Friday, Jul. 25, 2008
State deficit may hinder city finances
Los Baños could lose nearly up to $250,000
By Corey Pride / cpride@losbanosenterprise.com
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ReprintDuring a time when the city is dealing with its own economic challenges, officials are anticipating a decrease in the revenue they were hoping to have this fiscal year.
The newest monetary decline won't take place because of foreclosures or a sagging economy. If it happens it will be because the state wants money from municipalities to reduce its estimated $15.2 billion deficit.
"They're talking about taking 8 percent of the property tax. What that means for us is $200,000 to $250,000," City Manager Steve Rath said. "It would be devastating."
Rath met with others in his profession last week at a gathering of the Northern San Joaquin City Managers group. Members discussed the burden they could be facing.
"We all agreed they (the state) should close their own gap on their own budget," Rath said.
He said the state is also considering taking away money set aside for transportation. The transportation money, if taken, would hinder Merced County's The Bus. The countywide public transit system operates several lines that travel through Los Baños.
The state will make a decision on whether to take the property tax revenue and transportation dollars in August or September, according to Rath.
Los Baños is already facing economic issues without any additional state takeaways. The city is estimating that it will take in $59.5 million in revenue and have $74.8 million in expenditures this fiscal year. A hiring freeze was put in effect toward the beginning of 2008 in part to compensate for declining revenues in property tax and less building taking place in the city.
Mayor Tommy Jones, like Rath, believes the state should handle its own problems.
"I think its wrong the state does not keep their own house in order," Jones said.
He said Los Baños has to prepare for some hard times.
"It's going to be another crunch," Jones said. "But we are better off than most towns because we have been so conservative with keeping reserves."
Jones said if the state takes away too much money the city will have to start filling the void by using some of its reserve fund monies even though he would hate to do it.
Councilman Joe Sousa believes Los Baños will be OK for this fiscal year. His concern is 2009-2010.
"I think with the budget we just approved we'll be OK. The issue is going to be the following year," Sousa said.
Jones praised the city for not following in the foot steps of other municipalities by laying off staff, but Sousa said if the state continues taking revenues reducing Los Baños' workforce could be a possibility.
"That's a sad situation, but that's what the state is doing to us," Sousa said.
Enterprise reporter Corey Pride can be reached at 388-6563 or at cpride@losbanosenterprise.com.