Here is a San Jose Mercury News article. It's important to know that San Jose is already in financial trouble and making cut-backs to stay afloat:
By Denis C. Theriault and Ken McLaughlin
Cities vow to fight 'reckless' state budget proposal in court
As more details emerged about the tax take-away — twice as large as Gov. Arnold Schwarzenegger had initially sought — leaders from already-struggling South Bay cities were left facing a new round of budget cuts far steeper than most had anticipated.
"Everything's going to be back on the table," said a stunned San Jose Mayor Chuck Reed, whose city could wind up handing $100 million to the state, including as much as $67 million in redevelopment money.
He added: "We will certainly be joining in with other cities in litigation." Opponents say the move is unconstitutional because it reroutes funds earmarked for specific purposes like repairing roads and fighting blight.
Last month, San Jose closed an $84 million deficit by laying off a handful of employees, raising fees and trimming some services. Now, Reed says, the city may no longer be able to avoid making deeper cuts; officials were expecting just $50 million in state take-aways, on top of a general fund deficit next year that already could top $90 million.
San Jose's parks and libraries could see their hours sharply reduced. Miles of roads will likely go without repaving. Even the Police and Fire departments — which Reed had pledged to protect as "priority No. 1" — may face cutbacks.
County budget officials, still crunching numbers, were bracing for a worst-case hit of more than $100 million — far less than earlier doomsday projections but still a "devastating blow," said Leslie Crowell, county budget director.
The county last month closed a $273 million deficit, mostly through layoffs and reductions in health programs. Unlike their counterparts on the San Jose City Council, county officials set aside a $63 million reserve for such a raid. But new cuts could come from social service programs and long-protected public safety departments, such as the Sheriff's and District Attorney's offices.
Gilroy, the county's hardest-hit city in the current recession, already is grappling with unpopular police layoffs. City Administrator Tom Haglund said he had been bracing only for a $1.2 million hit in property taxes. The state took all that, he said, plus at least $800,000 in gas-tax money.
"Thank God we don't have a redevelopment agency" for the state to raid, he added.
The $4.4 billion plucked from local governments would come from three sources: nearly $2.1 billion in property and sales tax receipts; more than $1.3 billion in redevelopment money; and $1 billion in transfers from local gas taxes.
Officials in Santa Clara, where a proposal for a San Francisco 49ers stadium rests heavily on a $42 million redevelopment contribution, are girding for at least a $2 million redevelopment take-away. But Assistant City Manager Ron Garratt said that wouldn't be enough to sink the proposal — at least, not yet.
The team and city "predicted there might be these bumps," and the team has pledged to fill in the financing gaps, Garratt said. Still, if the state continues to raid redevelopment coffers in future years, the 49ers could decide to reconsider the deal, he said.
Under Proposition 1A, which voters passed in 2004, the property and sales tax money must be repaid with interest within three years. No such provisions exist for redevelopment funds and cash diverted from gas tax revenues, which voters have earmarked for road repairs.
Across Santa Clara County, said Randy Rentschler of the Metropolitan Transportation Commission, some $45 million in gas taxes would be lost this year.
Cities and redevelopment agencies from around the state are expected to take part in legal challenges to the redevelopment and gas-tax grabs.
"This budget proposal is a reckless Ponzi scheme, because it depends on unconstitutional seizures of billions in local revenues that the voters dedicated to specific purposes," Chris McKenzie, head of the League of California Cities, said in a statement.
This isn't the first time Sacramento has tried to divert money from redevelopment agencies. Last spring, the California Redevelopment Association won a court fight against state plans to shift $350 million in redevelopment money for education.
State officials, however, have signaled their intention to appeal that decision.
Posted July 21, 2009....Bob Brinker has said that education and bondholders are first in line to be paid under "California law."
May 16th on Moneytalk, Bob Brinker said: "Now it is unlikely in the case of the bondholders, because the bondholders under law in California are second in line after education to get paid. So they are so high up the food chain in the order of getting paid that they are protected to a significant degree....."
Well, looks like education was one of the first to take cuts. Almost unbelievably, California Legislature is helping themselves to some city property (and other) taxes. They call it "borrowing," but they didn't ask to borrow, they simply helped themselves. There will be lawsuits. They are also tapping next year income taxes, shifting money around and selling more bonds. Yes, that's the ticket, shift money around and sell bonds. LOL!
From Bloomberg: Spending Cuts
Senate and Assembly leaders said they will seek to put the proposals to a legislative vote by July 23. It would require passage of more than a dozen bills by a two-thirds margin. While Democrats control both chambers of the Legislature, they are six votes shy of such a supermajority.
The agreement calls for cutting spending by $15 billion, including $6 billion from schools, $3 billion from colleges and $1.2 billion from prisons. Schools will be repaid $11 billion once the state’s economy turns around. It also raises $4 billion by in part accelerating personal and corporate income tax withholdings and increasing income tax withholding schedules by 10 percent.
Read more at Bloomberg here [LINK]Dixiegeezer sent these awesome pictures. It seems like the water has such an unusual color to it -- flamingoes or pink spoonbills?
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