City to keep gas tax revenue

California has finally balanced its budget and done it without grabbing local gas tax revenue.

The proposed grab was denounced by city and county officials across the state, and lawsuits were threatened. After grueling negations in legislature and line editing by the governor, the state kept its hands off the gas tax revenue, traditionally a prerogative of local governments.

“It was the right decision and legally the right way to go,� said City Manager Ken Frank, one of the most vehement opponents of the proposed grab. “Revenue from the gas tax is supposed to be for roads and streets, not to pay off the state’s debts.�

Frank had issued a scathing condemnation of the state’s proposal to usurp the gas tax revenue, on which the city had depended for 60 or 70 years, for two years. It would have cost the city $1 million.

Frank has also expressed concern that once the state got a taste of the tax, its appetite would only be whetted and the revenue never restored to local agencies.

The reclaimed revenue means street projects in Laguna slated for fiscal year 2009-10 will proceed as scheduled.

“We will be able to slurry seal streets in Top of the World and North and South Laguna as planned this year,� Frank said.

Funding will also be available to keep the North Laguna Alley Improvement project on schedule.

“It’s just sad that the state has to cut out social programs like park operations to make the budget work,� Frank said.

The state still will dip into the city’s property revenue for $2 million, but even when that was first announced Frank considered it the lesser of the two evils being proposed.

He said it came as no surprise and could be handled even though the month before he had wrestled with a budget with a $2-million deficit, due to reduced revenue and increased labor costs.

On top of that, exceptional losses in the public employees’ retirement fund investments have been reported. As of June 30, 2008, California Public Employees Retirement System investment portfolio’s holdings were valued at $239.2 billion. The value had fallen to $180.9 billion by the end of June 2009.

The losses will have to be made up by the employing governmental agencies. However, CalPERS has devised a plan to spread the losses over the next 30 years, beginning in mid-2011.

Frank said that at least gives the city some breathing room.