Cities greet gov.’s aid offer warily

June Casagrande

City officials are offering mixed reactions to Thursday’s

announcement that the governor will invoke emergency powers to pay

cities and counties for lost car-tax dollars. But city leaders agree

that local governments aren’t out of the woods yet.

Gov. Arnold Schwarzenegger on Thursday announced that he would use

emergency powers to pay cities and counties millions that they have

lost in car tax revenues.

The round of payments to local governments will come from about

$150 million in budget cuts to a variety of programs, including the

two state university systems, and from closing a migrant farm worker

housing facility, among other things.

“At this point, we just can’t know how much we’re going to get,”

Newport Beach Administrative Services Director Dennis Danner said.

“Even if this turns out the way we hope, there’s no way of knowing

what we can hope for in the next fiscal year.”

Danner reported to the Newport City Council last week that the

state crunch had touched the city on more fronts than just the

vehicle license fee. City leaders were surprised when they got

$50,000 less than expected from the county in the form of the

Homeowners Exemption Property Tax Relief. Those funds flow from the

state to the counties, which in turn pass the money along to the

cities on a quarterly basis.

Instead of the roughly $75,000 the city expected, it got about

$25,000 and an e-mail from county staff saying that the state hadn’t

paid the county the full amount. When the state paid up, the county

would pass it along, it said.

Thursday’s move by the governor should correct this problem, as

well. A spokesman for the office of county Auditor-Controller David

Sundstrom said that county staff have been talking with state

officials, who assured them that the homeowner tax money would be

paid in full to the county. The county expects to pay the cities the

rest of their quarterly amount on Jan. 9.

Costa Mesa Assistant City Manager Anne Schultz said that, at least

in the short term, the governor’s announcement is welcome news.

Costa Mesa stood to lose about $4.7 million in vehicle license

fees this year after Sacramento reversed a tripling of the tax.

Newport Beach would have lost about $2.9 million.

“We’re pleased at this point,” Schultz said. “We’re still

concerned about the whole issue of revenues for cities, because every

time the state gets into a budget crunch, they take it from us.”

Vehicle license fees are taxes collected by the state on behalf of

cities and counties. During good financial times, Gov. Pete Wilson

decided that the state would share its wealth by reducing by

two-thirds the fees it collects from motorists and making up the

difference to cities out of the state budget. Gov. Gray Davis earlier

this year announced that the state could no longer pay this

“backfill,” in effect tripling the tax.

Riding a wave of discontent with Davis’ move, Schwarzenegger was

elected on a pledge that he would reverse the tripling of the tax. At

the same time, he assured cities that the state would continue to pay

them the same amount, though he could not say where he would get the

money.

Earlier this month, Schwarzenegger reversed that position, saying

that the state was unable to pay cities and counties the full amount.

Local governments reacted with outrage, claiming that police and fire

services would suffer and prompting Schwarzenegger to find the money

to pay local governments.

Thursday’s announcement that the governor would enact emergency

powers means he can make cuts to state programs without the

Legislature’s approval to pay the cities and counties.