State keeps millions from city

Jenny Marder

Just when it seemed like things couldn’t get worse for the

cash-starved city budget, Gov. Gray Davis signed a $99.1 billion

state budget Saturday that takes another $2.5 million from Huntington

Beach.

That loss is Huntington Beach’s portion of $1.2 billion in cuts

that cities and counties are required to absorb to balance the

state’s budget.

Most of the loss for the city comes from having to absorb a

three-month lag in reinstating the vehicle license fee, which will

cost the city $2.3 million. Another $192,000 will be taken from the

redevelopment agency. The state has agreed to “backfill,” or pay back

the city for losses from the vehicle license fee, in 2006.

“[The license fee] has been dedicated revenue under the

constitution to cities and counties for many years,” Asst. City

Administrator Bill Workman said.

The city has been operating under dramatically reduced services

since the City Council approved cuts in July to shave $11.1 million

from the current fiscal year general fund, eliminating everything

from police officers to street maintenance to cherished city

programs. Workman said the city will consider hiking fees and cutting

more programs to endure the latest losses.

“There are fewer choices now, and cuts will be even harder,” he

said. “We went right to the bone in eliminating programs last time.”

Councilwoman Debbie Cook, who predicts that more city services

will have to be cut to make up for the money, fears the worst is yet

to come.

“[State] legislators put off the really, really hard work until

next year,” she said. “We’ve still got a deficit, and they’re putting

it off. We really don’t know what’s coming.”

City Administrator Ray Silver complains that the state has imposed

its own fiscal problems on local governments over the years, yet

fails to give back when the economy improves.

In 1992, the city lost 25% of its property tax revenue when the

state shifted several billion dollars a year in local government

property taxes to schools and then reduced state aid to schools by

the same amount. Known as the Educational Revenue Augmentation Fund,

this action has cost Huntington Beach $80 million over the past

decade, money that Silver said could have been spent on

infrastructure.

Now, he said, the state is coming back to the cities to take even

more.

“Every time the state has a problem, they go to the cities, but

when they have a surplus, they don’t give it to us,” Silver said.

City officials are angry at what they see as local governments paying

for the state’s mismanagement. It’s especially frustrating every year

when the city struggles to adopt a balanced budget, Silver said.

But Cook thinks the problems are simply the result of a state hit

by hard economic times.

“Is it mismanagement that the state is funded through a

progressive income tax that rises and falls with the economy?” Cook

asked. “Is that mismanagement or is that the hand we’re dealt? I

think this is purely a factor of the way that progressive income tax

falls when we have a bad economy.”

The council will discuss the 2003-04 budget at a workshop at 4

p.m. on Aug. 11.

“We will run the city of Huntington Beach with whatever amount of

revenue comes in from the economy and with what’s provided by state

of California,” Workman said. “It will be a lower amount, and we’ll

need to adjust for that.”