Under a deal struck between the governor and statewide agencies
Thursday, San Benito County governments would sacrifice funding to
the state over the next two years in exchange for the assurance it
wouldn’t happen again.
Under a deal struck between the governor and statewide agencies Thursday, San Benito County governments would sacrifice funding to the state over the next two years in exchange for the assurance it wouldn’t happen again.
Gov. Arnold Schwarzenegger’s annual May budget proposal would take $3.1 million from four local jurisdictions and $1.3 billion statewide over each of the next two years. But in year three, counties, cities, special districts and redevelopment agencies would salvage much of those losses. And a constitutional amendment would bar the state from ever snatching local money again.
That means Hollister and San Benito County officials can sweat a little less over the possibility of reducing public services, including police and fire, in the coming years. Both are facing multi-million dollar shortfalls heading into budget planning sessions later this month.
Any money not taken away by the state goes right back into local agencies’ coffers for spending on workers’ salaries, other everyday expenses and recreation programs – which are on the chopping block.
Before the latest deal is enacted into law, though, the governor’s proposal must be approved by the state Legislature.
Hollister Mayor Tony Bruscia was pleased with the agreement Thursday.
“I’m excited about it,” said Bruscia, who’s active in the League of California Cities and represented Hollister at the organization’s vote on the deal Thursday in Sacramento. “This is something that has been plaguing cities and counties for years now. We’ve been getting hit hard, and it’s got to stop.”
Under the proposal:
– The city of Hollister would forfeit $562,000 over two years, then recover $658,000 in year three, according to the League of California Cities.
– San Juan Bautista would lose $38,000 over two years, but get back $30,000 the following year.
– San Benito County would sacrifice $954,000 over the next two years. It is unclear how much funding the county would receive back from the state in 2006-07. County Administrative Officer Terrence May did not return phone calls placed to his office Thursday.
– The Hollister RDA is in on the deal as well, and it will take a $761,000 hit in each of the next two years.
Cities and counties get reimbursed in year three because the state took millions from local governments when Schwarzenegger lowered the car tax. The Hollister RDA, however, will not recover any money because its losses come from a different source.
The state shifts RDA dollars into a state education fund. RDAs made those payments to the state Monday, according to California RDA Executive Director John Shirei.
Still, he pointed out that RDAs also will be protected by the constitutional amendment that bars the state from taking more money in the future.
“I think we see more good than bad,” Shirei said.
The deal struck Thursday also includes a condition aimed at curbing the state’s tendency to require local governments to provide programs it doesn’t fund. The governor agreed the state would pay back about $2.5 billion to local agencies for those programs over a five-year span.
The governor’s deal came after a League of California Cities effort, obtaining 1.1 million signatures, to place an initiative on the November ballot. That, if approved, would require voter approval for anymore state looting of local coffers.
But Bruscia said the governor’s deal, if passed, may nullify the need for a ballot measure.
The long-term benefits of Thursday’s agreement, he said, are even better than the League’s initiative. Plus, there would be an immediate effect.
The amount of funding lost next year for Hollister would be much less than previous projections, Bruscia said. As a round figure, which was considered conservative a few months ago, former City Manager Dale Shaddox had estimated the city’s loss to the state of $1 million in next year’s budget.
The state has been plucking away at all three local agencies’ coffers over the past two years to make up for billions in shortfalls. Hollister and San Benito County both project deficits – with coinciding program cuts and layoffs likely on the way – in 2004-05.
“After the two years of pain, we know we’re done contributing to their problem,” Bruscia said.
He plans to meet with interim City Manager Clint Quilter in the coming days to revise the city’s budget projections.
Council members approved a plan in January to lay off 36 employees, but left open the option to save some positions if the city’s financial outlook brightens.
Their fate will be decided when Hollister City Council is scheduled to hold its annual budget hearings either later this month or in early June.
Bruscia also said there’s a possibility California may allow local jurisdictions the unprecedented option of paying the state out of any type of fund. Normally, such losses would be absorbed by general funds, which finance operational expenses. Salaries of most city employees, for instance, are paid from the Hollister general fund.
The governor’s January proposal included a permanent annual loss of $1.3 billion – $900 million absorbed by counties, according to David Liebler, spokesman for the California State Association of Counties.
“It was really disproportionate to counties,” he said.
