Cities to feel pain from state budget deal

July 21, 2009 12:00:00 AM PDT
California lawmakers are banking on a big economic recovery to bail the state out of its financial mess. The budget deal struck in Sacramento Monday night makes up a $26 billion deficit through $15 billion in spending cuts, $11 billion in borrowing, and accounting gimmicks.

Details of agreement to close California deficit

For example they want to collect some of next year's taxes this year and pay some of this year's bills next year. It also raids $4 billion from cities and counties and local governments are not at happy with the plan.

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Some of the impacts are rather obvious of the budget deal. Road repair projects, road repair work on the local level would simply not get done, but city and county leaders say the cuts would run much deeper than that.

"This is just a devastating scenario for us," says Concord city manager Daniel Keen.

Keen's $80 million budget is already $13 million in the red. Now, the state wants to take another $2.5 million, much of it from gas taxes.

"We'll just do pothole repair and emergency repairs and I think that will be devastating for the long-term life of the infrastructure," says Keen.

The budget deal would suspend Proposition 1A. That would allow Sacramento to seize sales and property taxes otherwise meant for cities and counties. Besides the gas tax, state lawmakers also plan to borrow from redevelopment funds -- a move some cities will challenge in court.

"The constitution of the state does not allow taking of redevelopment money and furthermore, they're proposing to take highway user's tax money, which is also unconstitutional. So this is a giant Ponzi scheme," says Campbell City Councilmember Dan Furtado.

As it is now, Contra Costa County would lose all of its gas tax money for this year totaling $14 million. Supervisor John Gioia must work from handwritten notes, since lawmakers in Sacramento have offered virtually no specifics.

"It really cuts across all services of counties and cities: redevelopment, public works, social services, health services. It's really a disaster," says Supervisor Gioia.

As many as 85 public works employees in Contra Costa could lose their jobs. In-home health care, library, police and fire, welfare and employment assistance services could all face further cuts.

"With the social safety net being scaled back to the degree that it looks like it's going to be, we know that these needs are not going away. If anything, they are going to intensify," says Stephen Baiter from the East Bay Works Career Center.

The Concord GMC car dealership is just one example of how the city has used some of its redevelopment money to help businesses stay in Concord during these tough times. This city and others probably won't be able to afford to do things like this if this budget deal goes forward.

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