More on the State Budget
First for the semi-good news, apparently the state is being realistic in its future budget assumptions. Here is a report from the League of Cities fiscal expert, Michael Coleman:
Down deep in the text and tables of the Governor’s proposed budget released Friday are some revenue estimates and forecasts, some of which also apply to key city revenues. Although the growth patterns of local sales taxes and property taxes depend greatly on the particular economic situation within a jurisdiction, the statewide trends are noteworthy. The State Department of Finance (DOF) is estimating that the assessed value (AV) of taxable real property will decrease 2.9 percent from the FY2008-09 to the current FY2009-10 fiscal year.
DOF forecasts that AV will fall further by another 2.2 percent from FY2009-10 to FY20010-11. As for sales tax revenues, the Governor’s proposal estimates that final taxable sales figures will show a decrease of 12.8 percent for the FY2008-09 over the prior year and a further decrease of 7.5 percent in the current FY2009-10 year. Sensing the beginning of a turnaround, DOF projects a modest increase of 6.3 percent in statewide taxable sales for FY2010-11.
The real question is whether or not the legislature sticks to these numbers when they are trying to complete the budget on the eve of this fall's election.
The grim and insidious part of the budget is chronicled in today's Sac Bee (click here). While this sleight of hand didn't work last year, looks like the Governor is going to give it another shot. Here's how the Bee describes it:
California drivers could save a dollar and change each visit to the gas pump under a tax swap proposed by Gov. Arnold Schwarzenegger.
In an effort to free up money to balance the state budget, the governor wants to reduce the sales tax motorists pay on gas purchases while increasing the gas excise tax, also paid at the pump.
Administration officials say the switch would help California close a $19.9 billion budget gap by nullifying laws that reserve most of the gas-pump sales tax for transit agencies.
That would free up anywhere from a few hundred million dollars to more than a billion dollars for the state general fund. The total amount is disputed by the administration and transit officials.
State finance spokesman H.D. Palmer said the plan has the added benefit of saving motorists nearly $1 billion at the pump in the coming year.
"That's one of the pleasant aspects," Palmer said.
Longer-term, however, the governor's plan calls for increasing the gas excise tax annually for the next 10 years from its current 18 cents to 34 cents per gallon by 2020.
Transit officials, meanwhile, are livid. They're calling it a "bait and switch" move to avoid making good on voter-approved funding for local bus service and rail service.
School advocates also are troubled. The tax swap would allow the Legislature to reduce funding to public schools this year by $800 million, the Legislative Analyst's Office noted.
That represents a 1.6 percent reduction of Proposition 98-mandated school funding.
While the proposal doesn't have a huge impact locally, who knows--this bait and switch could end up impacting more of our road funds as well. More importantly, it is symbolic of the many games being played by the state to attempt to survive another budget cycle with gimmicks instead of hard decisions.
Down deep in the text and tables of the Governor’s proposed budget released Friday are some revenue estimates and forecasts, some of which also apply to key city revenues. Although the growth patterns of local sales taxes and property taxes depend greatly on the particular economic situation within a jurisdiction, the statewide trends are noteworthy. The State Department of Finance (DOF) is estimating that the assessed value (AV) of taxable real property will decrease 2.9 percent from the FY2008-09 to the current FY2009-10 fiscal year.
DOF forecasts that AV will fall further by another 2.2 percent from FY2009-10 to FY20010-11. As for sales tax revenues, the Governor’s proposal estimates that final taxable sales figures will show a decrease of 12.8 percent for the FY2008-09 over the prior year and a further decrease of 7.5 percent in the current FY2009-10 year. Sensing the beginning of a turnaround, DOF projects a modest increase of 6.3 percent in statewide taxable sales for FY2010-11.
The real question is whether or not the legislature sticks to these numbers when they are trying to complete the budget on the eve of this fall's election.
The grim and insidious part of the budget is chronicled in today's Sac Bee (click here). While this sleight of hand didn't work last year, looks like the Governor is going to give it another shot. Here's how the Bee describes it:
California drivers could save a dollar and change each visit to the gas pump under a tax swap proposed by Gov. Arnold Schwarzenegger.
In an effort to free up money to balance the state budget, the governor wants to reduce the sales tax motorists pay on gas purchases while increasing the gas excise tax, also paid at the pump.
Administration officials say the switch would help California close a $19.9 billion budget gap by nullifying laws that reserve most of the gas-pump sales tax for transit agencies.
That would free up anywhere from a few hundred million dollars to more than a billion dollars for the state general fund. The total amount is disputed by the administration and transit officials.
State finance spokesman H.D. Palmer said the plan has the added benefit of saving motorists nearly $1 billion at the pump in the coming year.
"That's one of the pleasant aspects," Palmer said.
Longer-term, however, the governor's plan calls for increasing the gas excise tax annually for the next 10 years from its current 18 cents to 34 cents per gallon by 2020.
Transit officials, meanwhile, are livid. They're calling it a "bait and switch" move to avoid making good on voter-approved funding for local bus service and rail service.
School advocates also are troubled. The tax swap would allow the Legislature to reduce funding to public schools this year by $800 million, the Legislative Analyst's Office noted.
That represents a 1.6 percent reduction of Proposition 98-mandated school funding.
While the proposal doesn't have a huge impact locally, who knows--this bait and switch could end up impacting more of our road funds as well. More importantly, it is symbolic of the many games being played by the state to attempt to survive another budget cycle with gimmicks instead of hard decisions.
posted by City Manager @ 2:52 AM
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