Cities find few surprises

Alicia Robinson

Gov. Arnold Schwarzenegger’s $111.7-billion budget for 2005-06 held

few unpleasant surprises for cities, because officials already knew

roughly how much they’d lose.

Through an agreement cities forged with the state in mid-2004,

cities gave up $2.6 billion over two years to help solve the state’s

budget shortfall. In the current fiscal year, Costa Mesa lost $1.9

million, while Newport Beach surrendered $2.2 million. And they’ll

lose the same respective amounts next fiscal year.

That’s the biggest effect of the budget proposal the governor

unveiled Monday, and it was already known. Because Newport knew how

big a hit it would take from the state, officials factored that into

the current year’s budget by delaying capital projects and keeping

expenditures down, Newport Beach city finance director Dennis Danner

said. They’ll do the same when they start creating the city’s 2005-06

budget, a process that will begin in February.

“Overall, I think cities are treated quite well in the governor’s

proposal, considering the severity of the overall cuts that are

proposed,” Costa Mesa City Manager Allan Roeder said.

Users of education, welfare and some other services are likely to

be angered by proposed cuts within those areas, though an overall

small increase is proposed for the education and health and human

services departments.

Cities were somewhat protected by their agreement with the state,

which constitutionally prevents the state from raiding city coffers

in the future, Roeder said.

But smaller charges may still be put on cities’ tabs. Danner

mentioned possible cuts to state programs that fund police and

library services as well as unfunded mandates. Cities also will miss

road maintenance money they usually get from the state gas tax,

Roeder said. The governor plans to shift $1.3 billion from gas tax

funds to a looming $8-billion deficit.

And pension costs for municipal employees -- a large part of

cities’ budgets each year -- may be reduced under Schwarzenegger’s

plan to reform the pension system. But that will take some time, and

savings aren’t expected for at least several years, Danner said.