The New Trickle Down Economics: By TOM BATES

Tuesday October 12, 2004

Voters throughout the Bay Area received their ballot pamphlets last week—many finding that they seemed heavier than usual. It wasn’t just their imagination. 

No fewer than a dozen East Bay cities have placed one or more tax measures on the ballot. School districts from Livermore to Albany have bond or parcel tax measures. BART, AC Transit, and the East Bay Regional Park District all have tax measures.  

In Berkeley, this all adds up to eight local or regional tax measures—including funding for city fire, police, and health services, libraries, and schools. All of this is in addition to the long list of state propositions. 

What is going on here?  

Virtually every city and local government in California is in fiscal crisis. San Diego, until recently the poster child for perfect bond ratings, is now teetering on the edge of bankruptcy. San Francisco, a county and city in one, faced a deficit of $352 million this year. In Berkeley, we have cut over $14 million from our $115 million general fund in the last three years. Next year, we have another $7.5 million deficit. 

The reasons for this financial crisis are many, but much of the problem can be traced to poor choices made in Washington and Sacramento. As federal and state governments cut taxes, cut programs, and cut funding, they simply passed the burden of providing essential services to the cities—which are also struggling to make ends meet. 

In a study released earlier this year, the Center for Budget and Policy Priorities found that Bush Administration policies have cost California $21 billion over the past four years. They wrote in their report that, “this has forced state and local governments to make much larger spending cuts and tax increases than otherwise would have been necessary.”  

In Berkeley, we have first hand examples of this trickle down phenomenon. Several months ago, the U.S. Department of Housing and Urban Development quietly changed its formula for funding Section 8 housing. Overnight, Berkeley was required to come up with over $150,000 or turn families out of their houses.  

The State has been no better. Twice last year, Berkeley had to re-open its budget to make additional cuts to cover State reductions. This year, we lost nearly $2 million when the State shifted a portion of our property tax revenue to state coffers.  

All of this trickling down adds up to tough choices. This year Berkeley has eliminated 100 employee positions, our employees agreed to return some of their pay, and every city department has taken reductions.  

Now we are faced with more severe cuts next year. Services for our vulnerable populations—seniors, youth, low-income families and individuals—will likely be reduced again. Essential services—such as police and fire—face significant cuts for the first time in decades. If we want to continue to be a safe, livable, healthy community, we must find ways to pay for the programs and services we need.  

This leaves local officials throughout the state with the unenviable task of going to the voters with a stark choice—tax increases or reductions in the services communities have come to depend on. In the end, we joined cities from Fremont to Pinole to Piedmont to San Ramon in placing new taxes before the voters.  

Hopefully, when the voters pick up their unusually heavy ballot pamphlets this year, they will think about how much of that extra weight trickled down from the State and federal government and how much they’ve saved in state and federal tax cuts. Knowing that, voters can make an informed decision about the kind of community in which they want to live and what it costs to get there. 


Tom Bates is the mayor of Berkeley. Previously, he served as the member of the State Assembly representing East Bay cities for 20 years.