For rural California, stakes are high in Capitol’s budget wars

Sen. Dave Cox's 1st Senate District enfolds nine counties and parts of three more, a district that is 80 percent rural and stretches north to the Oregon line and south to Mammoth Lakes on the Sierra Nevada's eastern slope.

By turns, it is desolate and sprawling, majestic and fearful. It includes more than 150 communities, from Copperopolis to Emigrant Gap, from chi-chi Granite Bay to rugged Wilseyville, from Mount Aukum to Cedarville, from Fort Bidwell to Rail Road Flat. It is the one of the largest state political jurisdiction in the United States, easily 450 miles north to south, and most of its 850,000 inhabitants – more than the entire state of Alaska – are clustered around suburban Sacramento. It has more towns that nobody has ever heard of than any other district in California.

"I've visited almost all of them," Cox quipped.

But as lawmakers struggle to reach agreement on a state budget that is 52 days overdue and counting, Cox's district is representative of the financial problems facing rural California. Like their urban counterparts, money is tight and residents are concerned about jobs, the quality of schools and public safety. But in sparsely populated rural areas, the combination of vast distances, scattered services and fragile economies magnifies the impacts of state and federal budget problems. Ranching and farming sustain the economies in some areas, tourism in others. Unlike growing urban counties, rural areas typically have a modest sales-tax base, which crimps local finances.

A fundamental issue is protection from the state of local money raised through sales, property, special district and vehicle fees and taxes.

California voters, angered at interminable state raids on local funds, approved such safeguards four years ago – they went into effect in 2006 – and they remain in effect today. But as the state faces a $15.2 billion shortage and is on the hunt for money, those protections may be at risk. Raiding the locals would require a two-thirds vote of both houses of the Legislature – an unlikely prospect.

"But in all fairness, you can never underestimate the ability of the Legislature to get money from the cities and counties and special districts," said Cox, a Republican and former GOP leader of the Assembly.

"It really is going to hit us if you take away the tax flow," noted Paul Smith, a specialist with the Regional Council of Rural Counties, or RCRC, which represents 31 counties.

Near the top of the rurals' concerns is the way Medi-Cal payments, a mix of state and federal money, are reimbursed to those who provide public mental health care. The payments are delayed, commonly for three months, sometime for a year, sometimes even longer. "A large number of claims have been held for more than a year," says an analysis by RCRC, which represents the rural areas in the Capitol. The result: Money is drained from municipalities that can least afford to pick up the tab. There is bipartisan recognition in the Capitol that "counties are not being paid timely and the impact of DMH (Department of Mental Health) dysfunction (is being felt) on county operations and programs," adds the analysis. On Tuesday, a federal judge in Los Angeles blocked the Schwarzenegger administration's attempt to cut Medi-Cal reimbursements by 10 percent – a move that stresses the state budget even further.

"They have a multimillion-dollar payroll and the funding is just not coming in," said Ron Eich of Mendocino, referring to the Mendocino Coast Clinics. A Cox bill, SB 604, would cut the reimbursement time to 30 days.

Timber, too, is a crucial issue. Logging restrictions have devastated the economies of rural counties, stressing other services, including law enforcement and social services. "Basically, the government shut down the economies in the rural areas," Cox said. Locals have long chafed at environmental regulations curtailing logging, but the issue gathered new force this year after hundreds of wildfires roared through the back country in both northern and southern California.

"The reality is that preventing catastrophic wildfires begins with measures like reducing the amount of dried brush, dead trees and other woody debris from unmanaged forests on government-owned land. Despite rural residents living in fear that the next fire will destroy their homes, businesses and communities, the only solution provided thus far is to spend more money fighting fires," according to a written statement of the Legislative Rural Caucus, which held a summit on Aug. 13 targeting rural fire suppression. By one estimate, there have been some 2,000 fires and a $1 billion price tag.

A number of water projects have been proposed but thus far none have come to fruition. The latest if a joint proposal of Gov. Schwarzenegger and U.S. Sen. Dianne Feinstein, a $9.3 billion plan aimed at the November ballot that would include $3 billion for reservoirs and groundwater storage, and $2 billion worth of grants to local governments to improve their own water systems. It requires voter approval, however, and the clock is ticking past the deadline to get it approved by the Legislature and sent to the ballot.
Tightened belts have hit the smallest counties the hardest. Tiny Alpine County, for example, with 1,200 people and 70 government workers, went through a 10 percent layoff and is losing ranking personnel to private industry.

Distances affect the rural areas, too. A state Air Resources Board regulation requires that nozzles at gasoline stations trap at least 97 of the fuel and vapors; new rules boost that to 99 percent. But doing that retrofit is costly to rural stations and could force some to close, critics say. "Then you have the problem of having to drive 50 miles to get gas," said Cox, who worked out an agreement to give the rurals a tow-year extension. The bill was sponsored by the Northern Sierra Air Quality Management District.

Urban and rural counties have similar concerns on financing, education, law enforcement and other issues, but the margin to maneuver is much smaller than in the big urban counties, especially in tinkering with taxes.

"It's huge, because (rural areas) don't have a big tax base. It becomes extremely hard on property taxes and, to a certain degree, looking at sales taxes to fund things," Smith said. He also noted that borrowing may not be a solid option for some counties. "Trinity, Sierra, Colusa, Glenn – they do not have the borrowing power."

But big and small, rural or urban, the counties often are in the same boat when it comes to financing.

"That's not to say there are no differences. But for the most part, we complement what the other counties do," he added.