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Tuesday, July 21, 2009

Impact of State's budget deal quickly reaches San Leandro

CITY BRIEFLY DISCUSSES DECLARING FISCAL STATE OF EMERGENCY

By Steven Tavares
The Citizen
Sacramento's decision to bridge a $26 billion shortfall on the backs of already struggling municipalities is already causing a tsunami of financial upheaval a day after Gov. Arnold Schwarzenegger and the state Legislature called for a short term loan from cities of over $4 billion.

"My worst fears have been realized," said San Leandro Mayor Tony Santos.

According to Santos the city will lose up to $1.2 million in gas tax funds used largely for the upkeep of roads, up to $3.5 million in money for redevelopment and a portion of San Leandro's property taxes. According to the tentative budget plan, the transfer of funds will be viewed as a short term loan to be repaid when the health of the state economy improves

"Local governments unfortunately have to be partners in pain," said Assembly Speaker Karen Bass, who was part of the so-called Big Five who negotiated the budget deal, "There is no way to close a $26 billion deficit through cuts alone."

The San Leandro City Council recently approved in June a fiscal budget balanced primarily with reserves largely unavailable past this year. "We may need to make Draconian cuts to our budget and it has nothing to do with the city," said Santos, "It's the state."

During a scheduled finance meeting Tuesday morning, committee members floated the idea of declaring a fiscal state of emergency, but later dismissed it, according to Santos. The city of Los Angeles tinkered with the idea last month, but it is unclear whether San Leandro's current financial predicament is as dire as other local governments in the state.

In just the past year, San Leandro's financial health has plummeted along with the state and national economy. A five-year projection commissioned in 2006 predicted revenues of $82 million for this fiscal year. As it currently stands, the city is looking at revenues of just $72 million for 2009-10.

With the budget solution comes a new round of belt tightening at city hall. The loss of gas tax funds may facilitate reducing repairs of the city's roads, which Vice Mayor Joyce Starosciak last night called the "worst in Alameda County." In addition, the finance committee discussed instituting a hiring freeze, although the mayor and city manager's office is severely understaffed according to Santos.

San Leandro residents may also incur higher parking fees along with the possibility of hiking the costs of parking violations, said Santos, but added "We certainly don't want lose to parking downtown and possibly lose tenants in this economic downturn."

One way the city hopes to maintain financial stability is through a potential parcel tax measure on next years ballot. Santos said results of a city commissioned polling of residents are due by the end of August and include a question relating to the possibility of a hospital tax to fund any one of many proposals to keep San Leandro Hospital open.

Read more about California's budget deal:
California Begins Deciphering State's New Budget Deal, The New York Times
State leaders have tentative plan to fix budget, San Francisco Chronicle
Another tricky budget devised by California, Dan Walters, Sacramento Bee.

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