The state's proposal to borrow from Prop. 1A transportation funds to help balance the state budget is raising hackles at the local level all across the state.
California Governor Arnold Schwarzenegger last week indicated that the state might have to borrow $2.5 billion from the state's Prop. 1A transportation funds, a sum that would have to be repaid within three years at a high interest rate.
The LA Times reported on July 18th:
SACRAMENTO -- Legislative leaders are drafting a complicated scheme to help close the state's massive deficit by raiding funds voters have set aside for transportation and local government services, Gov. Arnold Schwarzenegger said Thursday, adding that it probably would force a state sales tax hike.
"It is not a good idea," the governor said in an interview with The Times. But Schwarzenegger, anxious to get a budget passed before the state experiences a cash crisis, did not rule out signing off on such a plan.
During the half-hour interview in his office, the governor offered a broad outline of the proposal being discussed in closed-door budget negotiations. Schwarzenegger, who seemed exasperated by his inability to fix California's fiscal dysfunction five years into his governorship, cited the borrowing plans to bolster his point that the state's budget system was in need of reform.
The proposal is being considered as part of a possible compromise between Democrats seeking to close the deficit with $5.6 billion in income tax hikes on the rich and Republicans vowing to block any new taxes.
The legislative plan would balance the state budget with the help of $1.1 billion voters set aside for transportation projects and at least $1.4 billion earmarked for local governments under Proposition 1A, which was approved in 2004, Schwarzenegger said. State law requires that the money be paid back -- at a steep interest rate -- in three years.
In order to ensure that the money is repaid, "I literally would have to guarantee that with a sales tax or something," Schwarzenegger said. "Where [else] do we get the revenues that someone can be saying so freely we can pay back this $2.5 billion we are borrowing?"
Officials involved in the confidential budget negotiations, who agreed to speak on condition of anonymity, said lawmakers also were looking to borrow $200 million voters set aside for early childhood education programs through 1998's Proposition 10.
Local officials and advocates for the programs expressed alarm at the proposal to raid their funds. They accused legislative leaders of ignoring the will of voters, who approved the measures to prevent the state from touching the money in question.
All of this trickles on down to the municipal level. The city's website has an announcement from Claremont Mayor Ellen Taylor calling the state's threats to take local redevelopment and/or transportation funds "irresponsible":
If the state borrows or takes a portion of property taxes or transportation funds, it would force the City to reevaluate the entire City budget that was adopted last month. If the legislature enacts the provisions of Prop 1A, Claremont would lose more than $500,000 and force the City Council to take dramatic action, such as reducing services or tapping into reserves to bring our budget back in line. Like the state, Claremont faces similar challenges, including higher energy, labor and increased costs in supplies and services that are all vital to running a city. In the face of these challenges in our own revenues, Claremont still manages to live within its means and balance the City budget.
Like any statement by Taylor, that last sentence needs to be examined closely. Does Claremont really live within its means? Well, yes and no. If by "means" you include money not generated by Claremont but by grant applications to county, state, federal and private agencies, then yes. But if you include planning for economic downturns such as the one we're currently facing, the answer is a resounding no.
We suspect that $500,000 and more is lurking there in the present budget, irresponsibly tossed away to friends of the City Council and city commissions in a buddy system of financial commitments.
Let's face it, Claremonters, this city and the people running it spend your money (and money they don't even have) like drunken sailors. For instance, in October, 2007, the Claremont City Council voted to set aside $60,000 from the city's transient occupancy tax (TOT) that it collects from hotels and motels in town for each guest. That $60,000 was supposed to go towards homeless programs. Sounds like a worthy cause, but one problem was there were no agencies or programs asking for the money. The city had not identified any place to spend the money, but dedicated that tax revenue because some of the council's friends said the city should do that.
Or, consider the $50,000 the City Council voted to give to the Friends of the Claremont Library to establish a collection of works by Claremont authors. That $50,000 was a giveaway pushed by the Friends of the Claremont City Council, namely people like Claremont author and former mayor Judy Wright. It bought no additional hours of operation or staff to the library, only a special collection that should more properly be funded by private donations.
And, how about the $25,000 the city council voted to give to Marilee's Marsh, another boondoggle in the making. The marsh is the brainchild of the League of Women Voters of the Claremont Area and league member Marilee Scaff.
Between the TOT deal, library collection money, and marsh giveaways, there's $135,000, or 27% of the $500,000 Taylor cited. These are hardly things we could call needed services. And there's more, much more, trickling out from the city treasury to Taylor's friends.
And, getting back to Judy Wright for a second, what about Claremont Heritage, that non-profit local historical and preservation society for which Wright serves as president? In 2001 Claremont Heritage moved into the city-owned Garner House, which sits at 840 N. Indian Hill Blvd. in Claremont's Memorial Park. The city charges no rent to Claremont Heritage, which is allowed to act as the building's landlord, renting out space on the city's behalf to such organizations as (surprise!) the League of Women Voters of the Claremont Area, of which Ellen Taylor is a former president.Why not start charging a market rental rate to both organizations and get back some of the revenue they've selfishly stolen away from city coffers? In a private organization or business, this sort of cronyism would be criminal. In Claremont it's business as usual.
Taylor's message was also published as a letter in today's Claremont Courier under the title, "Cut the Government Credit Card." We heartily concur, beginning at home.
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