State wants $4.8 million from city

Modesto officials Friday got their first look at what the newly passed state budget is going to mean for the city. They weren't surprised by the bad news they got:

The state is taking $2.8 million of the city's property taxes, but promises to repay it by 2013. It is requiring Modesto to pay $2 million in redevelopment funds, money city officials say they don't have.

City Manager Greg Nyhoff told the City Council's finance committee at a special meeting Friday that the news could have been worse. The state didn't touch highway users tax money, which pays for road work.

Nyhoff said city staff recommends the city shuffle money from other funds, such as employee benefits and workers compensation, to make up for the $2.8 million shortfall. It's considered a loan to the state, so the city can basically put IOUs in those accounts until the money is returned in 2013.

More problematic is the $2 million from Modesto's redevelopment agency, which must be paid to the state and won't be repaid. The city has about $1.4 million, but $1 million is part of a contract the city has signed to acquire the former FMC factory property at Kansas Avenue and Graphics Drive and turn it into a business park.

"We're going to be short this year, no matter how you slice it," Councilman Brad Hawn said.

Officials said residents should not feel any effects from shuffling the $2.8 million but that it's too soon to say about the $1.4 million in redevelopment funds.

Redevelopment money goes toward projects aimed at improving property and encouraging business. With so many "for lease" signs around the city, the state has picked the worst time to take those funds, Nyhoff said.

The League of California Cities is taking the state to court over its plan to take redevelopment money, but it's not clear how long that will take.

Nyhoff said city staff hadn't had time to determine what options might be available and that they would look into the matter. The payment to the state is due in May.

The finance committee passed on a recommendation to the City Council that it accept the $4.47 million Community Oriented Policing Services grant. The money will be used to rehire the eight officers the city laid off in June and five more officers. The eight officers will return to work Tuesday, acting Police Chief Mike Harden said.

The grant funds the officers for three years; the city will have to pick up the tab, about $1.4 million, in the fourth year. To get the grant the city had to show it could keep paying the salaries for a year after the grant runs out.

Harden said finding five more officers would take some time, but he expects many applicants given the number of layoffs cities and counties have made this year.

"I think the talent pool would be very deep," he said.

Bee city editor Patty Guerra can be reached at or 578-2343.

Related stories from Merced Sun-Star