Morgan Hill City Council has taken symbolic action against any budget-balancing action by the California legislature that would divert or borrow money from cities.
City Manager Ed Tewes, who asked for the move to be agendized, passed faux credit cards around the dais at the council's Aug. 6 meeting and led the four present council members - with Councilwoman Marby Lee teleconferencing in - in ripping them in half.
"This is something I'm fully in support of," Mayor Steve Tate said. "That's about all we can do, without getting into the political discussions going on in Sacramento."
Tewes expressed concern about rumors floating around the state that California's budget - the state's fiscal year having started July 1 - could be augmented with local money.
Lawmakers haven't reached a compromise on how to deal with its $15 billion deficit. Some lawmakers want to raise taxes; others want to cut programs. Borrowing from local funds is the way state officials have dodged the issue in years past, said League of California Cities spokeswoman Eva Spiegel.
The league launched the Cut Up the Card campaign July 31. According to cutupthecard.com, Morgan Hill has turned over more than $14.8 million to the state since 1991.
The council signed off on the city budget, with a $1.3 million shortfall attributed to the lagging housing market and election costs, on June 18. The city's fiscal year also began July 1. The city could have even less money if Gov. Arnold Schwarzenegger declares a financial emergency.
"If we had anticipated receiving a certain amount in property taxes, and the state said they're taking some of it, then we would have a hole in our budget," Tewes said.
Two propositions passed by large margins in the past two state elections to ensure that the state can't continue to draw from city funds. Proposition 1A passed with 83 percent approval in 2004, and keeps property and sales tax revenues local - unless the governor declares a fiscal necessity and two-thirds of the legislature agrees. In 2006, Proposition 1A amended the California Constitution to ensure that state sales taxes were directed to local transportation uses. Under the amendment, money that is kept and not trickled down is treated as a loan and must be repaid in full, with interest, within three years.
Assemblyman John Laird, D-Santa Cruz who sits on the California Budget Conference Committee, said local money grabs weren't part of any plans he'd heard of.
"The budget proposed by both houses includes no borrowing," he said. "If we can get some revenues in this budget, and not do cuts only, I think it will end the pressures to borrow."
Laird said he expects an agreed-upon state budget in the next couple of days.
Other ideas proposed by the committee include to eliminating state funding for booking fees, charging cities for crime lab evidence processing and reducing Citizens Options for Public Safety grants, or COPS grants. The bottom-line: these changes would mean a $100,000 loss to Morgan Hill, Tewes said.
Natalie Everett Natalie Everett covers education and city issues for The Times. Reach her at (408) 779-4106, ext. 201, or neverett@morganhilltimes.com.
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