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Update: State board cuts November money to Merced, Los Banos, Livingston and Chowchilla

More bad financial news for four cities in Merced and Madera counties.

There’ll be a cut in local allocations they may have expected for November advances.

Included are Merced, Livingston, Los Banos and Chowchilla.

The California State Board of Equalization (BoE) said Monday that 535 letters were sent to local finance directors explaining that declining state sales tax revenues have caused a reduction in expected local allocations for their November advances.

In addition, 19 jurisdictions received letters notifying them they’ll get no November advance.

Four county jurisdictions found out they’ll be getting less than they thought. The city of Merced will suffer a 6 percent cut of $93,114 for a total adjusted amount in the third quarter of $527,600. Los Banos’ cut will also be 6 percent, $30, 234, for a total adjusted amount of $171,300. Chowchilla’s cut will be 10 percent, or $17,680, for a total adjusted amount of $53,000. Livingston will lose out on $20,450, also 10 percent.

Calls for comment from the mayors of Merced, Livingston and Los Banos weren’t returned.

The cuts are a continuation of an issue that developed this year with the unprecedented drop-off in taxable sales from the recession, the BoE said in a statement. Payments to the local taxing jurisdictions are based in part on prior taxable sales patterns that don’t apply in the current economic climate.

Similar letters were sent to 337 jurisdictions in August and 473 jurisdictions in May, the agency said.

Payments to local governments for the third quarter of 2009 were reduced by 11.5 percent, based on an estimate provided by the Department of Finance. An analysis of actual cash receipts from the third quarter of 2009 showed an overall decline of 14.9 percent, taking into account the newly imposed 1 percent sales tax increase going directly to the state. To account for the further decline, an additional adjustment of minus 6 percent was applied to jurisdictions that saw a decline in revenues greater than 17.5 percent.

BoE makes monthly allocations to 768 local jurisdictions based on a formula that includes historical allocations, growth factor adjustments to the base, transfers and audits, and actual cash receipts. Erosion in the expected cash receipts led to the downward monthly adjustments to the allocations for November 2009, its statement continued.

Not all local jurisdictions received a November 2009 allocation with an additional reduction, although more than two-thirds of the 768 total jurisdictions did. This is more than received additional reductions in August and in May, but BoE said it anticipates similar adjustments will occur to fourth quarter 2009 and first quarter 2010 advances as well.

In addition to the monthly allocation adjustments in November, August and May, similar adjustments were made in February based on fourth quarter 2008 information. Before 2009, broad scale reductions statewide hadn’t occurred.

The five-member California State Board of Equalization is a publicly elected tax board. For more information on other taxes and fees in California, visit www.taxes.ca.gov

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