Fwd: [BATN] Arnold declares tooth fairy will backfill VLF

Joseph S. Barrera III joe at barrera.org
Thu Dec 18 11:13:45 PST 2003

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-------- Original Message --------
Subject: 	[BATN] Arnold declares tooth fairy will backfill VLF
Date: 	Thu, 18 Dec 2003 09:23:43 -0800
From: 	12/18 SF Chronicle <batn at yahoogroups.com>
Reply-To: 	BATN-owner at yahoogroups.com
To: 	batn at yahoogroups.com

Published Thursday, December 18, 2003, in the San Francisco Chronicle

State to make up lost vehicle fees
Governor to declare emergency, pay counties, cities

By Lynda Gledhill, Mark Martin and Ryan Kim

Sacramento -- Gov. Arnold Schwarzenegger, under mounting pressure from
local governments, will declare a public safety emergency today and
order the state controller to pay cities and counties money they
started losing after his decision to reduce the fee for vehicle
licenses, administration sources said Wednesday.

Schwarzenegger's move is an end-run around the Democrat-controlled
Legislature, which has so far balked at the governor's demands that it
appropriate money for local governments. Democrats said all the money
in the budget is already spoken for and that it would be irresponsible
to spend money without knowing where it would come from.

"The governor tried to get the Legislature to take up this issue. The
longer this went on, the more concern there was for public health and
safety," said an administration source, who spoke on condition of

The governor's move will create a $2.6 billion hole in the state
budget, most of which will have to be made up through spending cuts,
because Schwarzenegger has said he does not want to raise taxes.

[BATN: This is on top of the $4.2 billion hole created by
Schwarzenegger's unilateral cut in the vehicle licence fee.]

Several local governments had said they would be forced to close fire
stations or reduce police hours if they did not receive payments.

"Obviously I'm happy the governor has taken action," said Berkeley
Mayor Tom Bates. "I hope it's not an empty promise. I wish he would
identify how we'll get the money, but we'll take it."

Berkeley's City Council considered but ultimately rejected a plan to
eliminate one of two truck companies Tuesday night after impassioned
protests by local firefighters, who argued that it would put lives at

Cities and counties saw their first reduced car fee payments on Dec
10. Under Schwarzenegger's order, local governments will receive their
full $40 million payment on Dec. 26.

State Controller Steve Westly, who writes the state's checks and
manages its cash flow, said he will go along with the governor's

"Our police officers and firefighters must not be held hostage,"
Westly said in a statement Wednesday night. "This is an appropriate
but temporary solution. The governor and Legislature now have six
months to cut waste and solve California's fiscal crisis."

Schwarzenegger campaigned on a pledge to slash the vehicle fee and
also promised that local governments, which rely on the revenue it
brings in, would not be harmed. He repealed the fee increase on his
first day in office, but finding the money to keep cities and counties
whole proved to be more difficult.

Some Democrat lawmakers had said they wanted to see Schwarzenegger's
complete budget proposal in early January before making any decisions
on the plan to compensate cities and counties.

"He's digging the hole deeper without any assurance the money will be
there," said Assemblyman Joe Canciamilla, D-Pittsburg.

Local officials, who this week have been preparing to sue the state
over the missing money, reacted favorably to Schwarzenegger's move.

"This is really crunch time for a lot of cities, so if this can get
the job done, we're in support of it," said Dwight Stenbakken, a
lobbyist for the League of California Cities.

Stenbakken said the lawsuit, expected to be filed in early January,
"might not be needed" if money flows to cities and counties.

As part of its plan, the Schwarzenegger administration also will take
advantage of new powers granted during this year's budget act to allow
the governor to make cuts without legislative approval. Donna Arduin,
the director of finance, will make $150 million in cuts by eliminating
up to 5 percent of any line item in the state budget to fund what is
called an "emergency deficiency," administration sources said. Those
cuts will come from programs Schwarzenegger has already put on the
chopping block.

Lawmakers have until March 1 to approve the deficiency, according to
the law. It's unclear what would happen if they reject it.

