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News Release

January 10, 2003
CONTACT: Angela Rushen
Media and Communications

Moreno Valley Officials Give an "F-minus"
to Governor Proposed Budget

The Governor's proposed budget, released today, deserves a failing grade, according to Moreno Valley officials. While the details are sketchy, it is apparent that the proposed budget takes dead aim on cities and counties by cutting and shifting revenues that fund local services and redevelopment capital projects.

Notably, this proposal, if adopted by the Legislature, would significantly cut the Vehicle License Fee (VLF) "backfill" revenue that was promised to local government when the temporary VLF tax rollback was enacted several years ago. It will also enact an "ERAF" shift that will reduce the property tax collected by Redevelopment Agencies. Other cuts to local government funding, included in the proposal, would also impact local government budgets.

The most ominous feature of this proposal is that the VLF backfill cuts would go into effect this fiscal year, a year that is more than half over. A quick analysis of the numbers indicates that Moreno Valley would immediately lose about 40% of its annual backfill allocation, or about $2.5 million. Next year, 100% would be cut, resulting in an additional loss of $6 million annually. The loss to the Redevelopment Agency would be about $1/2 million and much more annually.

City Manager Gene Rogers is highly critical of the VLF backfill proposal. "When the state was rolling in the dough, the Governor and the Legislature spent the surplus and rolled back the VLF. In order to blunt opposition, the policy they expressed was that the tax break would be rescinded if state revenues went south. Furthermore, during the Governor's run for re-election, he promised he would not take away our VLF revenues. Instead of rescinding the tax break in whole or in part, once again he is proposing that the state take revenues that are dedicated to local government. We have been betrayed. It's fortunate that the voters approved a constitutional amendment that dedicates VLF to local government, otherwise those local government revenues would be ripped off too."

Ironically, the draconian cuts to city general fund revenues come at the same time the Governor is touting his new 'homeland security plan." Since police and fire services are provided by cities and counties, the Governor must also be aware of the fact that the average city general fund budget has 60% or more of its expenses allocated to police and fire services and they are the people that will protect our communities, not the state. The VLF backfill cuts will be felt in public safety as well as libraries, parks, code enforcement, and other city services. To add to the irony, at the same time the Governor is calling for a jobs program through increased capital spending, he is taking redevelopment agency funds that are dedicated to local capital spending and economic development.

Rogers adds: "The Governor is playing an irresponsible game with the welfare of our communities. I can't believe that the Governor is serious about chopping the backfill because he must know the consequences of such a plan. In a couple of cities, 50% of their general fund revenue is from the VLF and VLF backfill. Moreno Valley stands to lose as much as 12% of our annual general fund revenue, and this loss would be catastrophic. We are efficient and fiscally constrained. Our voters have supported a local utility tax because they understand the needs of their community and the revenues needed to support the services they receive. If it stands, this proposal will have a very serious negative impact upon the safety and quality of life of this community. Every citizen and business owner needs to let the Governor and the Legislature know that this proposal will not fly."