State tactic fires up Modesto mayor, other area officials

Modesto, Ceres and other cities say local governments can't lose more revenue to fix the state's fiscal mess and can't afford more state legislation that imposes costs on the cities.

On Tuesday, the Modesto and Ceres city councils could pass resolutions declaring their cities are undergoing severe fiscal hardship.

Although the resolutions have no legal bearing, city officials hope it will send a loud message to Gov. Schwarzenegger and the Legislature.

According to the identical resolutions, the cities have experienced a severe fiscal hardship because of the state's seizure of property tax funds since the early 1990s and because of lawmaking that passes more costs to the cities.

The League of California Cities drafted the model resolutions in response to a state Department of Finance proposal this month to borrow slightly more than $2 billion in local government property tax revenue as the state deals with a $21.3 billion deficit for its budget year that starts July 1.

About 100 cities in California have passed the resolutions, including Oakdale, Sonora, Merced and Stockton, and sent copies to state leaders. The state Finance Department included the borrowing option in the May budget revision prepared for the governor; the money would be repaid with interest in three years.

Ceres City Manager Brad Kilger called the borrowing proposal irresponsible in his staff report for Tuesday's council meeting.

The temporary loss of funds would decimate public safety and other essential community services, he wrote, while the state would "dig itself a deeper hole from which it is less likely to recover."

The proposal would siphon off 8 percent of the property tax revenue that goes to cities, counties and special districts; it's not clear whether all the agencies would give up an equal percentage.

Modesto believes it would give up $3.5 million, adding to a budget shortfall that has resulted in $8.9 million in proposed cuts for 2009-10 budget, Mayor Jim Ridenour said.

The mayor already is recommending painful measures, from closing restrooms in city parks to getting $5.8 million in concessions from labor groups. Officials believe that losing the property tax revenue would lead to Police and Fire department layoffs.

"The bottom line is they have got to quit borrowing money," Ridenour said. "They have got to start living within their revenue."

Given the conditions in the credit markets, cities are afraid they will be unable to borrow against the state's promise to repay the money. State legislation is being considered to allow local agencies to borrow through a joint powers authority.

The resolutions can't stop the state from tapping property taxes or other revenue streams. But officials in Sacramento can expect to hear an outcry from cities during the budget deliberations.

Assemblyman Tom Berryhill, R-Modesto, said he agrees with the local officials.

"I think it would be a huge mistake for the state to be borrowing money that it doesn't have," he said Friday. "It's a pretty clear message that taxpayers of our state sent on Tuesday. They don't want any more taxes; they want cuts to spending and don't want more gimmicks and borrowing."

The Modesto City Council meets at 5:30 p.m. Tuesday in the basement chamber of Tenth Street Place, 1010 10th St. The Ceres City Council meets at 7 p.m. Tuesday in the council chambers at 2210 Magnolia St.

Bee staff writer Ken Carlson can be reached at or 578-2321.