Santa Clara city officials expected the state to take some of the money they had planned to use for the proposed stadium, but not this much.
"Over a two year period, $10 million in redevelopment funds which won't be available. So that looks like $8 million this year and the best estimates are for $2 million next year," said Santa Clara Vice Mayor Jamie Matthews.
That may be a drop in the bucket for a $937 million stadium, but it still hurts.
The state wants to grab that $10 million from the $40 million in redevelopment or RDA money, which the city will contribute to the stadium project.
So, who's going to make up that shortfall?
"Any shortfall whether it be construction or whether it be RDA funds would be made up by our partners," said Matthews.
That would be the 49ers. Under the agreement, the 49ers can give the city a loan of up to $12 million.
"That loan from the team would address things like fluctuations in the RDA and things like the state coming and saying we need some of that money," said 49ers Spokesperson Lisa Lang.
The 49ers say they don't expect that loan to be repaid, and the city says in this economic climate, don't count on it.
"All our projections show we're not going to be able to repay much of that loan," said Assistant City Manager Ron Garratt.
But all of this is not a done deal. In April, the California Redevelopment Association won a lawsuit against the state's attempt last year to take $350 million in redevelopment money from the cities.
The state is now appealing, but city officials say there will undoubtedly be another legal challenge to prevent the state from sticking its hands again in redevelopment coffers.