Only time will tell if Governor Arnold Schwarzenegger’s plan to
tackle the $12 billion state budget deficit can do so without
bankrupting local government, but officials in San Benito County
and the city of Hollister seem optimistic enough.
Only time will tell if Governor Arnold Schwarzenegger’s plan to tackle the $12 billion state budget deficit can do so without bankrupting local government, but officials in San Benito County and the city of Hollister seem optimistic enough.
The governor announced his new plan late last week. The plan will allow the state to raid local government coffers across California to the tune of $2.6 billion – that’s $3.1 million across San Benito County – in the next two years. The state will then promise to pay some of the money back in three years and create legislation that will keep state hands off local revenues in the future.
However, Schwarzenegger’s plan relies on much more than local dollars to keep the wolf away from the state’s door. His administration is counting on an additional $1 billion in tax revenue, $1.2 billion from a tax amnesty program, $375 million of federal funding, $500 million of gambling revenue from Indian casinos and $476 million in concessions from prison guards and other state employees.
There are a considerable number of ifs, ands or buts to balancing the budget, the largest being Schwarzenegger’s dependence upon the state’s lagging economy performing an about-face in the next two years. However, the governor has vowed solutions to the state’s money problems will not be solved through increased taxes ON to an already over-taxed constituency.
Meanwhile, city and county officials seem fine with the deal as long as the state promises to keep its hands off future local funds and pay back most of the money it “borrows” during the present time of need. Hollister Mayor Tony Bruscia supported the plan and represented Hollister in the League of California Cities when the deal was reached last Thursday. The League of California Cities formed a committee that created the formula to determine how much each member city would pay and recover under the Governor’s request of $1.3 billion annually over the next two years.
The city of Hollister will lose $562,000 in the next two years, but should recover $658,000 the third year. San Juan Bautista will lose $38,000, but should see $30,000 returned in year three. San Benito County will take the biggest hit of $954,000, and it remains unclear exactly how much the county will see returned.
The biggest problem with the plan is the governor is taking money from the cities and counties with the promise to tie the state’s hands to keep it from ever doing it again. However, if California’s economy, and budget for that matter, sink into further depression, how will the state ever repay the funding it needs right now?
Not to mention the governor’s plan will bind all future lawmakers to the deal. Quick fix budget Band-Aids are one thing, but destroying the bridge you just crossed could be dangerous and cause more money woes in the future, especially since the state has a horrible track record of keeping promises not to raid local government accounts.
Regardless of the outcome, the state’s budget crisis only reflects similar problems at the local level. The state needs local government to make the plan work, but who should local government turn to in the meantime? Hopefully, the state Legislature will follow Schwarzenegger’s plan, but one thing remains clear: It will be lean times in San Benito County during the interim.
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