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Lathrop could lose $430K more in property taxes if governor follows through on threat
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LATHROP – The City of Lathrop stands to lose about $430,000 from its 2009-10 coffers to the State of California following the failure of Proposition 1A in Tuesday’s elections.

“It’s a big deal,” interim City Manager Cary Keaten said about that projected amount that could be excised from the coming fiscal year’s budget.

Even more so considering the city, like practically every local government in the country, is trying its best to further whittle down an anticipated $2.5 million annual budget deficit in the next five years. Just last Saturday at a special meeting, the City Council unanimously gave the green light to lay off 10 employees plus eliminate five unfilled but budgeted positions. But that action, which the council members said was a very difficult decision to make, only carved out about half of that deficit and the city is now looking into other ways to reduce the deficit. And that could mean more layoffs, possibly in the Police Services, plus furloughs for employees which could mean cutting back business hours at City Hall.

“If they (state officials) pay it back within three years,” and assuming the economy turns around within the next three or four years, the projected amount lost to the state “should be neutral to our five-year survival period,” Keaten said, referring to the Five-year Survival Strategy that city officials have developed in the wake of the ongoing severe budget crisis.

“If they don’t and it takes them longer to pay us back, then it will impact us because it’s a loss of revenue and it’s our money,” added Keaten.

The good news is that this proposed “borrowing” from the state is just a one-time deal.

Passage of Proposition 1A means the $16 billion in tax increases negotiated as part of the 2009 state budget would be extended through 2012. That would mean a statewide 1-cent sales tax, the state’s Vehicle License Fee going up to twice the current fee, plus a .25 percent increase in personal income taxes through 2012.

Governor Arnold Schwarzenegger has already stated that if the proposition fails, the state would borrow money from local government coffers to balance the state budget. The state Department of Finance announced on May 5 this proposal to the governor of “borrowing” more than $2 billion in local property taxes from cities, counties as well as special districts.

Noting how severely such a step would impact “local public safety and other vital services,” the council at their regular meeting Tuesday night overwhelmingly voted to approve a resolution which declares the city as “experiencing a severe fiscal hardship to the state’s seizure of local property tax funds and the continued adoption of unfunded mandates by the State of California.”

All members of the League of California Cities are then requested to forward copies of the approved resolution to the governor, the state Senate and the state Assembly to inform them of their dire financial situation.

To emphasize that point, the resolution states, among other things, that the state has seized more than $8.6 billion of city property tax revenues since the early 1990s, and that in fiscal year 2007-08 alone, the state has seized $895 million in city property taxes statewide “after” reducing public safety program payments plus state seizures of an additional $350 million in local redevelopment funds in 2008-09.

All these bad news about the statewide budget crisis is causing great concern among local businesses like Andy and Amita Kotecha of Manteca whose family owns and operates the Country Kitchen Restaurant, Day’s Inn, Comfort Inn and Hampton Inn in Lathrop.

“Obviously, it’s not a good thing for us, especially business owners like us – for all business owners,” said Amita Kotecha who went to help her father, Balu Patel, ran Hampton Inn after she and her husband sold their Quizno’s restaurant in Modesto.

The layoff of employees at City Hall and in other businesses affects everybody, she said. Lathrop already has seen a lot of people losing their homes due to the mortgage meltdown and in the continuing economic distress, and with people losing their jobs, Lathrop and other cities are being hit by a double whammy.

“If those people lose their jobs and they leave the area, who’s supporting our businesses? It’s a vicious cycle,” Kotecha said.

The economic crisis has “impacted every business, impacted every person who punches a time card to the person who has a corporate job who’s been there years and years. It’s impacted every person I know, whether you’re a student, business owner or somebody who’s a stay-at-home mom. It doesn’t matter what you’re doing right now, you’re being affected. Hopefully, we can get through this,” said the young wife and mother of two girls, one of whom now goes to school in Manteca.