With a flourish of the gubernatorial pen, the 2008 California budget crisis came to an end Tuesday – but on the local level, it may be just beginning.
The approved $143 billion budget addresses a $15.2 billion shortfall partly by taking $350 million from city and county redevelopment funds – money which would otherwise help stimulate local economies in a variety of ways, including business loans and infrastructure grants.
In Sonoma, that amounts to $396,000 for fiscal 2008-09, Sonoma City Manager Linda Kelly said Tuesday afternoon.
“I’m concerned that with the issues that are happening now in the financial markets, that more business owners may wish to turn to the Community Development Agency for commercial rehabilitation loans since we offer very favorable loan terms,” Kelly said. “We wouldn’t have the capacity to expand our program to meet such a need.”
Since 1991, the state has taken $5.1 million from Sonoma to deal with various calamities. This year’s redevelopment budget includes estimated revenues of $5.3 million, Kelly said.
“The property tax increment is being generated locally in the redevelopment zone, yet it’s being taken from our locality without our consent to assist in the state’s crisis,” Kelly said.
The California Redevelopment Association, which is considering a lawsuit in wake of Tuesday’s budget adoption, is estimating that Sonoma County will lose $458,688 divided among its Roseland, Russian River and Springs redevelopment districts. The latter is estimated to give up $180,000 of a roughly $2.25 million overall budget.
Boris Sztorch, who manages the Sonoma County Community Redevelopment Agency, said Tuesday that the funds taken from redevelopment won’t affect the long-awaited installation of sidewalks and other improvements throughout the Springs area – for which an Oct. 20 groundbreaking is still scheduled.
“The legislature and the governor see all these redevelopment funds sitting there – they figure, ‘Well, (the agencies) must not be spending them,’” Sztorch said. “In our case, the reason that money was sitting around is we were waiting for Caltrans to approve the plans.”
However, Sztorch said, the effect of the budget approval will be seen in other ways.
“That will definitely affect to some degree the amount of revenue that we can show, our financial strength as a redevelopment project, when we issue bonds,” he said. “That will be in a disclosure statement when it goes out to investors.”
The fact that California lawmakers are projecting further deficits and problems doesn’t raise much optimism, though.
“This is supposed to be a one-year takeaway, but many fear that … this could turn into a multi-year situation,” Sztorch said.
Kelly agreed.
“It’s something that cities have learned to live with,” she said. “That’s why we are conservative in our budgeting – because we never know when the state will turn to us in times of need, when they haven’t been able to make their own ends meet.”
The budget impact on the hospital and school district
The impact on the Sonoma Valley Unified School District will become more clear over the next few days and weeks, said Assistant Superintendent Justin Frese in an e-mail communication sent immediately after the news that the budget had been signed. “It is difficult to know exactly what the budget will mean to education,” he wrote. “We do know that the budget did include authorization for the governor to make mid-year budget cuts if needed, but the details of how and what are still unclear.” He said there would be a conference in Sacramento on Monday, Sept. 29, which district staff will attend “to try and get answers to these questions.”
As for the Sonoma Valley Hospital, the immediate response to the news, from Chief Financial Officer Jim McSweeney, was “Thank God!” With the budget finally signed, the hospital will get $364,000 in back Medi-Cal payments, and another $100,000 in October, McSweeney said. The news does not mean smooth sailing into the future, however. “We’re already assuming a 10 percent cut in Medi-Cal payments over this year,” he said, indicating that the whole drama could begin again next July. But for now, he said, the news is good. “We’re happy till the other shoe drops.”
Sun staff writer Bonnie Durrance contributed to this article.
