Pleasanton braces for state to grab $4 million of local revenues to pay down state deficit

Schwarzenegger could take action if voters reject key state measures Tuesday

Pleasanton officials said yesterday they are bracing for another takeaway of municipal revenues aimed at paying down the state's rapidly-rising budget deficit, a move that could cost Pleasanton nearly $4 million in general revenue and gasoline tax funds.

The threat has come from Gov. Schwarzenegger who would first need to declare a fiscal emergency for California, which is expected if voters reject key revenue producing propositions on Tuesday's special election.

The state proposal calls for the governor to suspend 2004's Proposition 1A, which protects local funds from being used by the state, and to borrow 8 percent of local property-tax revenues.

For Pleasanton, that would amount to $3.7 million based on this year's property assessments, plus another $640,000 from Proposition 42 local sales taxes on gasoline, which Pleasanton uses for capital projects, according to Dave Culver, the city's finance director.

Schwarzenegger's action is allowed under Proposition 1-A, a constitutional amendment written by the League of California Cities and the California Association of Counties and approved by voters in 2004.

Under Prop. 1-A guidelines, the state is allowed to "borrow" twice from cities, counties and special taxing districts within a 10 year period, but any money borrowed must be repaid before a second takeaway could occur. The state also must repay borrowed funds at 7 percent interest within three years.

Prop. 1-A came as a result of years of takeaways by the state that started in 1993 when Pete Wilson was governor, with money being taken by Sacramento on an as-needed basis for the Education Revenue Augmentation Fund (ERAF). Those funds are still being siphoned off from cities and counties, with more than $100 million so far stripped from Pleasanton's General Fund.

Although the funds were designated to help the state meet its obligation to finance education throughout the state, there's never been any accounting of how the money is disbursed based on city and county contributions, Culver said.

"If the $100 million Pleasanton has paid into this fund had actually gone to the Pleasanton school district, I wouldn't complain," said City Manager Nelson Fialho. "But clearly, our school district has not gotten the benefit of that money."

Culver said that Pleasanton appears to be in better financial shape than many other local agencies that will have to give up 8 percent of their property tax revenue to the state.

Anticipating a state grab for local revenue, Culver recommended last fall that $3 million sitting unused in the city's capital improvement fund be added to the $7.9 million already in a temporary recession reserve, boosting it to $10.9 million. If Schwarzenegger seizes $3.7 million from Pleasanton, the money will be disbursed from these reserves. If that never happens, the $3 million or more will be transferred out of the temporary reserve back to the capital projects fund.

"Right now, we have completed most of our capital projects and can wait a few years before needing the funds," Culver said.

Besides the possible takeaways, which would occur next January and April, when the city receives it property tax payments, Pleasanton is also losing vehicle license fees gradually as the Department of Motor Vehicles takes more to pay increased administrative expenses.

Culver said the city received $400,000 in those fees in 2006-07, then just $300,000 the following fiscal year, and projects receipts to total only $160,000 this year.

"Fortunately, we anticipated the state's financial problems and put money aside to prepare for it rather than spend it," Culver said. "Many other cities are not in such good shape and I'm afraid the governor's demand for 8 percent in property taxes could put many of them over the edge."


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Posted by no name
a resident of Pleasanton Valley
on May 13, 2009 at 10:30 pm

Wow they are taking money from pleasanton to pay for there stupidity. It is amazing. This should be the head lines on CNN and other news station not what the presidents dog did or how he went for a run.

The people who have done this to california are as bad as the execs of any of the banks. They have taken your money and wasted it.

BTW...... these people always come back to the trough for more. Wait till the decide to make the freeways toll based,

Like this comment
Posted by Poorly Written
a resident of Amador Estates
on May 14, 2009 at 7:59 am

Another great piece of journalism from the weekly...who the heck is 'Culver'. Come on guys...this is basic journalism 1A stuff.

Like this comment
Posted by Miguel Cordova
a resident of Las Positas
on May 14, 2009 at 8:24 am

Do you suppose the voters in California are ever going to get a grip on reality and quit voting in these tax-and-spend left-wing loons. They will spend every dime they have plus a lot more. Now these morons are once again coming after our local property taxes to feed their habit. They are drug addicts -- addicted to money to distribute as pork to the loons that elect them.

It's really wake-up call time in Califonia, folks. Get rid of the left-wing loons in Sacramento immideately or the state is going bankrupt. Some of you want home schooling? You got a real chance of getting it. Oh, you will have to give up your job, though. You will be home schooling the kids.

Think about it - the most-likely next Governor will be Jerry (Moonbeam) Brown, Gavin (Drunken Philanderer)Newsom, or Antonio (The More Illegals the Better) Villaraigosa.

