Tuesday, August 04, 2009

Blog #29 - State Budget Decisions Hurt Town Budget

The State legislators and the Governor balanced the State Budget recently. You may remember that in February of this year the state adopted an 18-month budget. Since February the state accumulated a $26 billion deficit.

On July 28, 2009 the Governor signed a 27-bill package of budget solutions including:

Spending Cuts: $16.1 BILLION:

$820 Million in pay cuts to state employees or a 15% pay cut for 200,000 workers;
$9.3 Billion in education cuts;
$3 Billion in health and human services cuts;
$2.97 Billion in corrections, state parks and elimination/consolidation of state boards

Fund Shifts: $1.0 Billion
Revenues: $3.5 Billion

Borrowing: $2.2 Billion-$1.935 BILLION is the 8% local property tax grab
Other: $1.4 Billion - Payroll shift and health premium delays for state workers

How does the state budget affect the Town's budget?

The Prop 1A property tax grab amounts to about $250,000 in lost revenue to our Town budget. The state must pay this back in three years with interest. In the meantime the Town is short the $250K and must borrow this amount from its own reserves to balance the budget.

In addition to the state borrowing our property tax for three years, the Town's Measure F, a special municipal services tax is up for renewal on November 3rd of this year. Measure F represents $465,000 per year to the Town. The two attachments below summarize how Measure F has been spent over the last four plus years by the Town and provides other information relating to the town budget and Measure F.

If Measure F is not renewed by June 2010 the Town will be short $715,000 by this time next year.

Balancing next year's Town Budget will be a major challenge.