Antonio Villaraigosa: Borrow Taxes From Tomorrow to Fix Roads Today

Here's an idea...

Los Angeles Mayor Antonio Villaraigosa speaks at the launch of a political organization
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It's one of the oldest fiscal tricks around, and even though it is profoundly irresponsible, public officials continue to pursue it.

Los Angeles Mayor Antonio Villaraigosa wants to use the half-cent sales tax increase passed by the county voters in 2008 to fix the city's roads. What's wrong with that? Nothing, except the tax is designed to last for 30 years, and Villaraigosa wants to use the expected funds from the remaining 27 years to fix L.A. streets over the next two years.

Clearly, L.A. needs the road repairs. Just as clearly, the proposal would put tens of thousands of people to work. So, what could be so bad?

The tax is designed to fix roads as necessary over a 30-year period. If the money is used in the near term only, however, what happens to other needs as they arise?  Does this mean that the voters will be asked to pass another sales tax increase in two years, as they continue to pay the 2008 tax? The numbers don't add up.

You would think that elected officials and the voters would know better, but "fix-now, pay forever" economics is a staple of California politics -- and its bipartisan.

Republican Gov. Arnold Schwarzenegger and the voters enacted much the same deception in 2004 with the passage of Proposition 57, a $15 billion bond paid back out-of-state revenues over the next nine years to balance the 2004 state budget. What Schwarzenegger asked the voters to do in 2004 is similar to the way that Villaraigosa wants to spend public funds now.

Democratic Gov. Jerry Brown and the Legislature behaved similarly last summer when they enacted a budget that included $4 billion of funny money (anticipated revenues) that will not materialize.

That means drastic cuts in January 2012.

The simple reality is that state and local governments lack the funds to do what must be done. Knowing that there is nothing more to cut without public outrage, they're devising all kinds of ways to juggle budgets now even at our peril in the future.

The candid action step is to tell the voters directly that new taxes must be raised as the price for providing basic services and programs for our citizens. Somehow, most politicians can't bring themselves to make that plea in fear of losing their jobs for telling the truth.

It's a bit ironic that the only policy areas where elected officials have "stood up" to funding realities have been with public employee health care plans and pensions. That's because government workers are easy pickings for a public that is overwrought with our sick economy. It also draws attention away from the real problem: inadequate revenues.

If government officials want to accelerate work on our current problems, they need to accelerate methods of revenue collection. Living today based on tomorrow's possible revenues never works.

Haven't we learned that yet?

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