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Mayors blast cash grab

Responsible cities should not have to prop up the state's poor fiscal practices, mayors say

Posted: May 11, 2009 10:50 p.m.
Updated: May 12, 2009 4:55 a.m.

Gov. Arnold Schwarzenegger tried to drum up support Monday for the flagging propositions on May's special election ballot, but the 20 or so city officials who made up his audience were not real receptive to the message.

"There was a clear undertone of anger that the state mismanaged its fiscal policy," said Santa Clarita Mayor Frank Ferry. "Everyone in the state is angry at Sacramento."

Ferry was among the city officials invited to meet the governor Monday at the Culver City Senior Center.

Schwarzenegger focused on trying to rally support for the propositions during the meeting, Ferry said. He said the governor stressed that if people vote "no" on the propositions out of anger, there could be the unintended consequences of jobs and services lost.

Last week the state Department of Finance proposed borrowing 8 percent statewide from city, county and special district property tax revenues.

City leaders have decried the idea as a scare tactic to drum up support for the May 19 special election propositions.

Santa Clarita officials have been responsible in balancing their budgets, Ferry said, and the city should not have to prop up the state because of its poor fiscal practices.

"Many of these cities, including ours, when you take money away from us, local services are put at risk," he said.

Downey Mayor Mario Guerra echoed Ferry's concerns.

"I don't like scare tactics," he said. Municipalities that balance their budgets should not pick up the state's slack, he added.

Downey, like many other cities, has seen decreased sales tax revenue, he said.

Presently, Guerra's city is facing a $2 million to $3 million budget deficit in the 2009/10 fiscal year. If the state decides to follow through with the borrowing proposal, he said Downey's deficit will be closer to $6 million.

"I think (Schwarzenegger's) out of options," he said.

State can take money
If the governor accepts the Department of Finance's tax-borrowing proposal, and if the proposal is passed by the Legislature, cities would have little recourse but to hand over their tax revenue.

In Santa Clarita's case, the state could borrow about $3 million, City Treasurer Darren Hernandez said last week.

The city brings in about $11 million annually in property tax revenue.

City officials are "still playing around with a number of scenarios" to address the possible cash-grab, city spokeswoman Gail Ortiz said Monday.

As a provision of Proposition 1A - passed in 2004 by California voters - the state would be required to repay the money borrowed within three years with interest.

For the proposal to move forward, the governor must agree to it and issue a proclamation declaring a severe financial hardship.

Then the state Legislature would have to approve it with a two-thirds vote in each house.

Measures trailing in polls
Five of the six budget-related measures on the state's May 19 special election ballot are trailing, particularly among voters who say they're closely following election news, according to a Public Policy Institute of California poll released Thursday.

"The voters who are really tuned in are really turned off," said Mark Baldassare, president and chief executive officer of the San Francisco-based research organization. "They see the state's budget situation as a big problem, but so far they don't like the solution."

The six propositions, put on the ballot by Schwarzenegger and lawmakers, are an attempt to deal with the state's persistent budget deficits.

The centerpiece of the package, Proposition 1A, would impose new state spending restrictions and temporarily extend a series of tax increases adopted by the Legislature and signed by Schwarzenegger in February to help erase a $42 billion budget shortfall.

Proposition 1A was opposed by 52 percent of the 1,080 likely voters questioned by the PPIC in a telephone survey conducted from April 27 to May 4. Only 35 percent said they supported the measure.

Only Proposition 1F, which would bar state elected officials from getting pay raises in years in which the state runs a deficit, had support from most of the likely voters questioned.

Ferry said the failure of the propositions may be just what the state needs to start getting back on track.

"It's offensive that we're being asked to bail out a bad system," he said.

The Associated Press contributed to this report.


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