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State threatens takeaways, but local governments are fighting back

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While the state is looking to balance its budget on their backs, local officials are working to make sure it doesn’t happen again. City mayors, county supervisors, and representatives for local schools participated in a recent summit aimed at shifting more fiscal control from the state to local governments.

John Shoals, mayor for the city of Grover Beach, called the meeting between cities, counties, and schools “historic,” saying the local governments needed to take back control of local funds such property taxes, which are currently collected by the state, and take legislative action to make sure the state balances its own budget, without relying on local funds.

“We can’t keep having these fights every year,” Shoals said. “We balance our budgets and it’s hard enough with this economy …  the state needs to do their job and come up with a budget without using accounting tricks …”

One of the budget tricks Shoals referred to was the shifting payday. Instead of paying state workers at the end of June in 2010, the state is going to pay them July 1, 2010, which is the start of the following fiscal year. The state also plans to borrow local funds from three areas: community redevelopment agency funds (more than $1.6 billion statewide over the next two years), gas taxes, which are earmarked for streets and roads, and through a Proposition 1A loan, a process that voters approved in 2004 to discourage the state government from “borrowing” when money was tight.

The state eventually abandoned the plan to take away local gas taxes after the League of California Cities threatened to sue. But the rest of the cuts are still on the table. San Luis Obispo city officials are planning to fork over $1.2 million as a loan, concurrent with Proposition 1A guidelines, but they consider themselves lucky. SLO City Councilman Andrew Carter said the city is still in a relatively good financial position after closing an $11 million budget gap this year. City officials plan to use reserve funds to cover the loss, and pray the state pays the loan back.

Cities such as Grover Beach are facing a harder adjustment. Shoals said he didn’t know exactly how much the state was planning to withhold, but said before the gas tax idea was axed, Grover Beach was looking at handing over 10 percent of its total general funds.

“We’re simply fed up,” Carter said. “And this has been going on for years.”

The summit attendees discussed several ways to solve the issue, and their conclusion was to drastically overhaul the budget process, maybe even re-write the California Constitution to add protection for local governments. The next step, according to Shoals, is to hold a series of local meetings, get people informed and then start collecting signatures.

“We need to seize this moment, capitalize on this opportunity and get a grassroots movement going,” Shoals said.

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