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City: State expected to raid funds
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State raid.

City officials have seen this one before: The state gets short on cash, lawmakers don't like making tough spending cuts so they make up their deficits by raiding the coffers of cities and counties.

Ceres officials are bracing for the worst now that state voters have rejected a slate of statewide propositions designed to raise taxes.

Gov. Arnold Schwarzenegger along with the California Legislature have repeatedly borrowed money from local governments over the past few years to deal with the never ending state deficits. Now that all of the ballot measures designed to put another patch on California's financial hemorrhaging have been defeated, the governor has declared he intends to "borrow" another $2 billion from local government by suspending provisions of a voter approved initiative that prohibits him from doing so unless he declares a fiscal emergency.

Such a move has been projected to cost Ceres at least $546,807 in the fiscal year starting July 1. That means Ceres - as well as a number of other California cities and counties - will be collateral damage for the state's budget crisis.

"This could not have come at the worst time," said Ceres City Manager Brad Kilger. "Most cities are very disappointed. At a time when cities are having to cut back on services - because of reduction in sales tax and property tax due to the economic slowdown - the state, instead of making reductions in their expenditures, are transferring it to us by taking our money."

The latest loss is based on a Prop. 1A prescribed formula of taking eight percent of the cities' and counties' share of property tax revenue.

"We have to immediately factor this loss of additional property tax into our budget revenue estimates," said Kilger. "We have a need to reduce our overall general fund budget, based on our estimates, by almost 20 percent. That equals about $5 million over about five years. We refer to that as our 'structural deficit.'"

The city is looking at reducing expenditures by another $1.5 million in the 2009-10 fiscal year which begins July 1.

Kilger said the budget crisis is expected to bite into city cash reserves for the next five fiscal years by approximately $1.9 million.

"No final decision has been made," said Kilger. "We'll be working with our unions to talk about what kind of cuts we might be able to make."

The state will be looking for non-personnel costs reduction "wherever we can," said Kilger.

Various city finance directors throughout California said the latest threat from the state to cover their financial mess by siphoning local tax dollars is anticipated to push numerous counties and cities to the brink.

Ceres had managed to whittle an initial deficit projected at $1.6 million six months ago down primarily with spending cuts and freezing positions as well as worker layoffs.

Now in light of the governor's intent to again "borrow" from local government to bridge a new state deficit anticipated to exceed $23 billion it appears almost certain that Ceres will not be able to bridge the gap without severe budget cutbacks which translates into layoffs.

Last year the city lopped off $2 million from the budget in anticipation of shrinking revenues but the economy worsened late last year. City officials were sent scrambling on a budget-cutting mode when the county assessor announced that he was going to conduct a second reassessment of properties because of falling home prices which further reduced property values and tax revenues by another 15 percent. Sales tax revenues are also down 9 percent in Ceres.

In March the city let go of 11 workers to cut $1.13 million from the city budget. Kilger said layoffs were unavoidable since approximately 87 percent of the $16.8 million general fund is spent on labor and benefits.

The city currently allocates 83 percent of its discretionary funds to police and fire suppression services. Because of non public safety labor cuts, that percentage is expected to climb to 88 percent next year.

In April the city laid off Ken Craig, its Planning and Community Development Department director due to a decline of development activity. The move saved the city $184,081 in salary and benefit costs.

The state has taken a total of $9.5 million from the state of Ceres since 1991