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San Diego could sue Sacramento over gas tax 'raid'

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San Diego Mayor Jerry Sanders reiterated his stance against the state government borrowing funds from local municipalities Thursday, saying the city plans to sue over at least one of Sacramento’s tactics.

Sanders said the state could be borrowing as much as $75 million from the city of San Diego, and that could lead to drastic cuts in services and maintenance at the local level.

“They’re talking about every way they can think of to rip off local jurisdictions to balance their budget because they can’t make tough decisions up there and they certainly can’t work together,” Sanders said.

The state is considering taking as much as $36 million in 1A borrowing -- meaning Sacramento will take a portion of local property taxes -- upwards of $24 million in Proposition 42 funding, which mandates that gas tax money go toward transportation improvements. And the state recently announced it could take as much as $20 million more in gas tax money.

Sanders said San Diego and other cities are planning to sue over the gas tax borrowing, because in their opinion, it goes against the state constitution.

“The gas tax, when that was passed, was literally laid out so locals got a certain portion of it, so that the state got a certain portion of it, and the local money was supposed to be used for maintenance,” Sanders explained. “The constitution of the state apparently says they can’t take that from us without repaying it, the state simply said, ‘We’re going to do it.’”

The state, which is facing a $24 billion deficit, has promised to pay back much of what it borrows from municipalities, but it's already offering IOUs for many programs. Sanders and San Diego’s Chief Operating Officer Jay Goldstone said this could hurt the city in the public market because creditors don’t like to hear that a city might be getting repaid.

Goldstone said the city is trying to work with the state, even offering a plan that would allow the state to borrow without hurting the city’s credit.

“One of the things that we’re looking at is that because this is a constitutional obligation (for the state) to pay it back, could we use that obligation as leverage to securitize that borrowing,” Goldstone said. “That’s why we’re more open to that idea, because we conceivably could securitize that and the payback would be basically the state’s pledge, it would not have a negative bearing on our future borrowing capacity.”

However, Sanders said the best thing for the state to do is to make the “tough decisions” that San Diego and other municipalities have had to make. San Diego balanced its last budget by cutting nearly all staff compensation by 6 percent.

Goldstone was in Sacramento recently and explained San Diego’s new two-tiered pension system to Gov. Arnold Schwarzenegger. On Tuesday, Schwarzenegger announced the state was looking into adapting a similar system to save money.

Sanders called the state's ideas of borrowing money "raids" on municipal coffers. He said the county could see more dire affects because it recieves money for many social programs from the state, but the city will see services like road maintenance cut.

With state lawmakers announcing recently that they are going to go home for the Fourth of July weekend rather than continuing to work on the problem, Sanders said he doesn’t have much faith that anything will get done any time soon.

“They have had months and months and months to fix this,” Sanders said. “Right now I don’t have a lot of confidence in anyone in Sacramento.”


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