By Reggie Ellis
Governor Arnold Schwarzenegger's revised budget has been applauded for being balanced -- without raising taxes and even increasing funding for school and health care for children. What hasn't been mentioned is that the budget was balanced on the backs of local government.
The governor's $102.8 billion proposed budget eliminates $14 billion in deficits in 2004-2005 and $7 billion in 2005-2006 through a series of deals and the voter approved $15 billion bond measure. But a large chunk of the money to eliminate the deficit will come from local governments. Each of the next two years the state will "borrow" $350 million from cities and $350 million from counties. Also, the state will transfer $250 million from redevelopment agencies and $350 million from special tax districts to schools to maintain K-14 funding.
City Finance Officer Kenny Walker said Lindsay will lose $62,785 of its own tax money for 2004-2005 and the following year. The governor's budget promises to repay that money in fiscal year 2006-2007.
"Most companies have the option of saying yes or no when you ask to borrow money from them. We don't," Walker said. "We are a little cautious of the third year repayment."
Even more devastating is the $67,000 that the Lindsay Redevelopment Agency (LRA) will lose in funds over the next two years. That money will not be repaid. Walker said the cut accounts for 16 percent of the LRA's average revenue and could affect Lindsay's future grants.
"That is what we use for matching funds for grants," Walker said. "A large part of the reason we have been so successful in Lindsay is our redevelopment funds."
Both cuts were part of an agreement signed on May 12 between the governor and the League of California Cities, a legislative advocacy group of which most California cities are members. The League agreed, on behalf of member cities, to give up $1.3 billion in local tax revenues in exchange for Schwarzenegger's promise to support a constitutional amendment to protect these funds from being raided by the state in the future, and that any unfunded state mandates would be repealed by the governor.
"With this agreement, I am keeping my promise to cities and counties to ensure that local governments have a reliable revenue stream to pay for local services," Schwarzenegger said in a released statement. "This agreement is another example of the new spirit of cooperation and a new respect between state and local governments in California."
The amendment, titled "The Local Taxpayers and Public Safety Protection Act," is an initiative on the November 2004 statewide ballot intended to increase local control over local tax dollars, so that funding for critical local services is more dependable and predictable.
Also sponsored by the the California State Association of Counties and the California Special District Association, the initiative would require a majority vote of the people before the state government would be allowed to take and use local government funds. It also strengthens existing law that says when the state mandates a program, service or added cost to local governments, the state must reimburse the local governments in a timely manner for the cost of providing that program or service.
"The board believes that this package is fundamentally a good deal for cities, even though the cuts will be painful," said League Second Vice President Alex Padilla of Los Angeles in a released statement. "It means short-term pain for long-term gain."
Walker agreed with the intention of the agreement.
"We have faith that the governor is doing the best he can and he has promised to protect local governments in the future," Walker said.
However, the cuts will likely affect Lindsay in the next fiscal year. In order to combat state budget raids Lindsay has had to lay off or eliminate 22 positions over the last several years.
"We laid off employees last year during the last round of raids," Walker said. "It would be great if everyone shopped exclusively in Lindsay and increased our sales tax by $60,000 or the value of our property went up high enough to cover it, but there's no way to know that. I don't know. We will just have to wait and see."