Thursday, Sep. 25, 2008

California budget not as bad as feared for Merced County cities, schools

UC Merced insulated from state budget hardships

By DANIELLE GAINES, SCOTT JASON AND VICTOR PATTON

CITIES: In passing a state budget, the legislators didn't resort to an all-out raid on city money as many feared. Joining a campaign with other cities, Merced's City Council had passed a resolution during the standoff asking the state "to cut up its local government credit cards and deal with the budget deficit in a straightforward way."

Merced's interim City Manager Jim Marshall said he was thankful that Schwarzenegger pressured lawmakers to stop eyeing city money when the state runs low on cash. "It's a sign of integrity from the governor and I thank him for that," Marshall said.

Merced, and other Valley cities, are watching flat revenue lines go into a decline. The city is tapping about $4 million from its reserves to make ends meet, he said. City leaders could use the extra funds one more year before they begin "scraping dirt," Marshall said.

Some cash was still seized, and city leaders aren't pleased. They worry that the worst may have been delayed till next year.

The state also failed to make the changes necessary to keep its spending in line with its revenues and prevent further budget shortfalls, Marshall said. "I guess it works on paper, but it doesn't fix the problem," he noted.

The state took about $350 million in money from city redevelopment agencies, which are tasked with revitalizing blighted areas. Merced will lose about $580,000, and Atwater will lose about $135,000.

The California Redevelopment Association is considering a lawsuit against the state for taking money and is asking cities to come forward with stories about how their projects will be hurt.

Marshall said that the money set aside for polishing downtown and the west side of the city will have to be trimmed. Also, projects to improve the city's gateways -- Highway 140 and Highway 99 -- will be reduced.

The state also cut $75 million in city reimbursements. A state law requires the state to pay cities for its mandates, such as holding open meetings and having police officers help stranded motorists.

Merced had expected to collect about $33,000 from the state, Marshall.

The cities took one more big hit. The state cut by 10 percent how much it gives to counties for jail booking fees. As a result, the county may start charging cities for booking fees.

Marshall expected this move by the state. He set aside $230,000 in extra expenses. Whatever's not spent will be frozen and carried into fiscal year 2009-2010 because it's likely that money will continue to be tight.

Atwater City Manager Greg Wellman said that there may be more gimmicks hidden in the budget. "As in every year, the devil is in the details," he noted.

The state, Wellman explained, can delay payments in order to collect extra interest or just refuse to reimburse cities, even though it's legally required.

The budget mess, Wellman said, was settled by a series of irresponsible decisions by lawmakers. "It simply postpones the day of reckoning for the state to finally bring its expenditures down," he said.

COUNTY: "We have been very conservative with this budget. We are being very prudent -- not just for this year, but for the next year and for the next three years," said county CEO Dee Tatum. He noted that the county can absorb drastic cuts once, but it can't continue to fund ongoing services with one-time reserves.

"We have a fiscally conservative budget that is balanced," added Scott DeMoss, deputy county executive officer. "Overall, the city is in a good position. We will be able to handle some impact from the economy and the state. If we take a hit here or there, we will be okay."