HomeMy WebLinkAbout07/07/1992, 5 - THE STATE'S BUDGET CRISIS AND ITS IMPACT ON THE CITY OF SAN LUIS OBISPO (UPDATE FROM JUNE 30, 1992) �i h der-
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COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: John Dunn, City Administrative Officer
Prepared by: David Gray, Administrative Analyst
SUBJECT: The State's budget crisis and its impact on the City of San Luis Obispo
(update from June 30, 1992)
CAO RECOMMENDATION: Receive report.
DISCUSSION:
On June 30, the Council adopted a detailed action plan for responding to the State fiscal
crisis. At that time, staff indicated that an update would be provided during the Council
meeting of July 7.
As of this writing (July 2, 1992), the Legislature has failed to adopt a State budget.
Registered warrants (IOU's) have been printed and are being issued for all State debts
as they are incurred. The State Controller is prepared to continue to issue warrants until
a budget is adopted, or through July 31, 1992. This has had the effect of reducing the
economic pressure on the Legislature to meet the new fiscal year deadline, or other
perceived deadlines.
The Cost to Cities
State budget analysts continue to propose plans to stop some State payments to cities.
A phasing out of the AB 8 payments to cities to compensate for the loss of property tax
revenues caused by passage of Proposition 13 in 1978 remains as a State option. The
latest plan (July 2, 1992) would take $1.4 billion from cities over two years (FY 92-93 and
FY 93-94).
The Cost to San Luis Obispo
The amount of the loss of the AB 8 payments cannot be accurately determined at this
time, although staff continues to plan for a possible decrease ranging from $1 -$2 million,
annually.
Conclusion
It seems certain that the State will remove some amount of revenue at some point soon.
When and how much remain uncertain. However, staff continues to plan to make
commensurate and appropriate cuts to City expenditures in anticipation of State revenue
reductions.
(A verbal update will be provided during the JuIv 7 meeting, given the ever-changing
situation in Sacramento.) COPIESTO:
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