The Sacramento Bee has launched a new database to show how much money the state’s new budget takes away from cities and counties. Overall the state is taking away 2 billion dollars of direct money from cities and counties along with another 1.7 billion dollars from local redevelopment agencies this fiscal year.
During the budget agreement cities threatened lawsuits against the state if the state followed through with a suspension of Proposition 1A which was passed by the voters to prevent the state from raiding monies that are designated for cities and counties. While the cities and counties were able to get a devastating take away from transportation funds, the state prevailed in taking monies from redevelopment and also Prop 1A. Cities and counties are now in the position where they will have to decide whether or not to sue the state.
The city recently had to close a $3.5 million budget deficit. The city might be tempted to use one-time monies in the form of reserve in order to plug the new hole. And if this were a one-time take away from the state as it is currently advertised or a loan, that might be the right thing to do. The problem is if the state ends up taking away this money again next year, which seems likely at this point, a lot of the city’s reserve could be eaten up very quickly.
This is yet another reason the Vanguard was pressing the city so hard to deal with the structural issues of employee compensation rather than rely on programmatic cuts to close the original deficit.
It remains our concern with the statewide furloughs and salary cuts along with those from UC Davis that the city of Davis faces a far worse fiscal situation next year even as the economy appears to be on the verge of improving nationally with the report that GDP only dropped by 1% last quarter.
The league of California Cities believes that the taking of the money from redevelopment is illegal and will also cost 198,000 jobs as it diverts money that would go to contracting and construction projects.
“Although the budget signed into law by Gov. Arnold Schwarzenegger earlier this week includes several “wins” for cities, the League remains concerned about the constitutionality and economic impact of the redevelopment agency take. The FY 2009-10 budget seizes $1.7 billion in redevelopment revenue and an additional $350 million in FY 2010-11, totaling $2.05 billion.”
In an editorial in the league’s newsletter, they argue that this is illegal.
“The Sacramento Superior Court in April 2009 ruled unconstitutional the redirection of $350 million in redevelopment funds to the state’s general fund for FY 2008-09. The California Redevelopment Agency (CRA) is preparing another lawsuit against the state on the constitutionality of this new seizure and is currently seeking plaintiffs from its agency members to join the suit.”
Moreover, the money taken by the state will cost jobs.
“CRA has calculated what the loss of redevelopment funds will mean to the economy. For FY 2009-10, CRA estimates that if these funds were invested in local communities for affordable housing, improved infrastructure, community facilities, it would support about 164,000 full- and part-time jobs in construction and related sectors of the economy. The $350 million loss next fiscal year CRA estimates would support nearly 34,000 jobs.”
While cities will undoubtedly challenge the state in terms of the takeaways, the potential impact on already fiscally stressed cities and counties could be extraordinary. The problem of course faced by the state is that no one was willing to discuss new revenue and the two-thirds vote pretty much precluded it. That meant that the state had to find $26 billion in budget cuts. It sounds good to talk about the state living within its means, which means budget cuts in tough economic times, but cutting programs and money means that people will lose jobs, people will lose benefits, and the people most harmed by that are the poor, elderly, children through education cuts, and cities and counties.
The league of cities estimate on job losses from the cut of redevelopment money is probably a bit high as many cities will not be deploying that money immediately. However, the number illustrates the impact of budget cuts. And that is “just” $2 billion in cuts. Multiply that out across the state for the full $26 billion and before that the $40 billion and you end up with the proposition of losing a lot of jobs in the state which will hurt the economy.
We still really do not know what the impact on the economy will be from these sorts of cuts. The voters passed Proposition 1A precisely to avoid the state raiding local funding every time they had a budget crisis and yet here we see the state doing the same thing even with the passage of Prop 1A. Will the courts be willing to back up the local governments? If they are not, the proposition might as well be null and void.
What remains even more clear is that Davis needs to get its own fiscal house in order so we are not at the mercy of the state on these kinds of issues.
—David M. Greenwald reporting
Why would it be legally acceptable to suspend 1A and 98, and at least a handful of others, but not Prop. 13?
I’m just trying to figure out the rhyme & reason (if it’s there).
Has to do with who is doing the voting.
I doubt that I will vote for the sales tax renewal next year. The City is doing way too little to deal with sky-high employee compensation and benefits.
