Nickel and Diming Adds Up

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There's a new revenue sheriff in town and its name is "fee."  This often overlooked revenue generator has become a cornerstone of local government finance at a time when these governments are denied billions of dollars in aid from the state.  Cumulatively, fees can add up to big bucks.

For cities and counties with unbalanced budgets, fees are the easiest ways to generate new revenues.  Unlike parcel or sales taxes, fees can be authorized by city councils and boards of supervisors as revenue sources without the uncertainties connected with elections.  The primary requirement is that the fee come from individuals or businesses who use local services provided by local governments.

Fees have become necessary instruments for local government finance because of the disconnect between state requirements and funding support.  The state requires local governments to maintain law and order, provide fire fighting services, and be the last resort for health care, as well as many other local government functions.  These services are the largest areas of government and require vast. Whereas the state once supplemented local governments with assistance, those funds have dried up, hence more self-reliance at the local level.

Cities and counties have always had some fees--charges for developers who build housing to build sidewalks, streets and parks come to mind.  But in recent years, fees have exploded.  Fees on plastic bags have been instituted in several cities throughout the state to help recover clean-up costs.  Several cities now charge fees for keeping cars at storage facilities after they have been temporarily confiscated because of DUI arrests.  A few cities now charge fees of as much as $300 to people who call 9-1-1 for police or firefighter assistance.  And now San Francisco is on the verge of charging fees to the sellers of alcohol to bars to help pay the costs associated with intoxication.  When passed on to customers, the cost will amount to about a nickel per drink.  

Beyond the nuisance element of paying more for "this and that," fees illustrate the modern-day dilemma of budget making in California.  The more that state lawmakers resist the calls for more taxes statewide to make up for insufficient revenues, the more that local governments are holding the (empty) bag in the name of reduced state assistance for mandated programs and services.  Slowly but surely, this phenomenon is shifting government revenue bases from the state to local governments.  And with some local governments much more capable and/or willing to impose fees than others, the result is a state where the differences between communities is growing every day.

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