Lawmakers also will have to find ways to make up the $2.6 billion in
payments to cities and counties. The administration source said about
$1 billion in unexpected revenue will help, but the governor also
wants lawmakers to approve $1.9 billion in mid-year spending cuts.

Democrats in the Legislature have decried the proposed cuts, which are
aimed primarily at social programs, including payments to doctors who
care for the poor and recreational programs for the developmentally

The difficult part will be convincing enough lawmakers to go along
with the governor's proposed cuts, Canciamilla said. He called the
cuts, which also include capping enrollment in children's health
insurance programs and ending home-care programs for the elderly,
"hurtful" and "damaging."

"This really puts the onus on the governor to come up something we can
agree on," Canciamilla said.

While previous estimates of how much the state would owe local
governments ranged as high as $4 billion, administration officials
said their estimate now is $2.6 billion, based on the number of people
buying cars.

Bay Area counties and cities started unveiling plans this week to
close fire houses, lay off city workers, curtail all kinds of city
services and take legal action unless the state comes up with money to
replace the lost revenue.

>From Sonoma County to Santa Cruz, government officials started making
torturous decisions, choosing to spare some programs while targeting

"I'm getting ready to put the keys to City Hall in a box and give it
to (Schwarzenegger)," said Pacifica's City Manager Joseph Tanner. "Not
having the (vehicle license fee) will devastate the city."

In Tanner's town, officials say they would be forced to shut down the
city's Parks, Beaches and Recreation Department by February if they
don't get the $1.7 million lost car fee revenue.

In addition, one of the city's two fire stations would be closed and
nine firefighters would be laid off.

In Fremont, the city has started to close one of its 10 fire stations
on a rotating basis to save $400,000 a year. The usual response time
of 5 1/2- minutes is expected to increase by two to five minutes,
officials said. Fremont firefighters have been picketing outside
stations with signs reading, "This Fire Company Closed Due to Budget

San Francisco Mayor Willie Brown told his department heads to brace
for a $92 million hit if the state doesn't come up with an alternative
revenue source.

Without the full car fee revenues, more than 600 Alameda County
employees were expected to be handed pink slips over the next three
months. Some local elected officials suggested that Schwarzenegger's
action just delays painful choices.

"It doesn't change anything for me or for the people who are
administering services because we still don't have a resolution to the
fiscal situation," said Keith Carson, vice president of Alameda
County's Board of Supervisors. "How can anyone run a home when they
don't know month to month what our income will be?"
Bay Area counties plan for the worst

What local counties stand to lose in revenues if funds from the
rollback of the vehicle license fee are not restored and what steps
they have planned to take:

San Francisco: $92 million.

City departments have until Jan. 16 to come up with contingency plans,
which would have to be enacted by April.

Alameda County: $67.5 million.

The county planned to begin laying off about 670 employees over the
next three months.

Contra Costa County: $54 million.

The Board of Supervisors planned to discuss potential cuts in January
and have them in place in April.

Marin County: $14 million.

The Board of Supervisors will decide where to make cuts in February
and rely on reserves to cover any additional shortfall.

Napa County: $4.2 million.

County officials will meet in January to assess potential cuts in
Health and Human Services and the Sheriff's Department.

San Mateo County: $44 million.

The county was prepared to get by on reserves, but the Board of
Supervisors has scheduled a midyear budget meeting in January to
identify future cost-cutting measures.

Santa Clara County: $70 million.

County officials plan to use existing one-time funds to cover the
immediate shortfall and discuss cuts for the following fiscal year in
January and February.

Solano County: $30 million.

The county expects to have enough reserves to deal with the rollback
with only minimal cuts this fiscal year. A midyear budget review has
been moved up one month, to January, to identify possible future cuts.

Sonoma County: $13.3 million.

County officials will use reserves to cover shortfalls through the
remainder of the fiscal year and will begin making cuts in health and
human services after that.

Chronicle staff writers Demian Bulwa, Henry K. Lee, Rachel Gordon,
Maria Alicia Gaura and Pamela J. Podger contributed to this
report. E-mail the writers at lgledhill at sfchronicle.com
mmartin at sfchronicle.com and rkim at sfchronicle.com

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