadly, this information is not always readily available and accountability is lacking.

While some agencies may willfully violate the law, in many instances, illegal actions are simply oversights. But because these districts tend to operate “under the radar” improper procedures may be overlooked for years. For example, in 2014 it was discovered that a fire district was illegally collecting tax proceeds from property owners outside the district boundaries and that practice had been ongoing for several years. It took a special act of the Legislature to reimburse property owners for the illegal taxes they had paid. With greater transparency, this problem would likely have been avoided.

In addition to errors that go uncorrected due to secretive management practices, many of these agencies are hoarding vast quantities of cash. The large reserves are often in amounts that are in multiples of a district’s annual budget and not justified by serious plans for major capital investment with a realistic timeline for construction.

Adding insult to injury, despite the fact that most are in a solid financial position, special districts have been uniting to lobby for higher taxes. The California Special Districts Association, as well as other local government associations, has ramped up efforts to eliminate Proposition 13’s two-thirds vote requirement for approval of new taxes for infrastructure improvements.

Clearly, special districts deserve to be noticed both for the worthwhile services they provide as well as their potential for mischief at taxpayers’ expense. No longer should these agencies be allowed to hide in plain site.

In dealing with special districts, good, bad and indifferent, taxpayers’ and service users’ most powerful tool is awareness. These agencies control billions of dollars and taxpayers have the right to demand accountability. While local control should remain the objective, the Legislature can help by strengthening guidelines on the maintenance of reserve funds, which for many districts greatly exceed any potential need, as well as mandating periodic reporting and publication of financial reports on line.

Taxpayers should also take heart from knowing that special districts are getting renewed scrutiny from oversight agencies. Last week, the California Commission for State Government Organization and Economy, also known as the Little Hoover Commission, held hearings on some of the perceived abuses by California’s myriad special districts. The Commission specifically requested testimony from the Howard Jarvis Taxpayers Association on several issues including the practice of many districts to hoard taxpayer dollars.

Enhanced oversight of special districts can deter some of the well documented instances of bad behavior reported by the Little Hoover Commission and other investigative interests. Whether that oversight comes from taxpayer groups, government oversight agencies, the media or individual taxpayers, it is especially important to drag these often unknown agencies into the sunlight so that citizens can more clearly see what they are doing and how they are spending our money.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by HJTA.org

Is Coffee the New Gold Standard?

Since 1971, the United States has been off the gold standard. Instead of the value of the dollar being defined in terms of gold, our currency is said to be backed by “The full faith and credit of the United States.”

However, listening to politicians, the new standard for backing taxpayer dollars may be coffee, or, more specifically, the latte.

coffee latteEndorsing efforts to impose a parcel tax on property owners to support parks — parks that have been purposely ignored in the Los Angeles County general fund budget — Supervisor Hilda Solis trivialized the tax saying, “For Pete’s sake, what does it amount to for the average voter, a latte a month at Starbucks?” Her colleague, Sheila Kuehl, upped the ante, gleefully saying the permanent property tax increase would be like, walking into Starbucks and getting anything you want because parks are free. “I proudly support taxing and spending,” she added.

A dozen years ago, I wrote the following about the way politicians deceptively describe tax increases: Public officials pushing for a tax increase love to break the cost to taxpayers down to insignificant sounding amounts, usually the cost per month, or even the cost per day, and add the words “it’s only.”

I added that the award for the most arrogant example of using “it’s only” should go to the Los Angeles Community College Chancellor who had described the cost of a new bond as “the equivalent of one regular latte a month,” and I asked if the latte — a drink now costing nearly four bucks — would become the new standard by which taxes are measured.

Regrettably, I was prescient. Those promoting taxes in this manner assume that everyone can, like them, afford to hang out at trendy boutique coffee shops.

The reality is that millions of Californians, including millions of homeowners, buy their coffee already ground, and, for them, four dollars will pay for several weeks’ worth of the caffeinated beverage. These are the same folks who are already hammered by California’s high sales, gas and income taxes. Few of them can afford to spend much at Starbucks, or any other place serving overpriced, exotic coffee drinks.

However, if the tax raisers could be permanently bought off for four dollars a month, many taxpayers would gladly take that deal. Sadly, that would not even come close to satisfying the greed of the political class. For example, Los Angeles County is considering a second new tax for homeless services. The city of Los Angeles is seeking its own “homeless” tax and the local transportation authority is asking voters to approve an increase in the sales tax.

Those outside the Los Angeles area should be careful not to be tempted to relax, since scores of additional taxes, and as many as several hundred bonds that increase property taxes, are expected to be placed on the November ballot by other local jurisdictions. And let’s not forget the income tax and tobacco taxes that will appear on the state ballot.

These taxes are cumulative, not just a latte here and a latte there. Los Angeles Supervisor Don Knabe, who voted against the parks tax, may have best summed up the problem for California taxpayers when he observed that between the state, the counties and the cities, government agencies are asking everyone to buy a Starbucks franchise.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.