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UPDATED Budget news: Bleak, bleak, bleak

Submitted by on 1, July 22, 2009 – 6:00 amNo Comment

Updated 10:41 a.m. Wednesday, July 22

City staff is moving full steam ahead with plans to present a 24-month budget plan to the City Council for their approval on August 3, with looming indications that the state could take far more money from the city than it had previously proposed.

Gov. Arnold Schwarzenegger announced Monday that state leaders had cobbled together tentative budget deal that takes $4 billion from local governments, an amount that includes $2 billion in property taxes, gas tax and redevelopment funds. The money would be taken to help close a $26.3 billion deficit.

If the budget passes the Legislature – and there’s no guarantee that it will – Alameda stands to lose about $2.2 million in property tax money this year, according to figures released Tuesday night. The tentative deal calls for paying the money back after three years.

The city could also lose close to $2.5 million in gas tax money over two years. The money is required by the state constitution to be spent on transportation projects.

The city’s redevelopment agency could lose about $3.6 million this year and $916,000 in 2010-11, money that would be used to help pay for schools, according to estimates from the California Redevelopment Association, a statewide interest group. The city’s redevelopment agency is separate from city government and has its own budget that is independent from the city’s.

The state’s earlier proposals would have cost Alameda $2.4 million this year, plus $917,000 in redevelopment funds.

“We are really just almost speechless. It’s onerous,” Interim City Manager Ann Marie Gallant said. She and members of the council complained that state leaders are dumping the responsibility for fixing their budget problems on local school districts and government (Gallant pointed out that the state isn’t announcing layoffs, as the city just did).

Gallant said she’ll move forward with plans to present a budget on August 3, but she warned that she could be returning to the council to make changes in September or October.

Development Services Director Leslie Little said the budget, if passed, would impact redevelopment projects like a planned overhaul of electrical service along the former Auto Row. The project, which she said would cost about $500,000, is an essential step toward revitalizing the area, she said.

The California Redevelopment Association won an earlier lawsuit aimed at stopping the state from taking redevelopment funds. State leaders have since found a way to get around the suit and take the money, Little said.

Local governments have indicated they may sue to stop the state from taking their money if the budget passes.

On a more positive note, Gallant said her preliminary numbers showed the city’s finances were “solid and stable” through the June 30 end of the city’s 2008-09 budget year.

But she was less positive about the future. She said an economic recovery that was anticipated to be on the way in 18 to 24 months is now being projected three to four years into the future. (That future, by the way, may very well include multi-million-dollar increases in the amount the state’s pension fund charges the city for retirees’ pensions.)

More budget details should be released next week, so as I always say … more to come.

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