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City ponders further budget cuts

Council vows balanced budget even with threat of state seizing tax revenue

Posted: May 20, 2009 9:22 p.m.
Updated: May 21, 2009 4:55 a.m.

It came as no surprise to Santa Clarita officials that all but one of the propositions on Tuesday’s special-election ballot failed. The results have apparently only solidified the city’s need to cut its own budget even further.

With the failure of propositions 1A through 1E, the state may borrow $2 billion in property-tax revenue from cities and counties across California. Santa Clarita stands to lose $3 million of its $11 million in annual revenue.

“Based on past practice where the state muddles along, I think it’s at this point very likely,” City Treasurer Darren Hernandez said of the proposal by the state Department of Finance. “This is simply a Band-Aid when they have massive injuries.”

Hernandez expects the City Council to receive an update on the 2009-10 fiscal year budget during its June 9 meeting.

In the meantime, he and city spokeswoman Gail Ortiz said Santa Clarita officials are poring over the budget, seeing where cuts can be made.

City officials still expect to introduce a balanced budget and have it signed into effect for the July 1 start of the fiscal year.

If Gov. Arnold Schwarzenegger 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.

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.

The proposal has met with staunch opposition from the League of California Cities, which represents 480 cities across the state.

Borrowing the revenue dollars would “hardly put a dent” in the state’s problems, Hernandez said, but it would affect local budgets.

Los Angeles County also stands to take a hit as a result of the state’s budget mess, Tony Bell, spokesman for county Supervisor Michael D. Antonovich, said last week.

“We provide all the social services that the state mandates us to provide,” he said.

He said the tax revenue-borrowing proposal would pose a threat to public safety and municipal services including parks and libraries.



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