EDITORIAL: Waiting for governor to show his hand EDITORIAL: Waiting for governor to show his hand (January 07, 2004)

After one of the strangest political years in California history, Midpeninsula government and school officials, like their counterparts elsewhere in the state, are entering 2004 with trepidation about the upcoming year.

The state's huge budget crisis and the unexpected replacement of Gov. Gray Davis with film star Arnold Schwarzenegger in a recall have left local leaders with only a few clues about what might happen to their budgets this year.

Much more will be known this Friday, when the new governor presents his proposed budget to the Legislature. Another indicator will come in March, when voters will decide if the state should borrow $15 billion by issuing bonds to ride out the huge budget deficit. But even if the bond issue passes, the delicate truce between the Republican governor and Democrat-controlled Legislature could evaporate and scuttle any hope of easing the crisis.

Every local government and school district in Menlo Park, Atherton, Woodside and Portola Valley, as well as San Mateo County, has a huge stake in this year's budget sweepstakes and the direction the new governor plans to take the state as he attempts to overcome a $30-billion-plus deficit.

For cities and the county, the governor's promise to make up revenue lost when he rescinded the increased vehicle license fee is critical, but so far he has identified only a small portion of the funds needed to make up for the loss, which exceeds $4 billion for all jurisdictions in the state.

School districts receive a variety of state funds, but around the Midpeninsula, the critical issue is saving basic aid, which funnels local property taxes directly to qualifying school districts. Local schools went to the mat last year to preserve this funding, which ultimately survived the threat, but basic aid will be under siege again in the months ahead.

And, as county supervisors Rose Jacobs Gibson and Rich Gordon pointed out in last week's Almanac, for months the state budget has been shortchanging the county by transferring more local property taxes, which primarily fund county services, to schools. As a result, the county's primary responsibility to protect the public health and welfare is compromised, so much so that County Manager John Maltbie said, "San Mateo County simply cannot absorb these cuts. These cuts represent an unprecedented attack on local government and the health and safety services we provide."

Mr. Gordon believes the budget crisis will take many more twists and turns before it is resolved. He suggested that the state would be better off with some form of tax increase to pay for part of today's problem, instead of issuing bonded debt. Such an approach simply mortgages the future of the state's younger generation, who ultimately will have to pay off the debt.

Luckily, some cities are less dependent on state revenue than others, and some school districts are hoping to duplicate the Menlo Park City School District's passage of a parcel tax with their own ballot measures this year. But for most cities and other jurisdictions, the state budget is the key to making ends meet. And until the governor and Legislature play their hand, local government and school officials can only sit back and hope the cards fall their way.

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