Governor, local officials shape deal on tax diversions to state.

A deal was shaping up late last week that could head off a showdown between Gov. Arnold Schwarzenegger and local government officials opposed to his plan to divert $1.3 billion in property tax revenues into state coffers.

Local officials were incensed in January when the governor proposed a permanent siphoning of local property tax revenues to boost education funding. The diversion would start at $1.3 billion for the 2004-2005 fiscal year and grow slightly in each successive year as property tax revenues increased.

As a result, city, county, redevelopment and special district officials crafted the "Local Taxpayers and Public Safety Protection Act," a measure for the November ballot that would require this and any future tax diversions to be put to a vote of the people. Last Monday, 1.1 million signatures were submitted to the Secretary of State's office; only 600,000 valid signatures are needed.

Against this backdrop, the two sides have been in negotiations for weeks. While not in time to head off the ballot initiative, the outlines of a deal were beginning to emerge last weak.

According to a memo from John Shirey, executive director of the California Redevelopment Association, local governments would fork over $1.3 billion to the state for the next two fiscal years, not in perpetuity as Schwarzenegger has proposed. Which revenue streams would be the source of these funds was not clear.

In return, Schwarzenegger would put forward an initiative in the Legislature that would bar any future diversions of local tax revenues without a vote of the people. If two-thirds of legislators approve, then that initiative would go on the November ballot alongside the local government initiative. (While last week was the cutoff for submitting signatures for petition initiatives, the Legislature can put initiatives on the November ballot through June.)

With both initiatives on the ballot, said Shirey, local officials would drop support of their own initiative and back the legislative one. And Schwarzenegger would also support the legislative initiative.

If the Legislature does not put its initiative on the ballot, Shirey said local governments would go back to supporting their own.

Administration officials last week said they would not comment on the ongoing negotiations. To get incorporated into Schwarzenegger's May budget revision, the deal would have to be wrapped up within the next week to 10 days.

>From the local governments' side, there is one drawback: the protections against revenue diversions in a legislative initiative would not be as strong as in the petition initiative submitted last week. That's because a legislative initiative can be overridden with a two-thirds vote of the Legislature, while a petition initiative needs a vote of the people to be changed or suspended.

Voting Machines 

It's increasingly likely those "Ink-a-Vote" machines that county election officials introduced last fall as an interim step between punch card ballots and electronic voting machines could be around a lot longer than anyone intended.

That's because the touch-screen electronic voting machines that were supposed to be in place starting with next year's elections have encountered their own difficulties. Opposition to these machines has become so intense that Secretary of State Kevin Shelley may actually decertify them next month, forcing county registrars to scramble yet again to procure the right voting machines for upcoming elections.

The biggest issue surrounds the lack of a paper record of votes with the electronic voting systems in use today. Critics say this opens up opportunities for manipulation of votes and even outright fraud in the event that votes need to be recounted, as they were in the 2000 Presidential election in Florida.

While there are newer machines coming on the market that do yield paper records, up until now county registrars have been purchasing earlier models without the capacity to print paper records.

Another controversy has arisen surrounding Diebold Elections Systems, the primary manufacturer of the touch-screen voting machines. During the March primaries, several of these machines malfunctioned, invalidating tens of thousands of votes in several counties.

Last week, a hearing was held in Sacramento on the issue. By May 2, Shelley must decide whether to stick with the touch-screen machines or decertify them--at least until July of 2005, when under a previous order, all electronic voting machines must produce paper vote records.

A decertification would be devastating to 14 counties that have already invested in touch-screen machines. One of those is San Diego County, which last year spent $31 million.

In Los Angeles County, the impact of decertification would be minimal. After punch-card ballots were decertified last year, the county switched to the "Ink-a-Vote" machines, which are essentially identical to the punch card ballots, except that boxes are marked with a pen instead of punched out with a stylus. Those machines could still be used, according to Assistant Registrar-Recorder Michael Petrucello.

The county has also purchased and deployed up to 100 touch-screen voting machines at 12 to 20 locations during the last four elections as part of its "early touch-screen voting" program.

If Shelley decertifies the touch-screen machines, the fate of this program is up in the air. In their current state, the 100 touch-screen machines could not be used; however, Petrucello said there might be ways to attach printers or other devices that produce paper records.

Staff reporter Howard Fine can be reached at [phone], ext. 227, or at [e-mail].