$760,000 will be returned to city, $24 million to county
from Vehicle License Fees
Gilroy – The state budget Gov. Arnold Schwarzenegger signed Monday will return hundreds of thousands of dollars to Gilroy and millions to Santa Clara County two years earlier than expected.
The money is part of $1.2 billion in Vehicle License Fees that the state withheld from counties and cites in the summer of 2003 in an effort to fill a nearly $40 billion state budget deficit. The state was scheduled to restore the funds to local governments by 2006.
Instead, the newly signed budget immediately returns $762,654 to Gilroy and more than $24 million to the county, according to figures from the state controller’s office.
The early returns will have the most visible impact at the county level, where monies raided by the state were earmarked for road improvements.
“It allows us to go forward with road projects rather than having to delay them or not do them at all,” County Supervisor Don Gage said. “The chip and seal program was basically just halted on county roads because of not having the money, and now we’ll be able to move forward with our original plan.”
Gilroy City Administrator Jay Baksa said officials had no immediate plans for the funds, which will go into the city’s general fund. But he didn’t regret seeing the money earlier than expected.
“What it gives us is the ability to earn interest on that money for two years more,” Baksa said.
Baksa has served as city administrator for Gilroy for 22 years and has long witnessed state raiding of local taxes. Many times, cities do not see the money again.
“It’s good news,” he said of the VLF money. “At least they’re giving it back.”
Gage attributed the earlier-than-expected returns to a relatively smooth budget process.
“The problem is you never know what’s going to happen from one day to the next,” he said. “It’s better this year because they reached a budget solution before September. They reached a compromise and had a budget close to when they were supposed to.”
The state budget for the 2005-06 fiscal year avoids the borrowing that has plagued the state in recent years and does not raise taxes. It sets money aside to pay off some of the state’s debt and increases funding to most programs, including $3 billion more for schools and $1.3 billion for road projects.
“This budget is the result of a lot of hard work and a lot of compromise,” Schwarzenegger said. “It is an instrument of good for California.”
Staff writer Luke Roney and the Associated Press contributed to this report.