“Has to do with who is doing the voting.”
You are providing false information.
Prop 98 included a provision allowing its suspension by a 2/3 vote.
Prop 13 did not.
http://www.latimes.com/news/education/la-me-prop9817-2009jul17,0,2429437.story?track=rss
Don Saylor has it right . . . it’s time to sue the State. Davis and Yolo County should join with the other aligned 180+ cities and counties. If the State can “suspend” the law, why can’t we do the same and refuse to send them any funds collected on their behalf? Seemed to have worked 233 years ago . . .
Where are the Republican wing nuts when their “teabags” might be useful? Oh, I forgot that they are currently distracted by their paranoid suspicions regarding validity of Obama’s birth certificate and drumming up fear about the evils of socialized health care.
“It remains our concern with the statewide furloughs and salary cuts along with those from UC Davis that the city of Davis faces a far worse fiscal situation next year even as the economy appears to be on the verge of improving nationally with the report that GDP only dropped by 1% last quarter.”
The economy always appears “on the verge of improving”, according to what we read/hear in the media. Pretty soon citizens will actually believe that crap that is being shoveled at them by the Obama administration – until the next round of layoffs happens, the next round of foreclosures happen. It takes time for state budget fiascos to trickle down to the local level, and we have not seen the worst yet by far. The peak in foreclosures is not expected to crest until the middle of next year AT THE EARLIEST. More layoffs are coming this fall, according to Lois Wolk.
“What remains even more clear is that Davis needs to get its own fiscal house in order so we are not at the mercy of the state on these kinds of issues.”
Not only is the Obama administration clueless, but so are the elected officials of our City Council majority.
Don Saylor was instrumental in creating the problem, voting for such outrageous, expensive and unsustainable abuses such as lowering the retirement age for city non-public safety employees. Now he is posturing himself as a warrior to save the city.
A real politician.
anyone who thinks davis can survive independent of the state’s woes, both economic and republican-driven, by any discussion of employee salaries is utterly delusional. we are going down with the ship, if this sort of budget continues to be passed at ransom. this cannot go on like this, and none of the choices davis or yolo county took over the past decade will make a bit of difference.
if you’re going to make a claim that employee pensions would have significantly helped us this (and god help us with next) year, then lay out your numbers, david. just as the phony special election gimmicks would not have closed the gap we’re facing, neither would lower salaries or benefits for firefighters.
either we get rid of the supermajority and raise taxes, or else we all go down as one state. there really aren’t other options, especially to cities and counties so deeply connected to the state government as ours.
“either we get rid of the supermajority and raise taxes, or else we all go down as one state. there really aren’t other options, especially to cities and counties so deeply connected to the state government as ours.”
Raise taxes? You’ve got to be kidding?! With furloughs and layoffs, where do you think citizens are going to get the money from? Tax the wealthy? They have a plethora of lawyers to devise tax shelters. Tax corporations? There goes business and jobs out of CA. Raising taxes is not the sole answer either.
Being more fiscally responsible at every gov’t level is a necessity. Period.
“This would not only harm the city of Davis and it’s ability to use redevelopment funding for projects”
It should be “its ability.” I hate to be such a nitpicker, but honestly, David, if you want people to take this site seriously, you really need to learn the difference between “it’s” and “its.” You’ve made this error before. “It’s” is a contraction for “it is.” No reputable news source lets errors like that into print.
I don’t find the occasional grammatical error or typo in the Davis Vanguard particularly troubling. What I do find bothersome is the Davis Enterprise’s habit of opinions bleeding onto what are supposed to be the news pages, and its lack of investigative reporting. Most of
Davis Enterprise is nothing more than a string of fluff pieces kept in the hopper and trotted out when convenient.
I don’t have a full time copy editor, I have an intern who spends an hour reading over the new articles for grammatical errors. I do not believe she works on weekends. At 4:30 am, it’s an easy mistake to make with the its versus it’s. My apologies.
[quote]Where are the Republican wing nuts when their “teabags” might be useful? Oh, I forgot that they are currently distracted by their paranoid suspicions regarding validity of Obama’s birth certificate and drumming up fear about the evils of socialized health care.[/quote]
Read carefully the well-conceived leftist strategy: demonize and malign the other side while complaining that they don’t more to save you from yourself. Priceless!