Many city and county officials have scolded state leaders’
budgetary decisions during recent months. And with the new
governor’s repeal this week of a significant revenue source to
local jurisdictions, that attitude just took another nose dive.
The City of Hollister will lose about $2 million and San Benito
County will drop $2.4 million in revenues for next year’s budget
after Gov. Arnold Schwarzenegger’s repeal of the vehicle license
fee increase Monday.
Many city and county officials have scolded state leaders’ budgetary decisions during recent months. And with the new governor’s repeal this week of a significant revenue source to local jurisdictions, that attitude just took another nose dive.
The City of Hollister will lose about $2 million and San Benito County will drop $2.4 million in revenues for next year’s budget after Gov. Arnold Schwarzenegger’s repeal of the vehicle license fee increase Monday.
The decision will save all car owners hundreds of dollars a year in vehicle licensing fees; state leaders had previously tripled the tax in lieu of the budget deficit. But statewide local jurisdictions believe they will no longer receive a sum of $4 billion in annual allocations – money paid back to cities and counties that was earned from the fees.
The money has gone straight to the city’s and county’s general funds, which pay for basic services, such as police and fire.
For Hollister, the repeal fortifies a gloomy outlook for next year’s budget and a likelihood the city will cut about 40 positions from its 175-person workforce by next July, according to City Manager Dale Shaddox.
“It’s pretty bad news,” said Shaddox, who has even planned the loss into his preliminary budget crunching. “We’re trying to keep a stiff upper lip here. The mood here (at City Hall) is not really positive.”
City officials are entrenched in searching for solutions to a likely $5 million shortfall for the 2003-04 budget. Shaddox said he has planned proposals for one-time sales of properties to the city’s redevelopment agency. But even then, the city would be faced with a $2.6 million problem, Shaddox said.
As Hollister experienced while drafting the current year’s budget, San Benito County also struggled to balance its slate of expenses for 2003-04.
For the county, the $2.4 million shortfall would lead to further dipping into reserve funds, according to County Administrative Officer Gil Solorio. He called the repeal disheartening. And it seems to be a political gambit by the new governor, he said.
Layoffs for the county, however, are the “very last” option, Solorio said. Both Solorio and Shaddox have warned Board and Council members during recent meetings about the likely loss of funding.
Supervisor Bob Cruz expressed doubt the VLF funding loss would result in county employee layoffs.
If the losses keep piling up, though, Cruz said, the county will eventually be in a similar position as the city.
“Soon or later, the well will dry up,” Cruz said.
Shaddox said he and a majority of other city managers throughout the state highly doubt the state will continue paying the VLF backfill. He pointed out another announcement by Schwarzenegger on Tuesday – the state’s pursuit of a $15 billion bond measure to compensate for its devastating budget deficit.
The state, Shaddox said, simply doesn’t have the money.
“Us at the local level don’t see any way (the state) could continue to make those payments to the city,” Shaddox said.
City Councilman Tony Bruscia, also president of the Monterey Bay region of the League of California Cities, said the repeal brings to light the importance of a November 2004 ballot measure. The measure, approved by statewide delegate’s at a recent League conference, would require ballot votes any time the state wanted to re-allocate money away from local government.
“The state’s been making a bunch of promises and they’ve been lying to us,” Bruscia said. “They need to be held accountable.”
Other local jurisdictions, such as the City of Santa Cruz, Shaddox pointed out, are considering drastic alternatives to make up for the upcoming revenue shortage. Santa Cruz placed a measure on its March ballot to consider raising the local sales tax by 1/4 of a cent.
“I have indicated to the Council to seriously consider other alternatives, including a revenue measure on the November (2004) ballot,” Shaddox said.
