State Budget Woes Bring Concern to Coronado

Still smarting from the loss of $5.1 million in redevelopment funds and fearful that the state may once again come knocking, a number of elected officials are speaking out, saying the state should not be filling gaps in its own budget by "robbing" local coffers.

Based on figures released by the League of California Cities, the state redirected a total of $2.05 billion in redevelopment funds away from local governments in fiscal 2010 to help close its $19.1 billion budget deficit.

"We had long-term capital plans lasting for 20-plus years that we've been saving for, which the redevelopment funds were going to help us with," City Councilwoman Carrie Downey said.  The shifting of redevelopment funds to the state "absolutely slowed down some of those projects and removed others," she said.

The redevelopment money, according to local elected officials, is gone forever.

"That money is lost," City Manager Blair King said. "This is money which could have been used to address tax base issues or maybe parking on Orange Avenue. It could have been used to address vacant buildings that the community is concerned about."

Although sympathetic to the challenges before the Legislature, King feels the state needs to balance its budget without dipping into revenue streams of local municipalities.

"Just as the city has to balance our own budget, the Legislature and the state need to balance theirs," he said.  "We don't get to go out and add additional taxes and up business licensing fees to make up for money which is being taken away. The Legislature needs to show leadership in finding a better solution."

Mandating redevelopment funds from local municipalities was just one part of the state's budget deal last year. 

The plan also suspended California Proposition 1A. Passed in 2004, the proposition was intended to protect revenues collected from local governments from being transferred to the state. The suspension, which allowed for blanket borrowing of 8 percent in overall property tax revenue, meant Coronado was also forced to write an additional $1.6 million check–payable to Sacramento.

Unlike the $5.1 million in redevelopment funds, borrowed property tax revenue must be repaid with interest within three years, under the terms of the loan.

Coronado, however, sold the loan to an outside investor and, with the proceeds, "restored the city's $1.6 million so that we did not experience a net loss of these funds," Downey said.  

State Sen. Denise Moreno Ducheney (D-San Diego) pointed out that the city isn't losing any money due to the shift in redevelopment funds because the money stayed local.

"It never leaves the county of origin," she said. "What it's doing is paying for schools instead of streets."

Downey, however, noted that the Coronado Unified School District had to dip into its reserve this year to cover costs.

"I haven't seen any success in the supposed shifting of money," said Downey. "We had to cut the school year by over a week to try to balance its budget. We've managed to not lay off any teachers, but we're at the maximum capacity for students. Coronado has the highest academic performance index scores in the state, which is still impressive considering we do this with less and less money every year."

State Assemblyman Nathan Fletcher (R-San Diego) feels borrowing money from municipalities needs to stop, but is unsure if the practice will continue due to the state still being without a budget for the upcoming fiscal year.

"The state needs to balance its budget and you don't do that by taking money from local governments," Fletcher said. "[The State Assembly] has consistently opposed any efforts to take money from local governments by Sacramento, but in terms of the upcoming budget cycle, I don't know what's going to happen next."

Downey is hopeful voters will pass Proposition 22, the November ballot initiative that would prevent the state from taking funds from local governments.

But for now, without legal protection for the city's revenue stream, elected officials think that trying to predict what the state will do is a "foolish game," King said.

"We're just trying to make prudent decisions," King said.  "We're all Californians and we're all in this together, but suddenly the rules have changed and revenue has been reduced or altered. We just want to know what revenues are available to local government cities."