Like this comment
Posted by Connie
a resident of Birdland
on May 14, 2009 at 11:24 am

Miguel Cordova,

You're the only loon here with your right-wing, Rush Limbaugh-like racist rant.Please move to the south and hang around your redneck friends.

Like this comment
Posted by Michael
a resident of Livermore
on May 14, 2009 at 12:22 pm

We will see how this all unfolds. Federal government won't stop spending but is broke so takes from the states, who will not stop spending so they are broke so take from the counties, who will not stop spending so they take from the cities and guess what? The politicans are running out of people to tax because stated California unemployment rate is about 12% but they say real unemployment rate is now over 19%............hmmmmmmmmmmmm interesting story developing here.

Like this comment
Posted by Miguel Cordova
a resident of Las Positas
on May 14, 2009 at 12:34 pm


Very typical left-winger response. When presented with the facts their response is to shout "racist" or "redneck". I can assure you I am neither. Wake up an smell the roses. The state is broke, and the State government is like leaches, they will suck money out of us until they have sucked us dry to support the "entitlement state" they have created.

Like this comment
Posted by Einstein
a resident of Mohr Elementary School
on May 14, 2009 at 3:03 pm

Einstein is a registered user.

Miguel, the best solution to all of these economic woes would either be to significantly reduce the personal income tax rate, corporate tax rate, FICA, or maybe the best would be to go to a flat tax of say 20%. This way small business owners would be able to put more money into their businesses and hire and the high wage earners would have more cash to spend and grow the economy. On the flip side people who pay absolutely no income tax will be required to contribute even if it is not a lot.

Like this comment
Posted by tax them all
a resident of Another Pleasanton neighborhood
on May 14, 2009 at 7:11 pm

I agree with Einstein. Everybody should be paying taxes of some sort. It is so easy for somebody to support a program if it will not cost them anything and the cost is past on to another group. If everybody had to pay something, more people would be paying attention and being critical of how the money is spent. The mantra here in California is, "I want this program and I want you to pay for it."

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Posted by Einstein
a resident of Mohr Elementary School
on May 14, 2009 at 7:19 pm

Einstein is a registered user.

tax them all,

I believe the base should be 20% at the highest and maybe 10% for the lowest income earners. I believe this would also level things out so that everyone was in so to speak. In addition, in order to break up this buddy system we should have term limits for our elected officials. Senators should get two terms and the house should get three and then we get fresh ideas with no pockets being padded. By the way, we should have term limits in Pleasanton as well.

Like this comment
Posted by tax them all
a resident of Another Pleasanton neighborhood
on May 14, 2009 at 8:33 pm


I agree with you on having a couple different brackets but everybody paying. What upsets me quite a bit now is I pay taxes which are supposed to be used to perform services to protect me, take care of the infrastructure and take care of the schools. The government spends much of my tax money supporting those who do not pay taxes and then when finances are tights (i.e., they overspent in government), they talk about cutting funds for those essential services I am paying for but they keep spending tax money on those who do not pay any money. Maybe I have too much libertarian blood but I feel that government should primary be used to support safety, schools, and infrastructure. If we are going to do social services, ok then BUT if we do not have enough money, it should continue to fund those services I am paying for and use and needs to cut services to those who do not pay the taxes. My feeling can change if everybody pays taxes but until everybody does, those paying the taxes should not have their essential services cut first and/or then tell them they will have to pay more so the government can continue to pay for services for non-taxpayers.

I have to agree with Miguel about an "entitlement state". If California continues as it is, people with money will leave the state, maybe little by little, but at some point the state will be left with those who do not pay taxes and nobody to pay for their services. Then what do you do?

We do have term limits for state officials. We also have term limits for city officials. We do not have term limits for school board members.

Like this comment
Posted by Einstein
a resident of Mohr Elementary School
on May 14, 2009 at 8:39 pm

Einstein is a registered user.

tax them all,

Arnie just came out on TV and said we are effectively bankrupt because of uncontrolled spending and the highest taxes in the nation so we have bigger problems then just the city. You know the biggest advantage of everyone paying taxes is that we are all in! What I mean is that when you are playing with your own money rather than someone elses money you expect accountability and that is good. Related to term limits we definately need them for school board members and also for the US Senate and house.

Like this comment
Posted by Can there be a bright side?
a resident of Country Fair
on May 14, 2009 at 8:46 pm

I have an answer for: "If California continues as it is, people with money will leave the state, maybe little by little, but at some point the state will be left with those who do not pay taxes and nobody to pay for their services. Then what do you do?"

Answer: Great weather!

Sorry, but further commenting on this topic has been closed.

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