California finally has a balanced state budget, but only with
the help of about $1.2 million from Gilroy.
California finally has a balanced state budget, but only with the help of about $1.2 million from Gilroy.
Sacramento will soon withhold the money from the city’s property tax receipts, which account for about 29 percent – or $9.4 million – of Gilroy’s general fund this fiscal year, according to city figures. The city – which has a $37 million budget – already has a $1.6 million deficit in its general fund. City Administrator Tom Haglund said he expected to mostly offset the state takeaway – which Sacramento will repay in three years with interest – by turning to the general fund’s reserve, which holds nearly $18 million.
“We aren’t going to have to react in a way to reduce expenditures. We have a reserve and cash flow significant enough to deal with this,” Haglund said.
Protests from Gilroy, the League of California Cities and the Santa Clara County Cities Association – the board of which Mayor Al Pinheiro sits on – to state legislators contributed to their retreat from raiding an additional $2.7 billion from cities’ gasoline tax revenues, which fund road improvements.
“It has long been my opinion that state representatives should not use local government revenues to balance the state budget,” Assemblywoman Anna Caballero (D-Salinas) said in a press statement from one of Gilroy’s state representatives this weekend. “To that end, I and others have been looking for a middle ground that would avoid taking local dollars, and to date our efforts have not been successful. I cannot support efforts to borrow or take local government revenues. Cities and counties are dealing with their own budget problems and we need them as partners as we work to dig our economy out of this depression.”
Before the necessary two-thirds of state legislators in both houses approved the takeaway last week to help bridge California’s $26 billion deficit, city finance officials had already lowered their property tax projections by 14 percent compared to last year because they expect a flood of property devaluations.
In addition to more than $2 billion in borrowing from local governments across the state, Gov. Arnold Schwarzenegger and legislators agreed to cut $15.6 billion in schools, colleges, health care, welfare, corrections and recreation programs. An additional $4 million will come from new revenues and an addition $2.7 million from fiscal finagling such as shifting a payment to state employees from the last day of this fiscal year to the first day of the next fiscal year.
Though cities will receive repayment with interest in three years, the move has been 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’s general fund expenses, or about $28 million.
