Borrowing our way out of crisis?
By David W. Roberts
Solana Beach mayor and vice chair, North County Transit DistrictAs a member of the League of California Cities’ San Diego Division Executive Committee, I had an opportunity to meet with three other local elected officials and Governor Schwarzenegger to discuss our state’s budget crisis as California enters the third month into the new fiscal year without an approved budget.
This is truly a disgrace for our state to go for so long without a budget. What’s even worse is that many financially foolish ideas are being proposed to close the budget gap such as borrowing from counties and cities. A recent Public Policy Institute of California survey found that 96 percent of California voters are opposed to borrowing to close the $15.2 billion dollar budget shortfall. The survey found that 84 percent of voters think the budget stalemate is a major problem. The survey also found that 44 percent of voters believe that a combination of cuts and taxes are the solution.
This survey reinforces the message that my colleagues and I have been driving home for weeks - borrowing local government, transportation or redevelopment funds to close the budget gap is irresponsible. Across California, 140 city councils (including Del Mar and Solana Beach) have passed resolutions against borrowing. We all realize that cities are struggling with our own budgets given the tough economy which has driven down property tax and sales tax revenues as energy costs climb. If the state now borrows local revenues to solve its budget shortfalls, our cities and the county will be forced to enact additional cuts to absorb the hit. What’s especially irritating is that the cities and the county passed their budgets on time and made the tough choices. It is not fair to know have the state take even more of our funds to solve their problems because they don’t have the will to either make cuts or raise taxes.
The reason we were meeting with Governor Schwarzenegger was because he introduced a budget proposal on Aug. 22 that does not include borrowing local government or transportation funds. However, it does contain a three-year shift of $675 million of redevelopment funds ($225 million annually), which is of great concern to all cities that are using redevelopment funds to try and improve tax bases. This shift of redevelopment funds would result in a loss of critical local funds. I am so pleased that the League of California Cities under the leadership of President Jim Madaffer is working with the California Redevelopment Association to bring attention to the fact that this shift is fraught with problems.
Did you know that redevelopment funds are critical to both stimulating the economy and helping cities and the state as a whole combat global warming - two top priorities for California? Annually, redevelopment projects generate 310,000 good-paying jobs, provide a total of $32 billion in economic activity and generate $1.6 billion in state and local taxes. In addition, with the passage of AB 32 in 2006, California set out on a path to drastically reduce greenhouse gas (GHG) emissions to fight global warming. Redevelopment funds provide funding for projects that incorporate green building practices, encourage infill, transit oriented development and discourage sprawl.
California is in tough financial times. It truly is a crisis. All voters should immediately call the governor and members of the legislature to urge continued opposition to borrowing local government and transportation funds to balance the state budget and to oppose any seizure of redevelopment funds for the same purpose. Our local communities’ funding cannot solve the state’s budget crisis and only by holding our Sacramento legislators’ feet to the fire can we ensure that they perform their constitutional duty and do use the county and cities as their piggybank. If you would like to contact me directly with your opinion about this or any other issues in our region, please just drop me a line at