The League needs information quickly about how individual cities would be affected by a new proposal floated by Gov. Arnold Schwarzenegger’s Department of Finance (DOF) to offset state cash flow woes. Designed as part of a final budget package, the administration drafted legislation that would defer the payment of the following revenues to cities and counties:
Batch #1: Payments to cities and counties for revenues collected in January, February, March and the first half of April (that would otherwise be paid in February, March, April and May) would be instead paid in September 2009. We estimate this deferral would amount to about $162 million for counties and about $156 million for cities.
Batch #2: Payments to cities and counties for revenues collected during the second half of April, May, June and July (that would otherwise be paid in May, June, July and August) would be instead be paid in October 2009. We estimate this deferral would amount to about $165 million for counties and about $160 million for cities.
2) Three-Month Deferral of Proposition 42 Transportation Revenues: These revenues are paid quarterly to cities and counties from the state sales tax on gasoline. The DOF proposal is to defer payment of the June 2009 (fourth quarter) local government allocations until October 2009. This deferral would amount to about $68 million for counties and $68 million for cities.
3) Two-Month Delay for Mandate Payments: The DOF proposal delays the payment date for mandate claims from Aug. 15 to Oct. 15, 2009.
4) Seven-Month Deferral of State General Fund Aid to Counties: The DOF proposal also would defer state General Fund payments to counties for a variety of social service programs from February to August 2009.
Current Proposal Mirrors 2008 Deferral . City officials will recall that in 2008 HUTA payments to cities and counties were deferred for the months of April, May, June, July and August and repaid in September (ABX 3 7, Chapter 5, Statues of 2008), with a total value to cities and counties of approximately $500 million. Language in that measure authorized Proposition 1B transportation dollars to be temporarily used to backfill losses, and also authorized the September repayment to be accrued during the 2007-08 fiscal year.
While the DOF proposal includes similar accrual language and permits Prop. 1B funds to be used temporarily for HUTA and Prop. 42 purposes, it must be noted that Prop. 1B and other bond revenues are not being distributed by the state due to inability of the state to issue bonds.
Please Tell Us ASAP: How Will Your City Services Be Affected? While cities were able to weather the 2008 deferral of HUTA funds, the dramatic decline of our economy has since forced cities to make many adjustments to their budgets. The League’s fiscal consultant, Michael Coleman, has estimated the city-by-city impacts.
We need your help to fully tell the story of how local services would be impacted by this proposal. Specifically, what would your city do to manage this proposed deferral of funds? What programs and projects would be affected? How will this affect your residents?