Cities, counties agree to budget deal

Barbara Diamond

Laguna Beach will lose less than city officials feared in a budget

deal proposed Wednesday in Sacramento to bail the state out of its

financial morass.

The proposal by Gov. Arnold Schwarzenegger will cost the city

$674,990 in each of the next two years, according to League of

California Cities as of Thursday. The league was expected to vote on

the proposal Thursday. The state legislature also must approve it.

City Manager Ken Frank had announced the impending deal at the May

4 City Council meeting.

“It’s better than a sustained loss,” Frank said. “Nobody wants to

tangle with the governor.”

The terms were better than the always fiscally-cautious Frank

anticipated. He anticipated a $2 million loss to the city in the next

two years, nearly $700,000 more than the amount announced Wednesday.

Frank and Councilwoman Elizabeth Pearson represented the city in

Sacramento.

After the next two lean years, local governments would no longer

need to depend on the state for vehicle registration fee revenue --

some of it lost when Schwarzenegger lowered the fees after taking

office in the November 2003 recall election. Property tax revenue

would replace the fees, which in the past had been allocated to local

governments.

The governor’s proposal came in the face of more than one million

signatures on petitions to put an initiative on the November ballot

that would have required voter approval of state raids on local

budgets.

Statewide, the cities and counties will cough up an estimated $1.3

billion a year, about $84 million of it from Orange County and its

cities, if the deal is approved. Just the county and its

redevelopment agency stand to lose $30 million.