By JASON ECK
Although the state's budget crisis sounds drastic, the Sonora City Council is not intimidated.
At a special meeting Friday, city officials said they won't make immediate budget cuts or freeze hiring for the rest of this fiscal year, because state money questions won't be answered before the beginning of summer.
Following a finance committee recommendation, the council voted unanimously to take a "wait and see" position on any proposed mid-year budget cuts.
Finance Director Pat Perry told council members sales tax revenue projections are on target for the fiscal year, which ends June 30, and City Administrator Greg Applegate said the city can make it through the rest of the year in good fiscal shape, even with state cuts.
How much of a hit the city might take, however, is about as clear as chocolate milk.
Two proposals by Gov. Gray Davis have city officials' attention.
License fee worry
The first is Davis' proposal to eliminate vehicle license fee "backfill" money.
When vehicle registration fees were reduced as the state's budget surplus swelled two years ago, legislators made a deal with local governments to backfill their losses.
Applegate and other city and county leaders across the state argue the Legislature would be breaking a promise by taking away the backfill now, although the promise was never drafted into law.
In January, the Assembly passed a bill to triple vehicle license fees to make up for the anticipated loss of backfill money.
Smaller cities depend heavily on the vehicle fees.
But because it's the shopping hub of the foothills, Sonora is different. The city relies heavily on sales tax, which makes up 59 percent of the general fund this fiscal year. The vehicle license fees only make up 6.5 percent of the city's general fund.
The city would still feel a pinch from the reduction of vehicle fees, because general fund revenue pays for police and fire department salaries and services. Those expenditures are 57 percent of the general fund.
Through the license-fee reductions, the city would lose about $83,775 for the remainder of this fiscal year. Next fiscal year, when the loss is spread over an entire 12-month period, the city would find itself shorted by $178,549, according to figures compiled for the city by Assemblyman David Cogdill, R-Modesto.
Council members are drafting a resolution to urge the governor not to remove the backfill. The item will come up for discussion on the agenda of Monday's regular meeting.
The city's Redevelopment Agency could also lose money if Gov. Davis' proposed $500 million shift of property tax revenue from redevelopment agencies is OK'd.
A similar move last year left the local agency $14,000 short.
Applegate said a significant cut could put some projects in jeopardy. The redevelopment agency is in charge of improving blighted areas in the city, including the regeneration of Rother's Corner, the former 7-Eleven building on North Washington Street.
Contact Jason Eck at email@example.com.