NORTH COUNTY — The city councils of Vista and San Marcos unanimously issued twin proclamations of fiscal hardship to the state May 12, opposing a potential state grab of city monies. In doing so, they joined approximately 100 other cities in a statewide protest organized by the League of California Cities.
This year, the state of California is facing a budget deficit of nearly $21 billion after the failure at the polls of a slate of fundraising ballot propositions May 19. The state has a long tradition of appropriating money from its cities to deal with budgetary crises. Since the early 1990s, nearly $9 billion in city property tax revenues has been taken by the state.
On May 5, anticipating that the budget measures would fail, the California Department of Finance recommended borrowing $2 billion from the state’s cities, including nearly $1.7 million from Vista and $1.3 million from San Marcos. Gov. Arnold Schwarzenegger said May 14 that he “despised the proposal” but also conceded that should the budget deficit hit $21 billion, he would be under tremendous pressure from the legislature to approve it anyway.
Under Proposition 1A, overwhelmingly approved by voters in 2004, the state must repay with interest property taxes taken from cities within three years. However, there is no guarantee that the state will be able to pay back what it borrows in that time frame.
Such a big treasury loss would be coming at a very bad time, paid back or not. Both Vista and San Marcos have seen several quarters of shrinking revenues which have resulted in layoffs, pay cuts and service reductions. If the state seizes more funds, it will throw the cities’ 2009-2010 budgeting process into disarray.
“We are on the verge of presenting a budget for the next three years which is actually balanced without resorting to use of the city’s reserves,” San Marcos City Manager Paul Malone said. “I cannot say that will remain a true statement if the state triggers the borrowing provisions under 1A.”
Vista City Manager Rita Geldert expressed frustration with the state, noting that where Vista adjusts its budgets monthly, sometimes even weekly, Sacramento has been basing its budget on six-month-old revenue projections.
“Nobody in this state, let alone very few people in the nation, have been able to stick with any numbers that were projected last November,” Geldert said. “It’s easy to say, ‘Let’s just take $2 billion from the cities.’ They need to know what those effects are on each entity.”
“The city of Vista has done a great job … in trying to balance our budget here,” Councilman Frank Lopez said. “The state should learn how to balance their budget.”
Vista’s Assistant City Manager Patrick Johnson was pessimistic about the protest’s chances of swaying opinions in Sacramento.
“If 300-plus cities sign it, it might carry some weight … but I think the state is in such dire need right now, they’re going to do what they’re going to do,” Johnson said.