The governor signed the budget Tuesday. The bad news hit home Wednesday as officials calculated just what the state’s raid on local funds – a total of $2.14 million – will mean to city plans and services. “The hit to Sonoma was harder than we thought,” Mayor Ken Brown said. “It’s an astonishing amount of money.”
The cuts came in two categories. First, the state will borrow $239,000 from the city’s general fund. It will pay Sonoma back, with interest, within three years. The figure represents 8 percent of Sonoma’s property tax revenue.
Brown stressed that core services, including police, fire, public works and all city offices, will be maintained at current levels.
The second, more troubling hit is a $1.9 million raid on the city’s redevelopment funds, which total $4.5 million. It is not a loan, and must be paid to the state by May 10 of next year. The city will be able to make its bond payments, said City Manager Linda Kelley, but supporting all current programs, let alone making new investments, will be problematic.
“We’re going to look very closely at line items and where we can pare down,” Kelly told a city hall briefing on Wednesday. “We’ll put the agency on auto-pilot and not fund any new projects.”
The city, awaiting the final numbers of the expected state raids, has been operating under an interim budget that already forecast a deficit. Kelly will retool the numbers and prepare a budget for city council review next month. Borrowing from the city’s own emergency reserves to balance the budget is an option, she said.
“It’s a one-two punch,” Kelly said. “We’re dealing with declining revenues and the state looks to us to help solve its budget.”
Projects endangered by the loss of redevelopment money include loans for business upgrades, façade and structural improvement, energy and solar programs and even graffiti abatement.
Brown said the city council had planned to look at using redevelopment dollars to support the Sonoma Community Center, the library, the Blue Wing Inn, the homeless shelter and other community grants. “The list goes on and on,” said Brown. Regardless of merit, support of all of those initiatives after a 42-percent budget cut seems untenable. “The council will have some difficult decisions,” Brown said.
The cut in redevelopment spending could have long-term effects. Less local investment can mean fewer jobs and fewer job-related purchases, compounding the city’s revenue woes. “Redevelopment investments are an economic stimulus tool, a job generator,” said Amy O’Gorman, regional public affairs director for the League of California Cities (LCC). “Cutting them may jeopardize a recovery.”
The LCC, which lobbies on behalf of Sonoma in Sacramento, will challenge the state’s taking of redevelopment funds in court. “We’re prepared to challenge it as an illegal raid,” she told The Sun on Tuesday. “It’s unconstitutional.”
Last year, a similar maneuver by the state was indeed ruled illegal. But a year of tweaking the fine print, and Tuesday’s bold statewide grab of $1.7 billion suggests government attorneys may have found a loophole.
As for the $239,000 “loan,” O’Gorman said the LCC is pushing for “clean-up language” that will allow cities to borrow against the state’s promise to repay. Even if allowed, such a loan could be impractical; given the state’s poor credit rating, the interest rate would be high.
Brown said the state’s actions were particularly unfair for a city that has been financially prudent and responsible. “It’s unacceptable for the state to balance its budget on the backs of local government,” he said. “Our citizens deserve better.”
Kelley also noted the $14 million cut to the state parks budget, which will likely force the closure of 100 facilities. “If our parks close, it will have a ripple effect on the transient occupancy tax,” she said.
O’Gorman said the LCC is “looking at continued shortfalls” and is already projecting a $7-8 billion deficit for the state’s next fiscal year. There must be significant reforms, she stated, so the state balances its own budget using its own revenues.
“The governor called it a budget solution,” Kelley said, “but it does not solve the systemic problems.”
