State budget deliberations raise local concern

BY ERIC LINDBERG
DAILY SOUND STAFF WRITER

Concerned about mutterings in Sacramento that state legislators may dip into local property taxes to help even out a $15.2 billion budget deficit, local leaders are making it clear that such a move is unacceptable.
“They've been balancing the budget at the state level by smoke and mirrors, by pulling rabbits out of hats, and by robbing Peter to pay Paul for 30 years,” said Santa Barbara City Councilmember Iya Falcone. “The chicken has come home to roost. They don't have any more tricks up their sleeves.”

Although voters passed local tax protections in 2004 and 2006, known as Propositions 1A and 42, a fiscal emergency provision allows the state to take up to 8 percent of local property taxes not dedicated to schools.
Such a move can only happen twice in any 10-year period, Santa Barbara City Finance Director Robert Peirson said, and the state must pay back the funds with interest in three years.
Should state leaders slice a chunk off the top of taxes that should be headed to local coffers, officials estimate the cost could reach upwards of $10 million across the County of Santa Barbara and approach $3 million in the city of Santa Barbara.
Peirson said the city has a variety of options to deal with such a loss, including taking another look at the budget and finding approximately $2 million in adjustments to the city’s general fund.
“On top of the $4 million we just adjusted, if we had to cut another $2 million out of the budget, it would be pretty devastating,” he said.
Mayor Marty Blum said she also has worries about cutting any more from city services, describing the city as very lean already.
The city could also write it off as a three-year loan with interest — using reserves to cover the gap and replenishing them once the state pays off the debt.
“We can dip into reserves,” Blum said, “but I don’t like spending our savings account on somebody else’s problem.”
In addition, Falcone said a recent court case declared that the court system can’t force the state legislature to appropriate money, meaning there is no guarantee the state will pay back any funds it borrows.
“They need to balance their own budget and stop looking to us as their piggy bank, their credit card,” she said.
One person seemingly in agreement with that assessment is Gov. Arnold Schwarzenegger, who has long opposed any attempt to use local revenues at the state level.
His press secretary, Aaron McLear, said the governor is opposed to short-term borrowing to balance the budget, including a suspension of Proposition 1A protections.
“The governor is working with [legislators] through negotiations right now, but they have not been talking about specific items,” McLear said. “That particular idea is not something he supports.”
David Mullinax, the regional spokesman for the League of California Cities, said extreme partisanship, a lack of leadership and the pending election are major trigger points for a larger inability to settle the state budget.
“It’s a gross understatement to say it’s dysfunctional up there,” he said.
During an election year, few legislators are willing to cross the aisle to compromise on issues, Mullinax said.
He described a situation in which Republicans are refusing any new taxes and Democrats are opposed to making cuts to any services, leading to a stalemate.
“There’s just a huge leadership vacuum up there,” he said. “…It’s almost like the state is burning and they’re up there fiddling around.”
Assemblymember Pedro Nava, while agreeing that the state budget process is “particularly tortured” due to the requirement that two-thirds of the legislature approve any budget proposal, said he wants to emphasize a singular message.
“We are all in this together,” he said. “The city, the county, the state of California — we all have responsibilities to balance our budgets and at the same time provide services to those who need them.
“I want to make sure this doesn’t turn into an ‘us versus them’ conversation,” he said.
In an effort to add perspective, he described how during the past three budget cycles the sate has cut more than $12 billion cumulatively. Just $500 million in cuts translates into 100,000 children who won’t have money for special education, he said.
“Some of those children are going to live in the city of Santa Barbara,” Nava said. “It affects all of us in a very real way.”
Even with a $15 billion shortfall and a Democratic proposal that requires raising revenues in the amount of $8 billion, Nava said there has been no conversation about going after local property tax revenues.
“That doesn’t mean there hasn’t been a rumor that has been floated,” he said, adding that he isn’t suggesting concern at the local level is unwarranted.
Nonetheless, Nava made a point to note the Democratic budget process is open, with an actual document and actual figures.
“Republicans don’t do that,” he said. “There is no Republican budget. I would ask the cities and the counties who want to see progress and want to see [Proposition] 1A honored to ask the Republican legislators, where is your budget?”
Falcone, who sits on the board of directors for the League of California Cities, said local leaders aren’t taking any chances and will be holding a series of press conferences across the state to protest any use of local tax revenues to shore up the state budget.
She plans to bring a resolution before the City Council in opposition to the concept as well. The city has already sent a letter to state leaders expressing displeasure with the idea.
“We’re sick of it,” Peirson said. “We’re sick of them not solving their problem and then patching it over by borrowing more money.”