County officials are concerned that a proposal intended to help
close the gap on the state’s $34.8 billion deficit could take
approximately $3.5 million from local cities and San Benito
County officials are concerned that a proposal intended to help close the gap on the state’s $34.8 billion deficit could take approximately $3.5 million from local cities and San Benito County.
The proposal by Gov. Gray Davis would have the state renege on its promise to make up for the loss in revenue cities and counties suffered when legislators slashed vehicle license fees.
A portion of the money collected when people buy and annually register their cars goes back to local government to pay for services and programs, including funding for the sheriff’s department and health clinics.
Since 1998, the state has reduced the vehicle license fee by nearly two-thirds and it has repaid cities and counties an annual sum to make up for the lost funds.
However, Davis is proposing eliminating the $1.3 billion in reimbursements this year starting Feb. 1 and cutting another $2.9 billion next year.
The move, if approved, would be a loss to an already cash strapped county government of roughly $2.5 million.
“That would be an extraordinarily difficult situation to overcome with respect to maintaining the current level of service,” County Administrative Officer Gil Solorio said.
A $2.5 million loss to the county would represent a big hit to the county’s general fund.
Put in perspective, the loss would almost equal the $2.6 million total cost for salaries and benefits paid to the sheriff department’s patrol division, including clerical and office staff, county Finance Officer Dan Vrtis said.
The county would not be the only local government affected by the proposal, if it wins approval.
The City of Hollister could lose approximately $1 million in revenue, city Finance Director Barbara Mulholland said.
“That is roughly one-fourth of the police department’s budget or one-third of the fire department’s budget,” she said.
The loss of vehicle license fee revenues would also hit San Juan Bautista with a loss of about $35,000, City Manager Larry Cain said.
With a budget of about $760,000, “that would be a loss of about 5 percent of our operating budget,” Cain said.
“It would be premature to take any drastic measures until a (financial) blueprint is delivered from the state,” Solorio said.
The vehicle license fee is now 0.65 percent of the depreciated value of a vehicle, compared to 2 percent in 1998. Raising the fee back to the 1998 level would mean the fee for the owner of a car worth $10,000 would jump from $66 to $203.
Davis, meanwhile, has launched a public relations tour of sorts for his budget plan that cuts services and raises taxes to fill an estimated $34.6 billion deficit.