GILROY
– Gov. Arnold Schwarzenegger’s $99 billion spending plan is
triggering a wide range of reactions from local officials as they
assess whether their branch of government drew a short stick or a
long one in California’s budget snafu.
Gilroy City Administrator Jay Baksa called the governor’s budget
proposal
”
the same old shell game
”
of pulling money from local governments to manage the spending
problems in Sacramento.
GILROY – Gov. Arnold Schwarzenegger’s $99 billion spending plan is triggering a wide range of reactions from local officials as they assess whether their branch of government drew a short stick or a long one in California’s budget snafu.
Gilroy City Administrator Jay Baksa called the governor’s budget proposal “the same old shell game” of pulling money from local governments to manage the spending problems in Sacramento. And District-1 Santa Clara County Supervisor Don Gage says the plan, which cuts $14.4 billion next fiscal year, puts not only county coffers but “our children and our children’s children, at risk.”
Meanwhile, Gilroy Unified School District Superintendent Edwin Diaz said he was pleasantly surprised by Schwarzenegger’s plan to increase education spending. And Gavilan College President Steve Kinsella said the governor’s 2004-05 budget would be generous enough to fund 40 additional class sections in the fall.
“I think what we need to do is educate the governor on what some of the impacts (of his proposed cuts) are,” Gage said. “This is not a knock on education, but when you have a family homeless and with no food, what’s education going to do for them?”
Under Schwarzenegger’s plan, the county takes the brunt of the funding blows. Gage said county officials are estimating a $53 million funding cut from the state, made more painful because the county figures to see $100 million less in revenue due to the economic downturn in Silicon Valley.
Massive cuts to MediCal and correctional facilities also spell near doom for the county, Gage said. The former Gilroy mayor said with more poor being shut out of health care, the county hospital system will be burdened by more visitors in emergency rooms. He also worries the county will see a spike in criminal activity.
“These cuts are going to affect people’s safety,” Gage said. “Once you cut mental health and homeless programs, the crime rate goes up, and our jails only have so much capacity. So who do we let out?”
For Baksa, Gilroy’s city manager, there is a sense of disappointment in a governor who was elected partly to inspire the state out of its financial doldrums.
“One of the biggest issues is we thought that Arnold would get creative, that he would make cuts without taking money from cities to pay for (Sacramento’s) problems,” Baksa said. “He’s done nothing of the sort. Philosophically, it’s more of the same. We’re getting nickeled and dimed to the point where we have to hand over the keys to Sacramento.”
Baksa’s reaction would have been more critical had Schwarzenegger not promised to repay cities for lost revenue when he lowered the car tax. However, Baksa said the city still finds itself in a roughly $300,000 hole for next fiscal year under the governor’s plan.
Schwarzenegger’s proposal is critically hinged on a $15 billion bond that needs voter approval in March. Interest on the bonds will be paid with the city’s portion of sales tax, a slap in the face to municipalities like Gilroy. Gilroy sacrificed open space to build big box retail centers on the promise of the increased sales tax revenue those developments would bring.
Cities will get their lost revenue back, so the governor says, but interest that money could have been collecting – $300,000 in Gilroy’s case – won’t be reaped.
Baksa said an even worse-case scenario could be if the bond does not pass in the March election.
“If it doesn’t pass that would force the state to take even more from the cities,” Baksa said. “They could go back and just gut the three revenue sources for cities.”
The three revenue sources are the car tax, sales tax and property tax.
When the economy tanked in the early ’90s, the state reduced the cities’ portion of property tax revenue by nearly a third.
“That was $1.5 million we expected to get back and never did even during the good (economic) times,” Baksa said.
Baksa said he will review the budget impacts with City Council at its Jan. 16 to 17 retreat. He said the city would draw up a preliminary budget based on the governor’s plan in February. Sometime after, the city will present multiple budgets based on a variety of scenarios, such as the bond’s passage or failure.
Although schools fare better under Schwarzenegger’s budget proposal, the rookie governor’s plan hurts them, too.
Gilroy Unified School District needed a $400-per-student increase in state funding to keep up with rises in the cost of living. It will get $200 more per student, but will have to wait at least a year before it receives the remaining $200, causing potential cash-flow issues.
Schwarzenegger wants Gavilan College students to pay $26 per unit to attend the South Valley’s only community college in 2004-05. That’s and $8 increase on top of a $3 increase the year before.
Kinsella, the school’s fiscal-minded president, said the school will add 40 class sections nonetheless to its Fall 2004 schedule. The additional class sections will serve another 135 full-time students, a 3 percent increase in the school’s enrollment. However, the affect of the per-unit hike is unknown.
“The increase will be difficult for some, but we hope it will not deter too many students,” Kinsella said. “We’re putting extra people in the financial aid office to help students determine if they qualify for financial aid and to help them apply for financial aid.”
Kinsella said he is concerned most about the impact the state’s bachelor’s degree fee will have on enrollment next year. Schwarzenegger is proposing a $50-per-unit fee on students who already have a bachelor’s degree.
Gavilan College makes an effort to provide classes geared toward professionals wanting additional training and displaced workers who want to make themselves more employable.
“It’s one of the primary missions of our school, and it’s a key market niche for us,” Kinsella said. “The state did this in the ’90s and it was a disaster for community colleges.”
