With the long-awaited release of Gov. Gray Davis’ May budget
revision this week, the dark fog has cleared for Hollister
officials and the outlook for state funding to local jurisdictions
looks brighter than January’s original proposal.
Although city officials have not collectively scrutinized the
governor’s revision, City Manager Dale Shaddox expressed a sense of
relief that less of the state deficit’s burden has been placed on
cities.
With the long-awaited release of Gov. Gray Davis’ May budget revision this week, the dark fog has cleared for Hollister officials and the outlook for state funding to local jurisdictions looks brighter than January’s original proposal.
Although city officials have not collectively scrutinized the governor’s revision, City Manager Dale Shaddox expressed a sense of relief that less of the state deficit’s burden has been placed on cities.
“I frankly appreciate the governor attempting to balance the approach with a combination of cuts and revenue enhancements,” Shaddox said.
The state budget revision came in at $100.4 billion, and the latest estimate for the deficit Wednesday was $38.2 billion – $3.6 billion more than the already-dreaded estimate from January. The revised plan calls for significant tax hikes to compensate for the less-drastic cuts to local jurisdictions.
But city officials received both good and bad news Wednesday. If Davis’ revision passes the state Legislature, some cuts will remain and some will be scrapped.
Of the most notable funding proposals potentially affecting Hollister, the city would not forfeit about $1.9 million from the loss of vehicle license fee funding from the state. Under the revision, vehicle registration fees will increase – in some cases doubling – to offset that revenue loss.
On the flip side, redevelopment agencies throughout the state would shoulder a $250 million loss next year – an amount that would gradually increase each year until 2018.
Under a similar shift for the 2002-2003 budget, the local RDA lost $186,000. To calculate the loss for next year’s budget planning, Director Bill Avera was told to multiply that amount by 3.33. If those numbers hold, Hollister would lose $619,000.
“Next year is going to be ugly,” said city Finance Director Barbara Mulholland.
Avera said “it’s too early to tell” what plans may be shelved, though all major infrastructure projects – including Highway 25 improvements and the new sewer plant – would move forward, he said.
Another local funding loss would be incurred under the revision because the state plans to eliminate $38 million in booking fee reimbursements for payments the city makes to San Benito County for use of its jail. Hollister would forego $34,000 under that plan.
Since Davis released his budget proposal in January, local agencies have rallied to lobby state officials to lessen the repercussions to cities such as Hollister.
A key organization in that debate has been the League of California Cities. Hollister City Councilman Tony Bruscia, who is actively involved with the LCC, spent Wednesday and Thursday in Sacramento attending meetings to learn more about the budget revision and to lobby legislators.
“I think the governor’s proposal moves in the right direction for cities and counties,” Bruscia said from Sacramento. “It’s really a step in the right direction.”
He mentioned the vehicle license fee backfill as a positive result of the revision but was frustrated that the local RDA would take a “significant hit” under the plan.
Overall, Bruscia said the collective effort by local agencies has been a successful uphill battle.
“I’m really pleased such a diverse group of people are fighting for the same issue, in a strong show of force to protect local revenues,” he said.
Shaddox said the city will build its 2003-2004 budget during the next three weeks based on anticipated revenues, including those from the state. City officials optimistically hope to finalize a first draft of the city budget by June 6 and get Council approval by late June, Shaddox said.
City departments submitted their own budget requests today. Shaddox said each department head was instructed to plan conservatively.
“We’ve been told to try to hold the line on the budget,” Fire Chief Bill Garringer said.
Garringer said the planning process has been “very difficult” because the HFD is moving forward with plans for a second fire station. And while the city has earmarked funding for the station’s construction process, funding for its staff hasn’t been approved yet, he said.
Shaddox said the May revision, historically, has passed the Legislature with little alteration. But he emphasized this year’s budget is an “extremely unusual situation” and not one he expects to drastically improve anytime soon.
“We’ve been reminding our staff and the Council, this is not a one-year situation,” Shaddox said. “This is going to be a situation that lingers for several years.”
