With Revenue Sharing Funds in Peril, Officials Consider Alternatives

Since 1972, when the Nixon Administration began sharing the federal tax bounty with local governments, revenue sharing funds have made their mark in San Diego County.

Those federal dollars helped pay for a new library in Escondido, a senior citizen center in Poway and regional government complexes in Vista, El Cajon and South Bay. When there wasn’t enough money in the local coffers for parks, road maintenance, flood control or a favored social program, revenue sharing saved the day.

But since 1978, when the passage of Proposition 13 limited the taxation powers of local governments, some financially strapped cities began straying from the intent of federal revenue sharing. Those cities began spending the money on the bare necessities--salaries and police and fire protection.

Local governments were warned repeatedly that there might not always be enough for them to share. Now, faced with a mounting deficit, the Reagan Administration has decided the federal government no longer can afford such aid to local governments. The President’s budget proposals would eliminate revenue sharing in the 1985-86 fiscal year.

Nor can local governments expect a bailout from the state. Gov. George Deukmejian and Assembly Speaker Willie Brown have been in agreement on precious few issues in recent years but each has flatly opposed any move to have the state make up for the revenue sharing shortfall.

Deukmejian at a recent national conference of governors broke with state executives opposing the cuts and said the loss of revenue sharing would not greatly affect California.

Dave Gerrie, administrative assistant to Rep. Jim Bates (D-San Diego), said the congressman has been the target of a persistent lobbying effort by local officials hoping to preserve the program. “Most of their discretionary revenue is at stake,” Gerrie said.

“I wouldn’t classify it as a full-court press but we’ve received a sizable amount of information and briefings from local governments on how important revenue sharing is to the San Diego area,” Gerrie said. “And we’ve had contacts from people across the United States as well.

Gerrie said, however, that these officials were “lobbying after the fact. The conventional thinking is that revenue sharing might last this year but it’s dead in a couple of years, if not sooner,” he said.

Chris Warden, press secretary to Rep. Duncan Hunter (R-Coronado), said, “Our office hasn’t heard much yet, although we’re aware of the concerns. We expect it to heat up when the budget bill is in a more final form.”

Late last week, the U.S. Senate Budget Committee approved a massive budget reduction package that included elimination of the revenue sharing program but leaders from both parties said it could be significantly amended as it is reviewed by various committees before it reaches the floors of the Senate and the House.

Based on 1984-85 allocations, the decision to discontinue revenue sharing would cost the county and its 16 cities about $40 million, including $12 million in funds for the county and $12 million in funds for the City of San Diego.

Elimination of the funds would likely throw the county into political turmoil. Of the $12 million it received this year, $7 million went into the county’s general fund and another $5 million was allocated to community-based social agencies.

While most cities in San Diego County have been careful--or wealthy enough--to avoid dependence on federal revenue sharing funds, some cities are going to face significant problems if the money is cut off. Chula Vista, for example, spent its entire allocation this year on city salaries.

But for most cities in the county, the loss will be an annoyance, hardly catastrophic. San Diego, for example, which has been praised for its careful use of revenue sharing money, likely will fall behind on some storm drain and road improvements, according to Financial Management Director Libby Watson.

“Revenue sharing is a nice pot of money and we’d sure like to have it,” Watson said. “But we always guarded against becoming dependent upon it.”

San Diego was careful to spend its millions of dollars in revenue sharing funds on fixed, general fund expenses without becoming dependent on the money.

Each year, 75% of the city’s allocation was held in reserve until the ensuing year, with the available money allocated to the general fund and to each of the city’s departments, pro-rated on their share of the city budget.

Last year, mindful that revenue sharing might disappear, the city removed the money from the general fund and made all the accrued money available for capital improvements.

“Our timing was right,” Watson said.

National City, which received $1.6 million in revenue sharing for the current fiscal year, divided its allocations among a wide number of projects, ranging from youth sports and improvements to the municipal golf course to more than $1 million in street repairs.

“Not many people in our community would classify these things as non-essential,” said Alex Caloza, the city’s finance director. “A lot of city programs will suffer without revenue sharing.”

Kyle Morgan, National City’s longtime mayor, said, “I think we are going to have to cut everything, across the board. I don’t know how we’ll ever hire another police officer in this city. Revenue sharing has been good to this city. We’ve done a lot of things with the money for the people of National City that we never would have been able to.

“But the cuts from the state have gone too far since Prop. 13. This is going to hurt police, fire, the streets--everything.”

The City of La Mesa this year extricated itself from dependence on its $440,000 revenue sharing allocation for fixed expenses. “This is the first year the money was not budgeted for police and fire salaries,” said Carol McGlocklin, city accountant for La Mesa.

“We realized the money was shaky and we had to get out of being in a position where we absolutely relied on it,” she said.

Nevertheless, La Mesa Mayor Fred Nagel said it would be “unrealistic and unreasonable for Congress and the President to remove all of the money in one fell swoop like that.” Nagel said the city would consider imposing a fee on users of recreational facilities to make up for the revenue sharing shortfall.

“To balance the national budget we’re going to have to become more independent in local government,” Nagel said. “But let’s not go cold turkey.”