Local governments

Proposed cuts

Residents already facing the local effects of less money to fund local government operations are likely to see conditions worsen if the state adopts a budget that includes significant borrowing from city and county government revenue streams.

Impact

State budget formulas remained in flux Tuesday. But at first blush, the budget proposal would affect local funds for general government operations and redevelopment as well as transportation.

• The state would borrow $2 billion in local property tax revenues statewide with a promise to pay the money back within three years.

That would take money from general funds for cities, counties and special districts. Sacramento County has warned that that could translate to a $32 million hit. But Nav Gill, chief operations officer, said Tuesday that he has yet to see specific language from the state.

Governments could try to shield residents from the effects of that take-away by borrowing replacement funds from willing investors. Trouble is, because of the state's dismal credit, few investors may want to fill the breach.

• The state proposes to take $1.7 billion in redevelopment funds. If that happens, the Sacramento Housing and Redevelopment Agency would be on the hook for $26.6 million, most of it tied to city projects.

That would slow down redevelopment efforts, particularly projects for low- and medium-income housing. And it would hamper the agency's ability to find matching funds for state grants, city Finance Director Leyne Milstein said.

David Jones, legislative representative for the California Redevelopment Association, calls the take-away a constitutionally flawed approach.

What's next

Local government leaders hope to see details of the state's proposals as early as today.

Look for the state redevelopment association to go to court to block the state from taking redevelopment funds.

– Loretta Kalb and Ryan Lillis

Transportation

Proposed cuts

The tentative state budget agreement includes diverting all state gas tax revenues – an estimated $1 billion – from cities and counties statewide.

Impact

Cities and counties say their annual operations and maintenance budgets for roadwork will be gutted.

You will see fewer potholes filled, less money to add or fix signal lights at intersections, or to construct roadside signs and to re-stripe roads. It could mean more debris on roads and in roadside storm drains.

Sacramento County transportation head Mike Penrose said his road operations and maintenance budget could see a 45 percent hit, about $20 million. The city of Sacramento anticipates losing $7.5 million this year, about half of its operating budget for street work.

"It is dramatic and significant to us," Penrose said.

"As hard-hitting as anything I've seen," said city transportation head Jerry Way.

Some smaller counties will be worse off, taking hits of up to 90 percent of road budgets, virtually shutting down maintenance work.

What's next

Paul McIntosh, head of the California State Association of Counties, said his group believes the gas tax diversion is theft. His agency intends to sue the state if the Legislature agrees to the diversion.

"We believe this taking is unconstitutional," McIntosh said.

If the state does take the money, McIntosh said, counties may be forced to lay off several thousand workers statewide.

Sacramento city and county transportation officials said Tuesday they were uncertain what their next steps will be, in part because they do not know the details of the state's proposal.

Sacramento County has its own transportation sales tax, Measure A, and some of that money could be used as a substitute, officials said, but they point out that will do little to offset expected dramatic cutbacks in roadwork.

– Tony Bizjak

Higher education

Proposed cuts

The tentative state budget deal cuts $3 billion from California's four-year universities and $935 million from community colleges. The cuts to University of California and California State University will be partly offset by about $1.6 billion in federal stimulus funds, leaving UC to cut its budget by $813 million and CSU by $584 million.