This story was reported for San Diego News Network on May 20, 2009.
Five of the six propositions on Tuesday’s special election tanked, as many expected. Whether “Plan B” – laid out by Gov. Arnold Schwarzenegger last week – will be adopted is still unknown.
Meanwhile, local officials are waiting and hoping their property tax revenues won’t be a part of the plan.
Plan B, as proposed by Schwarzenegger and the state’s department of finance director Mike Genest, includes suspending Proposition 1A from 2004, which stopped the state from taking tax revenue from local governments. Under Plan B, that would change, and the state could take up to 8 percent of property tax revenue from local municipalities.
Suspending 1A could generate up to $2 billion in funding for the state; however, it would need a two-thirds majority vote in the legislature to pass. Just hours after the final ballots were counted, local governments began campaigning against the governor’s proposal.
“The amount of local opposition to this is going to be stronger than ever,” said Chris McKenzie, executive director of the League of California Cities. “The voters have spoken and they are sick and tired of giving bail-outs.”
In a letter to the governor by the League of California Cities, California State Association and California Special Districts of Counties Association, the organizations said local governments are feeling the same pain as the state.
“In these difficult economic times, local governments in California are also being faced with making tough decisions due to declining revenues and, in many cases, significant budget shortfalls that are already affecting the ability to provide essential services,” the organizations wrote in the letter. “Shifting additional resources intended for local use through a borrowing will drastically compound the impacts at the local level forcing unprecedented budget and service cuts which will result in further personnel reductions and impacts to public safety among many other areas.”
Taking a loan from local governments for state problems “is a fiscally irresponsible solution that does nothing to address the structural budget problems,” the groups wrote.
Locally, San Diego Mayor Jerry Sanders considers the governor’s proposal “stealing.”
Sanders said he has spoke to Schwarzenegger’s staff and expressed his distress over the proposal. The Mayor said the Governor’s staff said taking tax revenue from local governments isn’t Schwarzenegger’s first choice – but it is necessary.
“I think what Californians said yesterday is ‘We want to see the state fix the problems they have and we’re not going to give you any more money until you do fix the problems,'” Sanders said. “I don’t think people feel very confident in the state government at the moment. The state wants to steal money from the city of San Diego and we’re going to vigorously fight that.”
Councilmember Carl DeMaio called the governor’s plan to suspend the proposition “the 1A raid” but said the city is defenseless in the matter.
“The city has no choice in the matter,” DeMaio said. “Under Proposition 1A passed several years ago, the state government has the ability to raid property tax revenue from local government. It will cost the city of San Diego in the neighborhood of $30 to $35 million.”
The Councilmember, who is known for digging through numbers, said although the governor’s plan would mean the state couldn’t borrow more money for several years, the state may not be able to pay back its loan. DeMaio also said the state’s credit rating is so bad, the costs may be even more.
As of Wednesday, the city’s budget committee is creating a memorandum about the options the city has and what cuts it can make.
In the South Bay, Chula Vista Mayor Cheryl Cox is still soaking in the results and said, unfortunately, the city is used to making cuts now. She said the city estimates it will need to loan the state $4 million if the legislature allows 1A to be suspended. What $4 million entails, as far as lay-offs, is still yet to be determined. But programs will be cut.
“To have books in a library but not allow anyone to read them is devastating,” Cox said. “I’ve built my life around education and to take opportunities away from the community hurts.”
“The govenor has consistently said he wouldn’t take money from local governments and I just hope he keeps his word.”
In Sacramento, Sen. Christine Kehoe (D-San Diego) took part in a meeting Wednesday morning and said the state is working quickly and expects to have its proposed budget passed by the end of June.
“We get the message,” Kehoe said. “Voters spoke and we’re moving forward with the next plan.”
Kehoe said meetings will begin again on Thursday until a solution is found. In addition, state controller John Chiang will release the numbers of cash left in the state bank account on Friday.
While, Lori Saldaña (D-San Diego) in the State Assembly said overturning Proposition 1A is still on the table.
“We’ll have to make cuts from all levels of governments, including local,” Saldaña said. “Everything is on the table now – there’s just no other way. The voters are not willing to shift funding as we proposed.”
Aside from the possibility of suspending Proposition 1A of 2004, education cuts have also been explored. Schwarzenegger’s Plan B includes a $3.6 billion reduction to education funding, laying off 51,000 teachers, shutting down all public schools for 18.5 days, increasing class sizes by 17 percent and laying off 90,000 support staff.
“The worst case scenario has arrived,” said San Diego Unified School District boardmember John de Beck.
The voters’ rejection of Tuesday’s propositions will result in about $176 million in cuts to the school district’s budget, de Beck said. The cuts could mean the displacement of 28 counselors and librarians, up to 300 lay-offs, and four-day furloughs that will save about $18 million. He also said the popular Old Town program for fourth graders, Balboa Park program for fifth graders and the Camp Palomar program for sixth graders may also be cut.
“It’s unfortunate,” de Beck said. “Those were some of the things that made San Diego Unified unique. There may be other solutions explored in the next week or two but all optional cuts are no longer optional.”
The Governor’s 10-day-furlough will also be considered as that would save the district nearly $36 million, de Beck said. The furlough would take place near vacations, such as Christmas and Thanksgiving to make the change smoother.
Statewide, the California Teachers Association is “deeply concerned.” CTA president David Sanchez said public schools have already taken more than $11.6 million in cuts – “the single largest cut to public education since the Great Depression.”
But, the CTA isn’t just concerned about more possible cuts. Rather it’s concerned about the failure of Proposition 1B, which would have repaid public schools $9.3 billion owed to them. Sanchez said public schools intend to take all the legal measures necessary to obtain the money owed to them.
“This was a manipulation of Proposition 98, the minimum school funding law passed by voters over 20 years ago, and CTA will be taking all legal action required to ensure students, schools and community colleges get the funding required by law, and that they deserve,” Sanchez said.
The ballot slate included a mix of reforms, higher taxes, borrowing and funding shifts. Voters approved one of the six propositions, a measure prohibiting pay raises for lawmakers and other state elected officials during deficit years.
The election results marked the second time Schwarzenegger had been repudiated in a special election. Four years ago, voters rejected all four of the measures he described as government reform.
“Tonight we have heard from the voters and I respect the will of the people who are frustrated with the dysfunction in our budget system,” he said Tuesday. “Now we must move forward from this point to begin to address our fiscal crisis with constructive solutions.”
On Wednesday, the California Citizens Compensation Commission voted to impose an 18 percent pay cut for all state elected officials. In addition, the Governor’s office will cut 27 positions and will take a 9.3 percent reduction in work hours and pay.
“The people of California have spoken loud and clear: they want the state to live within its means and do not want any more government waste or pay raises for California’s elected officials,” Schwarzenegger said. “I completely agree and that is why I have cut back in my own office and ordered layoffs of state employees to save money. The state’s elected officials need to follow suit and cut back just as California families and businesses have in this tough economy.”
Assemblymember Joel Anderson (R-El Cajon) and San Diego County Supervisor Dianne Jacob’s offices have not yet responded to a request for an interview.
Associated Press writer Judy Lin contributed to this report. Hoa Quach is the political editor for the San Diego News Network.