The state budget signed by Gov. Arnold Schwarzenegger on Monday
this week returns hundreds of thousands of dollars the city will
use to offset a $1.2 million deficit in its budget this year. The
windfall is part of the $1.2 billion of Vehicle License Fees the
state used to balance its $40 million budget deficit in 2003, but
promised to return to California cities and counties by next
year.
The state budget signed by Gov. Arnold Schwarzenegger on Monday this week returns hundreds of thousands of dollars the city will use to offset a $1.2 million deficit in its budget this year.
The windfall is part of the $1.2 billion of Vehicle License Fees the state used to balance its $40 million budget deficit in 2003, but promised to return to California cities and counties by next year. The money returns this year in the form of $635,340 city officials say will help decrease the impact of a $1.2 million budget deficit this year. Additionally, the city expects to gain approximately $150,000 for street repairs from gas tax paid to the state.
City officials are glad to be receiving the money this year. Morgan Hill City Manager Ed Tewes hailed the measure as “good news for the budget.”
Councilman Mark Grzan welcomed news of more money coming to the city coffers.
“Any help we can get would be appreciated,” he said. “We have a $1.2 million deficit and any funds we could receive to offset this would be good for the city.”
Mayor Dennis Kennedy said the return of the gas tax money is also a boon to Morgan Hill.
“That’s good news,” Kennedy said. “I’m happy and pleased to see that. Morgan Hill was at a point where we had minimal money left for street resurfacing and providing seals to protect the streets. It will allow us to move forward to resurface the streets that so desperately need it.”
Tewes said the $150,000 the city will receive is a result of Proposition 42, which dedicated sales tax on gasoline to transportation projects when voters passed it in March of 2002. The proposition was suspended for two years as the state used these funds to give its ailing budget a shot in the arm to assist an ongoing fiscal crisis. The transportation infrastructure cutbacks merely appear to have deepened the state’s crisis, contributing to congestion, gridlock, crumbling streets and highways, ultimately costing motorists hundreds of dollars in repairs, poor gas mileage and vehicle wear and tear, according to advocates of Proposition 42. This proposition generates $1.3 billion, of which approximately $127 million is supposed to be given to cities and another $127 million to counties.
City officials embraced news that the state would return Vehicle License Fee revenues to cities and counties a year earlier than planned.
They indicated the money will help the city this year, however, it is far from a solution to Morgan Hill’s budget woes. The city has a developed a structural imbalance in its operating budget, Finance Director Jack Dilles told the Times in June.
“(It’s) good news to get the money early, but it has no direct impact on the $1.2 million deficit the city is facing,” Councilman Steve Tate said.
Though the money will help ease reserve spending this fiscal year, the city had already anticipated the funds would be returned to next fiscal year’s budget. Essentially, the windfall reduces reserve spending from $1.2 million this year by $635,340, but increases reserve spending by the same amount next year. The city anticipated just spending $399,000 of reserve funds next fiscal year, before learning the money will be returned this budget cycle.
Councilman Greg Sellers said money the city is receiving is virtually “money the state owes us,” but the funds, especially the road fund, will help.
“(It) doesn’t change things too much since we would have been paid these funds in any event,” Kennedy said. “But a bird in the hand is worth two in the bush.”
