When California politicians wanted voters to agree to higher taxes, they said that services like police and fire departments would be cut. How would that happen, when those services are funded by city taxes? Here’s how: California Cities Irked by Borrowing Plan
California Gov. Arnold Schwarzenegger, in his efforts to find funds to balance the state budget, has proposed borrowing $2 billion from municipal governments over the next fiscal year, a tactic that is rankling local officials up and down the state.
Mr. Schwarzenegger is invoking a 2004 law that lets the state demand loans of 8% of property-tax revenue from cities, counties and special districts. Under the law, the state must repay the municipalities with interest within three years.
Administrators of already cash-strapped cities and counties said the loans would force even deeper cuts in services. Fewer cops and fire engines would be on the streets, they said, and parks and libraries would be closed more often. And some local governments would be forced to lay off workers to keep their budgets out of the red, they said.
It’s not a done deal yet:
The governor’s proposal of borrowing from local governments must still be approved by the legislature. If it does so, municipalities are worried the state won’t be able to repay the loans, given the state’s fiscal plight. “They’re hijacking our dollars,” said Don Knabe, chairman of Los Angeles County Board of Supervisors. “They don’t have money to pay us back. It’s a joke.”
Some counties are resisting:
City and county officials are lobbying the state to reconsider the proposal. Mr. McKenzie said the League of California Cities is considering filing a suit against the state. Mike Reagan, a supervisor for Solano County in Northern California, said officials in numerous counties are strategizing on how to stop the state from borrowing the funds.
Mr. Krauter of Kern County said local officials throughout the Golden State are sending a clear message to Sacramento: “State, you solve your problems. Let us solve ours.”
I’m irked by the fact that the whole country will be expected to solve Sacramento’s problems through the TARP bailout California will likely receive.