City Administrator Tom Haglund cautiously welcomed news that the
state will not take $1 million from the city coffers.
City Administrator Tom Haglund cautiously welcomed news that the state will not take $1 million from the city coffers.
Gov. Arnold Schwarzenegger indicated Friday that his administration will not hit up local governments, including Gilroy, for $1.9 billion to help balance the state’s head-spinning deficit. Gilroy’s next fiscal year begins July 1 with a $37 million budget and $3.6 million deficit, according to city figures.
“This is very good news, but I’m cautiously optimistic they won’t pull the trigger,” Haglund said. “Twenty-four billion dollars is a huge gap for the state to make up. This is a long way from a formal commitment, but it’s also indicative of the tremendous amount of hard work by this city and other cities in this state to articulate what would happen if the state took that money, which would not solve a single problem for Californians.”
The State Department of Finance recommended Schwarzenegger pull the Prop 1A “trigger” to borrow eight percent of local property tax receipts to help raise state revenues. That would mean a hit of more than $1 million for Gilroy, which has already lowered its projected property tax revenues by nearly $1 million for the next fiscal year, according to city figures.
But in a budget speech in Escondido Friday, the governor said his administration would not borrow from local property tax revenues if both sides of the political aisle agreed it was a bad idea. The governor also seemed to back off thanks to protests in recent months from municipal leaders and lawmakers, both liberal and conservative, and other groups, such as the Santa Clara County Cities Association – for which Mayor Al Pinheiro is a board member.
Though cities would receive repayment with interest in three years, the move was widely ridiculed as short-sighted by folks like Chris McKenzie, executive director of the League of California Cities, a nonprofit statewide association.
Similar to most cities across the state, Gilroy’s combined police and fire budget accounts for about 75 percent of city expenses, or about $28 million. Gilroy’s finance team is already struggling to patch next year’s expected deficit of $3.6 million, which is in addition to this fiscal year’s total deficit of about $8.3 million. Depending on any last-minute project cuts, all of that money will come from the city’s general fund reserve, which holds about $22 million.
For the state to collect $2 billion, the governor must proclaim a “severe state of fiscal hardship,” and at least two-thirds of state legislators must pass a separate bill approving the move.
