City manager sings budget blues

Chico City Manager Tom Lando, who is as much a realist as you could ever hope to meet, has told the City Council that the new governor intends to take some $7 million in city revenue over the next two years to help balance the state’s gaping budget deficit.

And that means that, if the state Legislature won’t raise taxes to plug the budget deficit, that politically unpleasant task will fall to local governments.

Included in Gov. Schwarzenegger’s raid is more than $2 million in property taxes and the estimated $1.6 million in lost vehicle license fees, a result of the governor’s promise and follow-through to keep that tax at a rate normally reserved for when the state budget is wallowing in money.

The city, Lando said, can make it through this year without major cuts in services and with some adjustments make it through the next couple of years, “then we hit a wall.”

The council needs to make adjustments now to survive the future with some semblance of what a city government is expected to do—provide services.

“We spend most of our money on police, fire and public works,” Lando told the council at an all-day budget meeting Jan. 27. “I think we need to look for a safety tax of some sort, and we need substantial additional revenues.”

And this dire prediction comes only if the voters pass the $15 billion bond initiative on the March ballot. Without that, things could get really ugly.

The safety tax would come through an increase in local sales tax, with the increase earmarked for specific purposes. The increase would most likely be countywide, as other local jurisdictions have all indicated they are in at least the same dire financial predicament as Chico.

The increase would have to be approved by voters in an initiative, which at the earliest would be on the November ballot. To make that date, it would have to be prepared by mid-July, said City Attorney Dave Frank. But Lando said the city may not have all the information it needs by that date to properly word a tax-increase initiative.

If the bond doesn’t pass, the state is going to have to raid local jurisdictions for another $3 billion “right off the top,” Lando said. “The state needs $11 or $12 billion just to finance the existing debt.”

Right now, Lando told the council, polls indicate the bond initiative will not pass.

Councilmember Coleen Jarvis said she would support a sales tax increase, which she called a regressive tax, only if it were combined with other sources of revenue that are not regressive.

The issue of the city’s financial future will most likely be taken up again by the council in April.