Budget may halt street projects

Some weary but triumphant local state legislators returned home Tuesday after staying up until the early morning hours to pass a budget with no new taxes; but in order to make that happen, Costa Mesa will have to give up some cash.

Gov. Arnold Schwarzenegger vetoed the budget late Tuesday, but lawmakers are expected to override his veto with the same two-thirds majority they used to pass the budget.

Under the budget, the legislature decided to take almost $300,000 in funding that Costa Mesa planned to use to repave Westside streets, improve lighting and make other infrastructure improvements, according to city Finance Director Marc Puckett.

“We have some projects downtown that we will probably have to delay to a following year. As of right now, our Redevelopment Agency is going to have to write a check to the state for $294,000,” Puckett said.

Costa Mesa was already bracing for a rough fiscal year because of a projected $3-million drop in sales tax revenues. No money was taken from the general fund.

Newport Beach officials were happy that they did not have any money stripped from their already-tight general fund.

“It’s a relief because you never know what the legislature is going to do at the last minute to reach a budget agreement,” said Newport Beach City Manager Homer Bludau.

Property tax and sales tax revenues make up the vast majority of both Costa Mesa’s and Newport Beach’s budgets, and proposals earlier in the state budget process tapped those funds as possible ways to overcome California’s big budget shortfall.

Proposition 1A, which was overwhelmingly passed by California voters four years ago, made it difficult for the state government to take local funds by requiring the approval of the governor and two-thirds of the legislature.

Still, the state’s $15 billion budget gap had to be dealt with somehow, and a variety of creative financing strategies that were used are being called fiscally irresponsible by some who think the state is pushing its problems into the future.

These methods include borrowing from future state lottery proceeds, collecting taxes earlier than usual and increasing spending on education and health care by a much smaller amount than is typically done to deal with inflation and population growth.

“No budget will be fixed within one budget cycle,” said Assemblyman Van Tran. “It will take several years.”

Tran called the budget a step in the right direction.

Fellow Assemblyman Chuck DeVore agreed. The local official said the budget was an unlikely victory for the Republicans, who fought to block new taxes.

While Costa Mesa and Newport Beach waited to see whether they would be able to fund all of the projects they budgeted for the year, local college students went without some financial aid money.

OCC’s fall term started a couple of weeks ago, but students were not given their Cal Grants because there was no budget in place. The state grants award needy students up to $1,500 per year to help pay tuition and living expenses.

The school let the students know at the beginning of the term that their Cal Grants would have to be held until the state had a budget, but Financial Aid Supervisor Kathie Tran said the delay wasn’t a problem for any of the students she talked to because they had money from other sources to hold them over.

“We haven’t heard any complaints from the students,” Tran said. “If students are eligible for the state grant, they’re also eligible for the federal grant. So that’s why it’s OK with them, because they can use the federal grant already.”

Now that a budget has been passed, Tran is hopeful that the students will be able to get their aid money.

VOICES

“We’re going through the same economic hard times as the state is, so [taking city funds] would be a double hit.”

Homer Bludau

Newport Beach city manager

“I’m extremely tired because [Monday night’s budget negotiation] was a marathon session.”

Assemblyman Van Tran

“If we were to have had to absorb extra cuts to our general fund it would have required us to either delay projects that have been budgeted this year or cut programs or services.”

Marc Puckett

Costa Mesa finance director

“We haven’t heard any complaints from the students. If students are eligible for the state grant, they’re also eligible for the federal grant. So that’s why it’s OK with them, because they can use the federal grant already.”

Kathie Tran

OCC financial aid supervisor

ALAN BLANK may be reached at (714) 966-4623 or at alan.blank@latimes.com.