When the California electorate voted in 1978 to reduce property taxes it also shifted control of those revenues from local government to the state.
Most observers recognize that there are now serious imbalances between state and local finances.
This situation hampers the state's ability to deal effectively with such important public policy issues as urban growth and redevelopment, infrastructure investment, education, and community services financing. There are currently several proposals to reform local finance in California. Alternatives are being developed by the State Controller's State Municipal Advisory Reform Team, the Speaker's Commission on State and Local Government Finance, the Legislative Analyst's Office, and State Senator Steve Peace. In addition, stakeholders such as the League of California Cities and the California State Association of Counties are examining options for fundamental reform of the state-local fiscal relationship. The Center for State and Local Taxation seeks to facilitate a clearer understanding of the effects of alternative state and local tax strategies on individual and corporate taxpayers, economic activity, and government revenues.