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August 5, 2009 > Hayward protests State appropriations

Hayward protests State appropriations

By Simon Wong

Hayward City Council voted unanimously (7-0) on July 21 for an emergency resolution, introduced by City Manager Greg Jones, opposing the potential loss of local-government funds to balance the State budget.

Sacramento legislators agreed a budget plan on July 24 to appropriate approximately $4 billion of local revenues from cities throughout the State to close California's $24 billion budget gap - $2 billion in Proposition 1A loans from property taxes, which must be repaid within three years, and $1.7 billion from redevelopment agencies.

Following the failure of Propositions 1A and 1B in the May 19 Special Election, Sacramento will "borrow" $3.6M (8%) of the City's property tax revenues in FY2009-10 to help balance the State budget. The State has up to three years to repay this amount with interest; in the meantime, the City will have a funding shortfall. The Council formally opposed this action on May 26.

The State's budget plan means the City's Redevelopment Agency (RDA) will see a take-away of $1.46M per annum for three years.

The City of Hayward, like all other cities and counties, wishes to avoid further reductions in staff, greater strains on public-safety staffing levels and deeper cuts to essential public services despite having already implemented expenditure reductions, furloughs and layoffs to adopt a fiscally responsible 2009-10 budget on June 16.

The passage of Measure A (utility users tax or UUT) in the May 19 Special Election is expected to generate $10M this fiscal year but this sum, along with other revenues, has already been taken into account to help narrow a projected FY 2009-10 funding gap of $12.6M to $2.2M.

"The State has taken about $6M a year of local government property tax revenue since 1992. It's important that all Council members contact State Senator Ellen Corbett and Assemblywoman Mary Hayashi to let them know how we feel. The message is simple; we should ask them to vote against the loss of City revenues," said Mayor Mike Sweeney ahead of the State Assembly's solution to the State budget crisis.

Appropriations arising from the State budget plan are in addition to the $6M to which the Mayor refers.

"We've taken aggressive actions against State takes. One distinguishing factor of our UUT is that the State can't touch that revenue, unlike most of our other revenues. This was made clear in information provided about Measure A and is why Measure A is so important to us here locally," says City Manager Greg Jones.

"The property tax take is a borrowing that must be repaid by the State within three years. We're looking at how best to manage that cash flow issue and will present our recommendations to the City Council in September. There are a number of options. Our commitment to the community remains the same, viz. to do everything possible to maintain current service levels despite what is going on either in Sacramento or in the overall economy. We're doing that and will continue to strive for that.

"An example of this is the pursuit of outside funding, such as the recent monies for police officer staffing through the Federal COPS office; our successful grant application [for just over $4M] will fund nine police officers for three or four years. We continue to seek outside dollars to augment our local revenues so we can maintain, or even enhance, local services for our community," concluded Jones.

The State must wait 90 days after budget implementation before taking monies from local jurisdictions.

Los Angles and Alameda County boards of supervisors have approved plans to sue the State over the proposed losses to RDAs. The California Redevelopment Association, an advocacy group in Sacramento, successfully challenged a similar proposal last Fall and is litigating against the State's latest plan. The City of Hayward supports this action.

The matter will be brought back to Council in September by which time the status of litigation should also be clearer.

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