Legislators in Sacramento emerged from their weeks long discussions of California's multi-billion dollar budget shortfall with a plan to close down a $26 billion budget gap through a series of financial maneuvers and a raid on funds designated for California's cities.
At their Tuesday night meeting, Town Manager Joe Calabrigo broached the news of the budget settlement to the members of the Town Council and explained that the plan coming out of Sacramento is going to put a serious dent into the town's budget over the next two years.
Calabrigo said among the impacts on local governments are the loss of $1.7 billion from Redevelopment funds, $2.1 billion in property tax borrowing and $1 billion in transfers from local gas taxes.
Some of that money reportedly will come back to the town. The property taxes being "borrowed" are being reapportioned as allowed under Prop 1A. The proposition allows for the takeaway as long as they are paid back with interest by 2012/13.
All told, Calabrigo said he is estimating that Danville will lose $3.13 million over the next two years. "That's 12 1/2% of this year's current operating budget," he stated.
Calabrigo and town staff will be examining the data they are getting from the state and the California League of Cities in determining how solid the number coming out of Sacramento are.
"By the beginning of September, once all the deal points have been finalized, staff will be back before the council with some options for your consideration for changes to be made to the current years financial plan," he said.
He added that the town has done a good job of setting up their funds to weather the ongoing financial chaos, but with the state's economy in disarray, he is not confident that the worst is past yet.
"I don't have reason to be optimistic as I sit here before you," he said, "that this will be the last time we have this conversation as we sit here at the start of the 2009-10 budget year."
Council members expressed outrage over the state takeaways. "It's extraordinary," said Mayor Newell Arnerich. "This self inflicted mess."
Councilman Mike Doyle, a member of the League of Cities said he was in Sacramento over the weekend to discuss the budget and from speaking with other city officials he said the budget plan announced will spell doom for some of them.
"When they get this news today, alot of them are going to go bankrupt," he said. "It's a sin to allow this to happen to this wonderful state."