5 of 6 statewide measures defeated; Pleasanton braces for revenue takeaways

Voters approve only Measure 1F, which blocks legislator pay until budget is approved

With five of six propositions defeated at the polls statewide yesterday, Pleasanton officials will confer this morning on the possible financial impact to the city if Gov. Schwarzenegger follows through on his threat to start reducing the state's now $21-billion-plus deficit by "borrowing" the money he needs from cities and counties.

Final vote tallies showed that Measures 1A through 1E were defeated by more than 60 percent of the votes cast with only Measure 1F passing. That measure, which will prohibit legislators and state constitutional officers from receiving pay raises when the state is running a deficit, was approved by 73.9 percent of voters statewide, with 26.1 percent voting against it.

The final results for the other measures were:

1A - Yes: 34.1% No: 65.9%. Would have sent a portion of state revenues to a "rainy day" fund for use in lean years and capped state spending at a 10-year average of state revenue, adjusted for population growth and inflation.

1B - Yes: 37.4% No: 62.6%. Would have required additional payments to local school districts and community colleges to offset recent budget cuts starting in the 2011-2012 fiscal year.

1C - Yes: 35.4% No: 64.6%. Would have allowed state to borrow $5 billion to address current budget deficit against projected additional lottery proceeds.

1D - Yes: 34.2% No: 65.8%. Would have temporarily redirected $600 million in funds from California Children and Families Act (1998's Proposition 10) to General Fund for support of health and human services children's programs, also cutting early childhood development programs funded by the act.

1E - Yes: 33.6% No: 66.4%. Would have redirected $230 million from Mental Health Services Act funds (2004's Proposition 63) for two years to existing health programs, cutting community mental health programs.

Gov. Arnold Schwarzenegger has said that if the propositions failed, he would have to make drastic cuts to education and health care, and served notice that he may ask cities and counties for billions of dollars from their property tax and other funds.

At Tuesday night's City Council meeting, Finance Director Dave Culver said that if the governor follows through on that threat, it could force the city to send nearly $5 million more to Sacramento to help pay down the state deficit.

That would come from sending 8 percent of the city's property taxes for fiscal 2009-10 which starts next July 1– or about $4.7 million – to the state. To do that, Culver said the governor would 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.

In addition, the state could seize another $640,000 Pleasanton receives from Proposition 42 local sales taxes on gasoline, which the city uses for capital projects.

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."

Tuesday night, 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 $4.7 million from Pleasanton, the money will be disbursed from these reserves. If that never happens, the money 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."


Like this comment
Posted by Concerned
a resident of Another Pleasanton neighborhood
on May 20, 2009 at 9:10 am

Despite the good planning of Pleasanton our long-term future is bleak. We need to reduce the public sector salaries ,pensions and medical benefits to levels comparable to the private sector. Over the past decade the apread has widened substantially. Given the collapse of California's economy we need major cuts and Pleasanton is not immune. As the voters indicated yesterday tax increses are out of the question. They will just increase the flood of people leaving the state. Make the public sector take cuts just as the private sector has done. There is no time to waste. California is bankrupt and a lot of the cities are as well.

Like this comment
Posted by Terry
a resident of Highland Oaks
on May 20, 2009 at 9:41 am

I agreed with Concerned Citizen.

Also, I feel that the State Lawmakers can start by reducing their salaries, perks, and staff. If they think they can make more in the private sector, then let them go try. Many of the lawmakers have never met a payroll or operated a business

Like this comment
Posted by erryja
a resident of Lydiksen Elementary School
on May 20, 2009 at 10:21 am

If you are a city official of any city and have responsibility for department performance, the time has come for you to develop a plan to maintain good performance while reducing staff and resources,
The main stream of or business society has been under this direction for the last decade and the fit survive and the category will adjust long-term.
Many institutions do not have the leadership and skills to put forth such plan, so they must go outside to help develop plan "B".
Our government is no different than any other functional business. The leaders must find the talent to achieve success.
Reach out to experienced local residents who have the track record to execute the plan and these people will get you on the right track.
Plan " B" needs to be implemented with objectivity and speed. Goals and accomplishments must be set and tracked and accountability for targets missed must be addressed.
This is a very simple plan but takes unselfish players and leaders to pull off.
I hope Pleasanton and Livermore puts up a plan " B " SOON.

Like this comment
Posted by Pete
a resident of Downtown
on May 20, 2009 at 11:14 am

Well I know of 3 recently retired Toyota executives in town and you cannot get better than that.

Like this comment
Posted by Resident
a resident of Another Pleasanton neighborhood
on May 20, 2009 at 11:16 am

Why should Sacramento take money from Pleasanton? They need to cut spending, reform the 3 point system which allows many union workers to retire with 6 figure incomes at a very young age, get rid of agencies like counties of education, the list goes on.

Sacramento should not take local money for their unnecessary spending. I hope the mayor of Pleasanton speaks about this, and tries to do something to prevent the governor from taking our money.

Like this comment
Posted by It's time
a resident of Another Pleasanton neighborhood
on May 20, 2009 at 12:28 pm

California needs to declare bankrupt and renegotiate/invalidate all those ridiculous salaries, pensions, and contracts that are milking us dry. Enough is enough.

Like this comment
Posted by Get out of the wagon
a resident of Another Pleasanton neighborhood
on May 20, 2009 at 2:09 pm

Thanks PW for this very cautious are always on the right side of the issues...just look at your stellar judgement on the ballot initiatives yesterday...

Oh, were wrong!

As usual you have peppered your statements in reporting with emotion about what will happen to our little town: Your ridiculous conclusions sound like: ONLY MEASURE G CAN SAVE US NOW!!

Why don't you all make this week's front page story headline: Be afraid, be VERY afraid!

We will approach June 2 with reasoning and no emotion and tell Casey and his wonderlings to get to work this summer and figure out a sustainable budget with zero increases, and then tell them to look at how to break the plate of the Union in town.

Just the humble opinion of one insignificant citizen.

Like this comment
Posted by Alee
a resident of Highland Oaks
on May 20, 2009 at 2:35 pm

I am so incredibly happy I voted yesterday! The state of California has been going down the same road in the last 10 years as Obama has been leading us down in the last 5 months- a road of debt and irresponsible spending! So happy to see that the citizens of this state are starting to say "enough is enough."

Like this comment
Posted by Ceasar
a resident of Vintage Hills
on May 20, 2009 at 4:32 pm

I will say this several times for emphasis.
Regarding Public Employees

Reduce pensions, reduce medical benefits, eliminate all pay raises
Reduce pensions, reduce medical benefits, eliminate all pay raises
Reduce pensions, reduce medical benefits, eliminate all pay raises
Reduce pensions, reduce medical benefits, eliminate all pay raises

A tax increase is out of the question unless these issues are addressed.

Like this comment
Posted by The Jackal
a resident of Vintage Hills
on May 20, 2009 at 6:28 pm

I agree with its time.

Time to renegotiate.

Private sector has been dealt major blow to 401k and private union pensions same. Lay offs are many and increasing.

What does happens to the state of CA in a downturn - they raise taxes. Sorry no bailout for the state of CA - cut spending and cut headcount!

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

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