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Friday, February 10, 2012
Mayor: City may face more layoffs if state takes funds
by Kathleen Haley, published on July 21, 2009 at 8:38 PM
Storyline: How state budget affects city
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Mayor Kevin Johnson is worried that the state’s plans to take local revenues could lead to more layoffs of city workers and slow major development projects. County government officials are also alarmed about the state’s plan, which could be approved by the Legislature on Thursday.
Legislative officials and Gov. Arnold Schwarzenegger are planning to use local funds to help balance the state’s $26.3 billion budget gap. The Legislature may take $1 billion in gas tax funds and $1.7 billion in redevelopment funds from local governments throughout the state. The state plan also includes borrowing $2 billion in revenues from local property taxes.
Earlier this month, the city laid off 135 workers and made severe cuts to programs to balance its budget for the 2009/2010 fiscal year.
Johnson told reporters Tuesday that he is participating in efforts to lobby against the state proposals. “I’m making phone calls, and we’re lobbying like crazy,” he said. “I don’t know if there’s anything we can do at the end of the day, but we as a city need to be prepared.”
If the Legislature approves the plan to take money from local governments, the city would likely have to lay off more of its employees, according to Johnson.
“I’m a little bit in denial,” Johnson said, referring to the prospect of more layoffs.
Sacramento would be able to part with local property tax funds because the city can borrow from its risk funds, Johnson said. However, the city is concerned about the possible impacts from the state taking redevelopment and gas tax funds, he noted. Johnson said major development projects in Sacramento, such as The Railyards, Township 9 and Curtis Park Village, could be affected if the city is compelled to give redevelopment funds to the state.
The county could also face hardships if the Legislature approves the plan as part of the state budget. County spokesman Zeke Holst said redevelopment projects would have to wait if the state takes local redevelopment funds. If the state borrows from the county’s property taxes, county social services programs will suffer, he said.
If county gas tax funds are tapped into by the state, road maintenance in the county would be delayed, he said.
*Photo by Cheyenne Cary
Kathleen Haley is a staff reporter for The Sacramento Press.
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"Monday's proposal would allow redevelopment agencies to collect a portion of property taxes for decades longer than expected in exchange for giving a portion of that money to the state. The state would then use the money to pay back a loan aimed at helping balance the current budget.
"The state can go to Wall Street and say, `Here's this income stream for the next 30 years, what can we get for it?"' said state Sen. Bob Huff, R-Walnut. He said if enough redevelopment agencies participate - they must decide by Dec. 1 - the state could get a loan worth as much as $7 billion.
Redevelopment agencies collect property- tax revenue from properties in redevelopment areas. Specifically, they collect tax increment - the amount of property tax above the level of taxes collected before the agency was created.
Redevelopment agencies can collect tax increment for as long as 45 years in most cases. The plan would allow agencies to collect tax increments for up to 40 more years, officials said, with 10 percent of that money going to the state.
County officials said the proposal raises several concerns: the length of time tax increment is collected, the use of the money locally and the potential harm to county coffers.
"They capture that revenue for 40 years at the expense of counties and special districts," McIntosh said.
As long as redevelopment agencies - and the state - are collecting tax increment, that money isn't going to the counties and agencies that serve those areas, he said. "
Remeber-Tax increments can not pay for services-they can not go into a jurisdictions general fund-only Brick and motar improvements-Think about all of our redevelopment zones and the Tax Increments-NOT Property Taxes-they will generate-and extend that for 40 more years! How many more people are proposed to be living in these zones like the Railyards, Township 9, Central Business dist, the docks, and yet their property taxes-Tax Increments-won't be paying for the services they expect. Except for that property tax on the base value of the property, at the time the redevelopment zone was created.
So key questions are: Who is pushing this demolition so fast? mayor? mayor supporters? big local developers? foreign investors? corporate interests? Where are the guarantees that this demolition won't create and remain a hole in the ground for years to come? No mention of this!
With the state "borrowing"--more accurately TAKING-- from cities and counties property taxes, redevelopment tax increment and gas tax funds as fifthgen says, can and will the state guarantee a fast pay back? You "borrow" from the bank and you have some time limitations and amount obligations. Where does Arnold include that the state will pay back so much with interest every year until the debt is liquidated? No mention of this.
Based on these realities, the project sounds like a giant gamble with us the taxpayers being the losers again. A logical and reasonable mayor and council should say thanks but no thanks.
The Council must vote to join in the municipal lawsuit against the state...it needs to strongly stand up to this ponzi scheme...munis must fight back and we need to support em when they do.