The ‘Chicken Little’ Problem

They’re partying like it’s 1999 over at the county building. Money is rolling in, not from a stock market bubble but from increased real estate taxes (probably a bubble too), which flow primarily to the counties, and because of state Proposition 1A, which voters passed last year to keep Sacramento from continually raiding local coffers.

Los Angeles County’s proposed fiscal year budget, approved Monday by supervisors, is up more than $1 billion from what it was estimated to be a month ago, to $19.6 billion. This is mostly, but not all, good news.

About half of the additional funding is going to capital spending, one-time improvements (unlike salary or hiring increases) that don’t put taxpayers perpetually on the hook. Other funds will aid struggling health services and hire more sheriff’s deputies, reopening shuttered jail facilities so prisoners will serve their full sentences. That’s all to the good. The troublesome part of this wave of money is its last-minute, seemingly surprise appearance.

California counties have been strapped by Proposition 13 limits, the loss of vehicle license fee revenue two years ago and vastly growing costs of providing healthcare for uninsured patients, a particular burden locally. Los Angeles County supervisors have pinched pennies and cut services, predicting disaster with every year’s budget. Somehow, though, most fiscal years ended with a healthy surplus -- and this year’s is even healthier than usual, by hundreds of millions of dollars. Such chronic underestimation has given the county a Chicken Little (“the sky is falling”) reputation.

Proposition 1A offers more stability, even if there are still good-sized variables. Sure, a real estate bust would drop county tax revenues, but L.A. County would be less affected than faster-growing surrounding counties. Properties that haven’t changed hands lately, the norm in built-out cities, are assessed at far below their current market value, so a modest drop would have a small effect on revenues.

L.A. County supervisors should use this new stability to demand more accurate budgets and fewer surprises. Better revenue predictions might have kept the jails open. On-target budgeting would make the county more believable in Sacramento and Washington when supervisors cry for help.

The supervisors, at their meeting Monday, congratulated themselves for being such prudent savers of county funds. Prudence, however, also includes showing residents a predictable return on their tax investments.