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Local leaders sort out state budget effects

It took a year and 45 days to build the Empire State Building. Two years and two months for the Eiffel Tower. Three years for the Transamerica Pyramid.

So the fact that it took 85 days to pass a state budget shouldn’t dismay too many Californians. State voters, after all, elected the governor and lawmakers who held the capitol purse strings hostage for nearly three months.

And as Joe, the Pharaoh, noted in Modesto-based “American Graffiti”: “Rome wasn’t burned in a night.”

Gov. Arnold Schwarzenegger signed the state budget on Tuesday, a $144.5 spending plan that passed after the standoff over how to close the state’s $15.2 billion deficit.

Ripple effects from both the delay and the fiscal content of the budget are just beginning to wash over our part of the Valley. Here are some early forecasts of their impact:

CITY: 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 Gov. Arnold 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.”

UC MERCED: The UC Merced campus was shielded by the rest of the University of California system from some financial hardship, said Mary Miller, Merced’s Vice Chancellor for Administration. “Sometimes there is competition, but they are really standing behind us even though it is not easy for them,” she said. “It really signifies that we are one university.”

Funding for the system remained essentially flat with the new budget, though nearly $100 million that had been proposed to be cut earlier in the funding debates was reinstated.

A chief contribution from other schools in the system to the Merced campus was the reorganization of funds to cover additional funding for 700 of the campus’ 800 or so new students.

The final 2008-09 state-funded operating budget for the UC system is $3.256 with an additional $204 million in lease-revenue bond funding for building projects at six campuses, not including Merced. Local administrators said they will begin seeking their own lease-revenue bond funding for the planned Science and Engineering 2 building. Funding for student housing comes from student fees, so a new housing project will continue as expected.

“The final budget for the UC is probably the best we could have achieved in a difficult fiscal environment, but it falls far short in terms of maintaining and enhancing our competitiveness in educational and research programs,” UC President Mark G. Yudof said. “We will need to do more with less.”

Though Yudof said belt-tightening alone will not be enough to meet the university system’s fiscal challenges, his office in Oakland has already taken steps to reduce central office positions and expenditures by more than $20 million. The university system will have to find $100 million to cover costs associated with increased enrollment and inflation.

The tight budget situation in Sacramento won’t mean fewer local law enforcement officers on the streets in Merced County, but officials say it will mean less state dollars for officers in their war against the methamphetamine epidemic.

K-12 EDUCATION: Nelson Heisey, the assistant superintendent of business services for the Merced County Office of Education, said local schools K-12 schools received basically flat funding compared to last year.

Statewide the K-12 budget is $58.1 billion, which is $1.4 billion more than last year, but $2.3 billion less than the projected workload budget, which includes the cost of last year’s programs, plus adjustments for inflation and enrollment.

Even though budgets didn’t increase, the final numbers are larger than those put forth by the governor in January. That’s when local school boards started putting their budgets together and since they were operating under the assumption that numbers were going to be even lower, “they will be able to survive,” Heisey said.

It will be hard for school districts with decreasing enrollment, Heisey said. Districts receive funding from the state based on their average daily attendance numbers. At the Dos Palos-Oro Loma Unified School District, their ADA decreased by 128 students this year. That means the district will be missing out on around $600,000 in funding it used to receive.

“What is happening with enrollment and the budget this year means we will have to tread softly with our spending,” said Superintendent Brian Walker at last week’s board meeting.Hilmar, Gustine, Delhi and Los Banos are all also seeing decreased enrollment, Walker said.

Overall, we think it is OK. It is not going to effect us right now,” said Scott Scambray, Merced Union High School District Superintendent.

The district planned for lean times and is going to be able to get by with what the budget seems to offer, but officials are worried about the possibility of midyear cuts. “The last thing we want to do is lose jobs, to lose educators, in the middle of the year,” Scambray said.

LAW ENFORCEMENT: Sheriff Mark Pazin said that under the state’s new budget, Cal-MMET funds (California Multi-Jurisdictional Methamphetamine Enforcement Team) will decrease 34 percent from the $29.5 million that was devoted to the program statewide last fiscal year, to $19.5 million this year.

That means the Merced County Sheriff’s Department will probably receive less than the $400,000 in Cal-MMET funds it GOT in 2007. Those funds go mainly towards the department’s Narcotics Enforcement Team.

The NET Team focuses on busting drug traffickers and those who produce illegal narcotics. The team was one of the agencies involved in the arrest of Jason West, a 36-year-old UC Merced Ph.D student who was arrested after Merced County sheriff’s investigators said he had stolen more than $10,000 in chemicals and equipment from UC Merced.

The dollars from Cal-METT now fund three full-time officers on the NET Team.

Although the decrease in Cal-MMET funds won’t mean the NET Team will disappear, Pazin said his department will have to “deal with it” and budget its dollars carefully. Pazin doesn’t expect the state budget woes to result in any personnel cuts..

“Are we going to survive? Sure. Could we use the extra $100,000? Yes,” Pazin said. “We’ve been very adroit in how we spend our money. We bought a lot of the vehicles and equipment already, so right now I am going to be more concerned with saving the positions.”

On the brighter side, Pazin said Governor Arnold Schwarzenegger exercised a line-item veto over language in the budget that would have made Cal-METT funds available only through a competitive bid process among Office of Emergency Services regions in the state.

Pazin said he and other county sheriffs were opposed to a bid process for Cal-METT funds because it would have created another stumbling block for the county to get those necessary funds. “The methamphetamine war in Merced and Stanislaus counties has literally been ground zero,” Pazin said. “The drug trafficking organizations are not only making this poison in Merced County. They are smuggling it in.”

Merced County reported 74 meth lab-related incidents in 2007, compared to 97 incidents this year.The sheriff’s department generally receives about $1.1 million from the state annually.

Merced Police Chief Russ Thomas said the new state budget “generally” won’t have an adverse impact on his department, and he doesn’t foresee cuts in any staff. “We budgeted pretty well during the process to account for what we thought might be some shortfalls,” Thomas said.

Still, Thomas said the optimistic projections assume that revenues will continue to come into city; otherwise city officials will have to look at the total city budget again. “I can’t tell you that we’re totally out of the woods, but for now at least, the police department’s budget is sufficient to continue operations at our current level of staffing,” Thomas said.

Pazin said his department will receive 10 percent less from the state in Ag Crime Task Force funds. They go toward investigations of metal thefts and other agricultural crimes. The sheriff’s department received $255,000 last fiscal year in Ag Crime Task Force funds. The county will receive $500,000 in small and rural county funds this year, a figure unchanged from last fiscal year. Small and rural county funds generally help support capital improvement projects and equipment purchases. The state dedicated $18.5 million in the latest budget for small and rural county funds, Pazin said.

Merced County will continue to receive the $77.77 daily reimbursement fee for each state prisoner held in the county’s jail system.

About $20,000 less in jail-booking fees from the state will come to Merced County under the new budget. The county received $220,000 in jail booking fees from the state last fiscal year, according to Merced County spokesperson Mark Hendrickson.

Stay tuned: there’s always next year’s budget.

The reporters for this story can be reached at: dgaines@mercedsun-star.com; sjason@mercedsun-star.com; vpatton@mercedsun-star.com

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