Wednesday Jul 29 2009
City faces financial setback
By: Brandon Darnell, News Messenger Reporter
Lincoln’s embattled general fund is once again in danger as the new state budget and still-slacking property tax revenue could equal another $1 million hit. The state of California is looking to borrow $3.5 billion from city and county governments in an effort to close its $26.3 billion deficit. That’s according to City Manager Jim Estep, who said Tuesday that it is too soon to know exact details. As it currently stands, the state is preparing to take $675,000 to $700,000 in property taxes when the budget goes into effect, and there was an additional 9 percent loss in revenue over what was anticipated – an estimated 5 percent – which equals another $275,000. “There will be some cuts to services,” Estep said. “We don’t know to what extent.” In addition to the property-tax revenues the state plans to take, it is a virtual certainty that the state will also take $870,972 in redevelopment fees, according to City Councilman Kent Nakata. “That’s a huge number,” Estep said. Redevelopment funds are used to improve and construct areas within the city to bring in more business, which equates to more sales tax revenue, said Mayor Spencer Short. Another area the city is taking a hit is in gas tax revenue, which will likely be deferred at the state level – meaning California cities won’t see the funds until January at the earliest. The effect on services – there will be no road repairs until that money comes in. “We’re working to change that,” said City Councilman Tom Cosgrove. Earlier plans to simply take the gas taxes met stiff opposition from the California League of Cities, with approximately 180 cities threatening to sue the state if the funds were seized. According to Short, the city of Lincoln will determine whether to pursue legal action to prevent the deferment of those funds. “It’s already embarrassing because you can see the difference in the state highways and now our city streets are going to be just as bad,” Short said. In all, the city of Lincoln stands to lose an estimated $2.2 million. “By taking money from the cities, the state is taking money from public safety,” Short said. Even if the library and the Department of Parks and Recreation were eliminated, there would still need to be “deep cuts” into police and fire, Short said. There is no plan to eliminate those services, but Short gave them as examples because they are the two the city could theoretically eliminate. “Our goal is to minimize cuts into public safety,” Short said, adding that elimination of the library and the Department of Parks and Recreation is not a viable option. No action can or will be taken until the final budget analysis comes in, according to Nakata. “We’re waiting on the budget to be signed,” Nakata said Tuesday. On Tuesday night, Estep said the city was just starting to get the details. “It’s a short-term solution at best, because none of the long-term structural problems (of the state budget) have been addressed or solved,” said Lincoln resident Vic Freeman. Assemblyman Ted Gaines released a statement Friday that concurred with Freeman. “(The budget) doesn’t go nearly far enough to close our long-term budget problems,” Gaines wrote, adding that taking money from cities and counties “will only increase the ripple effect our poor financial decisions will have on the rest of the state.” Citizens in Lincoln weren’t happy to hear the news of the potential $2.2 million hit to the city’s finances. “The state ought to clean up their own house,” said Lincoln resident Chris Logan. “If anything, the state should probably subsidize the cities and counties a little bit.” Mike Hogan, a Lincoln resident who lives in the rural part of the city along the route trucks carry equipment to the Highway 65 bypass, is concerned about the possible state of the city’s roads. Along his street, Caltrans repairs the damage caused by the trucks, but he said the city’s roads will likely need repairs before January, 2010 – when the money is currently scheduled to be coming in. “It’s kind of the same all around,” Hogan said. Hogan said he would not call himself upset yet, but when the road conditions start to deteriorate, he won’t be happy. “I would like to have a message sent to those in the state,” said Gene Thorpe, a Realtor and Lincoln resident. “Don’t try to be right – do what’s right. People have got to quit infighting. This period of time is going to be tough. Everyone in America is going to have to rethink how we deal with our assets.” Short said that in borrowing money from the cities and counties, the state of California will bring many cities to the brink of budget insolvency, but he was quick to add that Lincoln will not need to declare bankruptcy even in the worst-case scenario of a loss of $2.2 million. “I find it a disturbing trend that the state continues to take money willy-nilly from cities and counties when we are experiencing significant reductions in funding that lead to drastic cuts in public safety,” Short said. Brandon Darnell can be reached by e-mail at email@example.com.