Tuesday, July 21, 2009

State Budget Gimmicks to Hammer City Services

Local service cuts are nearly 20% of State’s “solution”

SUISUN CITY — The proposed State budget compromise would raid three sources of funding essential to providing necessary public services in Suisun City, and includes at least one maneuver that a state court has ruled to be unconstitutional.

“This state budget seems to be a repeat of prior magical acts by our confused legislators, using accounting gimmicks detested by accountants like me,” Mayor Pete Sanchez said. “It’s just a repeat of the usual ‘kicking the can’ down the road to handle another day.”

The budget compromise reached by Gov. Arnold Schwarzenegger and Legislative leaders relies on tapping local funding sources, including:

  • Borrowing $2 billion in Prop. 1A funding, which the State plans to repay in 2013;
  • Diverting $1 billion in gas taxes used for local road maintenance; and
  • Taking $1.7 billion in redevelopment funding earmarked for affordable housing projects.

Of the $26.3 billion budget gap the state needed to close, the compromise reached by the Governor and Legislative leaders would take $4.7 billion from local governments.

“We have all faced the challenges of the downturned economy,” City Manager Suzanne Bragdon said. “Now local governments have to deal with the downturned economy and the State’s mess? Twenty percent of the state’s mess! Give me a break!”

For Suisun City, this translates to

  • $285,000 from the General Fund – Monies to pay for police, fire, senior services, recreation programs and park maintenance;
  • $470,000 in gas taxes — Monies to repair pot holes, maintain street lights, provide litter control, and other basic road maintenance; and
  • an uncertain amount from redevelopment funds that could exceed $4 million.

In adopting its balanced $12 million budget for FY 2009-10, the Suisun City Council put $285,000 into a special contingency fund to protect against state action. Rather than augmenting the Police Department, Recreation or Public Works, the Council established a defense against the State.

But there is no defense against the State taking gas taxes. If adopted, this measure will strip away more than two-thirds of the money Suisun City uses to fill pot holes, repair streetlights, perform litter control and other routine roadway maintenance. Nearly half of the remaining $150,000 pays the PG&E bill to keep streetlights burning.

On June 16, 2009, the Suisun City Council adopted a resolution opposing the state proposal to take gas taxes.

Officials are working to quantify the potential impact on the Redevelopment Agency Affordable Housing Fund, but it could be enormous. The state proposes to take $1.7 billion statewide over the next two fiscal years. Last fall, when the state proposed to take $350 million statewide, the Suisun City Redevelopment Agency stood to lose $1.1 million.

“Assuming similar formulas are used this time around, our RDA losses could be more than $4 million,” City Manager Suzanne Bragdon said.

Most recently, Suisun City has used affordable housing money to provide loans to build the Cottonwood Creek affordable housing complex and create a first-time homebuyer program to return foreclosed properties to private ownership.

In April, the Sacramento Superior Court blocked the state’s earlier $350 million RDA shift when it ruled that it was an unconstitutional use of redevelopment funds.

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