Almost as soon as a deal to close the state’s $25 billion shortfall was announced Monday evening, a call went out from local government to vote against the proposal when it comes to the Senate and Assembly floor on Thursday.

“It is a Ponzi scheme that is fated to fall apart in the next few weeks and months,” said Chris McKenzie, executive director of the League of California Cities. He urged city leaders to call their legislators and ask them to vote against the measure.

“Counties across the state must alert their legislative delegations that a vote for this budget that contains the array of destructive raids, cuts and borrowing is a vote for local government ruin,” said Paul McIntosh, executive director of the California State Association of Counties (CSAC).

Robert Cruickshank, public policy director at the Courage Campaign, immediately offered a $100 donation to the campaign of the first Democrat to vote no.

Negotiators praised the final package for limiting pain.

“The budget agreement contains less borrowing from local governments than the plan first put forward by the governor,” said Assembly Speaker Karen Bass (D-Los Angeles) in a release.

Bass highlighted the agreement’s protection of state safety net services. Eligibility requirements were tightened, but some CalWORKS childcare services were retained.

“[It] limits the workload burden that would have fallen on local governments if safety net eliminations had occurred,” Bass said.

Bass also pointed to the limiting of Highway Users Tax Account (HUTA) funds diversions to two years as an improvement over the governor’s initial proposal.

Even one year of subverted gas tax would have devastating consequences on public safety, San Diego County Supervisor Dianne Jacob said. San Diego County would lose $40 million a year ($500 million a year statewide and $1 billion over two years).

“San Diego uses gas taxes to maintain, repair and improve 2,000 miles of roads and bridges. A $40 million reduction to the FY 2009-10 budget could result in the inability to meet contractual obligations, the need to issue stop work orders on construction, and could cause delay in completion of projects already in progress, creating safety/traffic hazards,” Jacob said in a press release.

Another nod to local government was given in the inclusion of an “accelerated repayment” plan for $2 billion in Proposition 1A funds “borrowed” until 2013. The details were not released immediately.

The plan also includes a transfer of $1.3 billion in property taxes from local redevelopment agencies.

“There is not a shred of good news in the package for counties,” CSAC’s McIntosh said in a letter to county administrators. “This budget is nothing but a cold slap in the face to California’s counties.”

McIntosh urged county leaders to call their representatives and ask them to vote no.

“Counties must remind our state’s elected representatives that when they take a budget vote this week, they are casting a vote to send counties off a cliff.”

The League’s McKenzie threatened lawsuits if the budget passes.

“We think it is a house of cards predicated on numerous illegal components – stealing of local gas tax, redevelopment and transit funds – that are all unconstitutional and a property tax loan that the state will not be able to afford to repay and will cause deep cuts in city services, particularly public safety,” McKenzie said.

“We continue to oppose it, will ask legislators to do so and will challenge one or more parts of it in court the day after it is signed.”

JT Long can be reached at