GILROY
– City and county officials spent Friday digesting the latest
turn of events in Sacramento between the state’s Republican
governor – who wants to pay local governments what they are owed –
and the Democrat-controlled Legislature – which wants to know where
the money is going to come from.
GILROY – City and county officials spent Friday digesting the latest turn of events in Sacramento between the state’s Republican governor – who wants to pay local governments what they are owed – and the Democrat-controlled Legislature – which wants to know where the money is going to come from.
District 1 County Supervisor Don Gage and Gilroy City Administrator Jay Baksa had mixed reactions to the latest budget news involving Gov. Arnold Schwarzenegger’s promise to pay back $2.65 billion in vehicle license fees to local governments.
Schwarzenneger is trying to fulfill a promise that cities and counties won’t be hurt because he slashed the state’s “car tax” from 2 percent to .675 percent – a campaign pledge that elated individual car owners, but sent local and state politicians into a frenzy to figure out how to fund government programs and services.
The new and budget-embattled governor wants to cut deeper into state programs and services so California can pay back local governments for the revenue they lost when he returned vehicle license fees to their recent level of .675 percent.
Both Gage and Baksa are happy Schwarzenegger will fulfill his promise, however both men are keenly aware that the governor’s solution may be short-term at best, since the state is hardly flush with funds.
“It’s a positive step from the governor’s office. He is starting the dialogue of fulfilling his promise to (repay) what’s owed to us,” Baksa said. “But when you hear what’s coming from the rest of the Legislature like (Senate President) John Burton the news sounds even worse.”
Burton lambasted Schwarzenegger last week saying the governor created the mess himself after lowering the vehicle license fees former Gov. Gray Davis had returned to historic levels to help California out of its budget crunch.
Burton also said the Legislature would have “backfilled” the vehicle license fees by the end of January, once Schwarzenegger laid out his budget for 2004-05. Although Burton said he would not challenge the Governor’s proposal legally, he suggested certain interested parties may, according to a summary briefing issued by the League of California Cities.
According to the League, Burton also indicated he would push for a 2004-05 budget that continues to take money from cities and counties – a maneuver historically done by the state when there is a downturn in the economy.
Gage said county staff spent Friday scrambling to research the implications of Schwarzenegger’s latest action. He said supervisors will meet sometime before Jan. 10 to decide whether to abandon the county’s plan to sue the state for the so-called vehicle license fee backfill.
Jan. 10 is a key date for two reasons. It is when the governor intends to start paying cities back for the reduced vehicle license fees. And, it is when Schwarzenegger will present a budget for 2004-05, Gage said.
“We haven’t made a decision on whether to move forward with a lawsuit. Right now we’re just pleased the governor is saying he’ll pay back the vehicle license fees,” Gage said. “But this is all a two-edged sword. The state still has to come up with $4 billion (total for 2002-03 vehicle license fees).”
Gage’s comment is in stark contrast to ones he made late Wednesday.
“I don’t think we have any choice (but to sue),” Gage said after 17 California counties announced plans to sue the state for the vehicle license fees.
As for Gilroy, Baksa is getting daily briefings from the California League of Cities, of which Gilroy is a member.
After Schwarzenegger’s latest announcement, the League praised the governor but added that the governor still has many questions to answer.
“In the final analysis, the governor’s proposal is probably a month-by-month proposition with some unanswered questions about being able to secure the total amount of money needed to cover all the (car tax) backfill amount for the remainder of the year,” the League states in its briefing to city managers. “A big assumption behind this proposal is that the Legislature will cooperate with some of the governor’s proposals.”
Perhaps the biggest question is how the governor plans to raise the $1.9 billion needed to start paying the vehicle license fee backfill. Mid-year cuts requiring legislative approval are the likely means.
The $15 billion bond the governor wants voters to pass in March 2004 is not an option.
Another question lingering in the collective minds of cities is how the $2.65 billion backfill figure has emerged. The state at one point said $3.1 billion was owed to cities.
“This is another detail that needs to be examined,” the League told city managers.
For local government officials focused on more immediate revenue concerns, the state’s Dec. 10 vehicle license fee payment is also an issue. California sent vehicle license fee revenue to cities and counties on Dec. 10, but payments were based on the reduced-fee amount.
In December, Gilroy received roughly $58,000 in car tax revenue from the state. It marked a $150,000 reduction in what California originally had promised. It’s not clear yet if the Jan. 10 payment covers the shortage brought upon by the skimpy December checks.
“December’s backfill may be a lost cause,” Baksa said. “We just don’t know yet.”
