If State Demands City Funds, City Will Have the Money

Schwarzenegger’s recent proposal to borrow $2 billion from local governments has angered cities and counties, including the city of Sacramento. The proposal aims to help the state cope with its budget deficit -- the latest number for the state’s deficit is $24.3 billion.

At first, Sacramento reacted to the state proposal with alarm. But Mayor Kevin Johnson’s recent comments indicate that the city’s fears have somewhat dissipated. The city has a way to pay up if the state asks to borrow its money.

The city can use up to $12 million in its “risk funds” to pay the state, Johnson said Friday. A May 22 report by city staffers explained that these funds “are reserved to cover city liability settlements over the life of a claimant.”

While the city’s fears have calmed a bit, city officials note they are still worried. Johnson said it would be a bad precedent for the state to borrow money from cities. He also said Friday that he was worried about the possibility of the state taking a long time to pay back the city of Sacramento.

“Sacramento can tap into our risk funds...but what concerns me more so is that when the state borrows money, they don’t have a good history of paying back the full amounts in a timely manner,” Johnson said.

The city is working to resolve its $50 million deficit.

County Budget On the Way

The county will release its proposed budget Friday, June 5, said county spokesman Zeke Holst. The proposed budget will tackle the county’s $180 million projected deficit.

Kathleen Haley is a staff reporter for The Sacramento Press. Send your tips about local politics to kathleen@sacramentopress.com.