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Sacramento should tap the $80B they have on hand first
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Apologists for Sacramento’s out-of-control spending habits try to blame everyone and everything else for their irresponsibility: Proposition 13, redevelopment agencies, and special districts.

Some are practically salivating over the $41.3 billion in “reserves” from what they call “the 250 wealthiest special districts” in California. They contend it is obscene for any special district to have extra money in reserves while the state is hurting and faces yet another mega-deficit. This time around the deficit is $26.6 billion.

Even though all of that $41.3 billion held by special districts was collected for a specific purpose and restricted by state law on how it can be used, there is a suggestion that perhaps it is time for the state to change state law. It is the same argument behind the redevelopment agency money grab effort.

So if it is all bets are off on legal requirements on what money can be collected and spent for, maybe the state should go after the biggest pot of fund balances in California - its own.

At the end of the last fiscal year Sacramento had $80.2 billion in its coffers.

Of course the same people who want to raid special districts and collapse RDAs up and down the state would protest the money is earmarked for  a wide variety things of and its use restricted by law.

But why treat the state’s money differently than local money?

A chunk of that money is from bond proceeds for specific projects. Funny, but when the state took $1 billion from Proposition 13 (the water bond in 2000) to meet state payroll during a previous deficit to help keep the state bureaucracy going full steam  eight years ago with the promise to pay it back, no one in Sacramento squawked. The money has never been paid back. Plus a chunk of it was supposed to go to finance a permanent flood solution south of Manteca after the devastating 1997 floods. That also hasn’t happened because the state spent the money for purposes other than voters authorized.

And if Gov. Jerry Brown wants to go after every dime, why not go after the $350 million PG&E did not pay in state taxes over several years as it teetered on the edge of bankruptcy? A previous attorney general was suing PG&E for back taxes but that suit was dropped shortly after our current governor became the state’s top lawyer.

Notice a pattern here? It’s OK to use RDA when you are mayor of Oakland and to praise its effectiveness and then turn around as governor and trash it by saying it is just a bunch of waste and bleeding state government. Which one is it, secretary of state- turned-governor-turned-mayor-turned-attorney general -turned-governor? And how come PG&E got a walk? Only the Brown chameleon knows the answer.

Brown could redeem his Sacramento Two-Step over taxes and recommend a real reform.

All of California’s quasi-public utilities - power companies like PG&E and San Diego Gas & Electric as well as telecom companies - operate with monopolistic protection from the state through guaranteed rates of return on their investments.

Part of the rates they are authorized to charge everyone includes money to go toward paying their taxes.

Since the power companies led  by PG&E and their friends in the California Legislature de-regulated power for a spell in California, they were able to set up Delaware corporations and then resell their assets to themselves so they could depreciate them again and create other nice tax deductions.

As a result, the taxes ratepayers pay every time they pay a PG&E bill or a Southern California Edison bill go into the utility’s pocket and not to the state.

There are some estimates that this amounts to billions of dollars a year that ratepayers fork over for the purpose of paying utility company taxes that those companies are able to avoid paying thanks to the fancy footwork following deregulation.

  Why not eliminate tax breaks for the utilities? And if that isn’t feasible, direct a rate cut and force shareholders to pay taxes on a power company’s profits and not ratepayers.

Real reform needs to start in Sacramento.

The debate shouldn’t be about where Sacramento can swipe money from to pay its bills. Instead it should be about Sacramento living within its means.

If avoiding deep cuts are so important to Sacramento, then they should raid all of the fund balances they have left first.

And given their inability to control their spending, California will be penniless in less than four years.