By Murtaza Baxamusa
Despite several warnings about the taxpayer costs and risks, Escondido’s politicians have decided to place a charter city ballot measure before their voters this November. Escondido will thus join Costa Mesa and Arroyo Grande in voting on a charter, despite the fact that voters rejected similar measures in these cities two years ago.
The public may not know what a charter is, and why it is important. Some may recollect that in 2012, Costa Mesa became the “Wisconsin of the West” by proposing a new city charter that would outsource city jobs, outlaw collective bargaining on public projects, exempt itself from prevailing wages for construction workers, and limit union dues from being used for political advocacy. Well, 59 percent of voters in Costa Mesa rejected it, and state legislature stepped in to ensure that the chartering process was not being abused to rush through ideologically motivated laws.
State legislation now requires that a new charter city ballot appear on a statewide general election. This November is the first time that these cities can pass new charters under this law. Therefore, the charters in Costa Mesa, Escondido and Arroyo Grande are back on the ballot.
So what is a “charter city”? There are two basic ways that cities are organized in California. The most common way that cities are governed is through “General Law”–a set of provisions laid out in the California constitution that establish standards for local governance. There are some larger cities, such as Los Angeles, San Diego and San Jose that have opted to create their own set of governing rules, which is a charter.
However, a minority of smaller cities have taken advantage of charters to grant local officials enhanced authority that can include the power to raise their own pay, increase fees and property transfer taxes, run deficits, and have considerable autonomy over districting and elections. Charter Cities often face more litigation because of more frequent conflicts with state law.
Three high-profile bankruptcies have thrown into question whether these smaller charters are good for taxpayers:
- The corruption that plagued the city of Bell was a result of a faulty charter on which only about 400 of the 40,000 people in the city even voted. By exploiting loopholes in this charter, city officials were able to raise their pay to hundreds of thousands of dollars, which nearly bankrupted the city. Several officials are currently serving prison sentences as a result of their crimes.
- San Bernardino – a Charter City facing crippling debt – declared bankruptcy in 2012 after years of reckless spending habits. News reports indicate that budget numbers were falsified in 13 out of 16 years leading up to the crisis.
- In Vernon–a city of only 112 people, and with more city employees than residents–corrupt officials used their city charter loopholes to feather their own nests. A recent report details how one corrupt official served simultaneously as the city administrator, city clerk, city treasurer and finance director. With no oversight, spending spiraled out of control. Even after the graft ended, this official is still seeking to keep his $551,000 annual pension from being reduced to $115,000.
In the wake of scandals like those in Bell and Vernon, the LA Civil Grand Jury completed a study of the financial health of Charter Cities. In short, they found that only 5 of 22 cities studied had balanced budgets. The study also found that Charter Cities were more likely to make risky decisions that endangered the city’s financial future. In Charter Cities, politicians can keep discretionary accounts which amount to slush funds stockpiled with tax dollars that they can then personally direct to projects and activities of their choosing, often with very little oversight and disclosure. The Sacramento Bee recently editorialized on this issue, saying, “When feathering your own nest, best to keep quiet about it.”
There were as many as 30 potential charter city battles looming in California. However, a number of cities – including Redding, South Lake Tahoe, La Mirada and Elk Grove considered–and then abandoned–efforts to place charter proposals on the ballot. With the deadline for November approaching, there were only half a dozen that completed the minimum statutory process necessary for proposing a charter.
Dozens of people mobilized in these small cities to oppose the charter proposals. Many organizations with diverse interests expressed their concerns. Finally, the cities of Wasco and Garden Grove were successfully persuaded from proposing charters. But politicians in three cities consistently refused to listen.
So unfortunately, by having a charter on the ballot this November, Escondido has the notorious distinction of sharing statewide stage with the city known as the “Wisconsin of the West”.
Murtaza H. Baxamusa, Ph.D., AICP is a certified planner, writer and thinker. He develops affordable housing for the San Diego Building Trades Family Housing Corporation, and teaches urban planning at the University of Southern California (USC). He has over 12 years’ experience in economic development and sustainable urban planning, and has previously worked for the USC Center for Economic Development as well as the Center on Policy Initiatives. He has doctoral and master’s degrees in Planning from USC, and a bachelor’s degree with honors from the Indian Institute of Technology, Kharagpur.
John Lawrence says
The charter organization seems to work well for large cities like San Diego and LA. So what’s the solution to prevent smaller cities like Bell and Vernon from corrupting it? Should it only be available to large cities, but not smaller ones? The charter city organization would allow a charter city to form a public bank, for example, a good thing, but the other organization would not.
No John, SD does not work well: look at KPMG report done a few years ago about our bad economics, remember the B- financial rating we had that got us into that mess! We are still a shell game city that mixes and moves funds continually that is not open to giving out public info. about finances and regularly is controlled by “Staff” in City Hall. Every year 100’s of trip & fall claims come in on street & sidewalk events! Rather than fix the sidewalks & streets the City Atty settles MILLION$ of dollars of claims!! Every year for decades! And b/c they go on “closed” session docket, we the public can not see what went on! In fact $66M in loan repayments for Redevelopment give aways is now in the pipeline (for over $190M in Redevelopment debt because the SD City Council acting as “Redevelopment Agency” did not pay back any of the principle on the old redevelopment loans (mostly DT proj.s). Also note that the US Dept. of Finance has pulled the loans saying they were illegal, has taken CDGB (GRANTS) back & fined the city for bad behavior!! NO CHARTER, and City Council ARE NOT WORKING WELL in San Diego!!!
John Lawrence says
That all may be true, but my understanding is that a charter city has the possibility of having a public bank, but a city operating under state rules does not. LA since it is a charter city is considering a public bank:
“Like the BND [Bank of North Dakota], a public bank of the City of Los Angeles would not be a commercial bank and would not compete with commercial banks. In fact, it would partner with them – using its tax revenue deposits to create credit for lending programs through the magical everyday banking practice of leveraging capital.
Like the BND, a Bank of the City of Los Angeles would provide credit for city projects – to build bridges, restore lakes, and pay bills – and this credit would essentially be interest-free, since the city would own the bank and get the interest back. Eliminating interest has been shown to reduce the cost of public projects by 35% or more.” – See more at: http://www.occupy.com/article/abandoning-wall-street-and-creating-public-bank-city-los-angeles#sthash.xHkKQDWK.dpuf
By changing to a non-charter city, the possibility of a public bank is lost. Correct?
Doug Porter says
I find it amusing that the same people screaming about city worker’s pension funds are trying to get all these cities to sign up as charters. Of course the real reason behind the “Sign Me Up As a Charter” movement is that it’s a tactic for union busting.