In June, the State "pulled the trigger" to raise vehicle license fees (VLF) to its original, pre-1998 level. However, the Governor recently announced that he supports an initiative to undo the VLF increase. The City’s largest State funding source is the VLF. Oceanside received approximately $9.6 million in 2002-03, which helped pay for police, fire, parks and recreation services. However, the State did usurp cities’ vehicle license fee backfill payments for the July- September period, which created a $2 million revenue loss to Oceanside. If the trigger is undone, the City could permanently lose millions more which will drastically impact its ability to provide services in the community.

The State budget also includes a provision to take 50% of the local sales tax rate to secure bonds covering nearly $12 billion of the State deficit. This exchange, called the triple-flip, would be in effect until all the deficit bonds are paid off. If the exchange proves more expensive than expected because sales tax growth rates exceed property tax growth rates or, if the State stays mired in its budget crisis, cities will face the risk of crippling revenue losses.

The State budget includes a $135 to $250 million, one-time shift from local redevelopment agencies to the State Educational Revenue Augmentation Fund. It is anticipated that the Oceanside Redevelopment Agency will loose up to $250,000 in FY 2003-04.

Additionally, under Proposition 42 (2002) revenue from the sales tax on gasoline that previously went to the General Fund is to be transferred into the Transportation Investment Fund (TIF) for transportation purposes, beginning in 2003-04. Instead, the 2003 budget transfers to TIF only a small portion of the Proposition 42 revenue and keeps the remaining $856 million in the State’s General Fund. Consequently, $650,000 earmarked for the downtown parking structure along with an estimated $400,000 in traffic congestion mitigation funds used for local street repair, will almost certainly be lost. These funds are included in the City’s capital budget and are used for maintenance and rehabilitation of the local street and road system.

The State budget eliminates approximately half of the Public Library Fund (PLF) money. Oceanside’s PLF funding has been subjected to a series of deep State budget cuts over the past two years. It is anticipated that Oceanside will experience an ongoing loss of $177,000 per year.

Two State public safety grants that are currently received by the City -- the Citizens’ Option for Public Safety (COPS) and the Law Enforcement Technology Grants -- will be reduced by a minimum of $100,000 in FY 2003-04.

The State’s inability to identify permanent, structural fiscal reforms continues to make it extremely difficult for cities to plan for the delivery of local services such as police, fire, library, maintenance, parks and recreations services.

The City is bracing for a potentially large loss to its general fund in FY 2004-05 as the State continues to wrestle with its deficit budget. The magnitude of the anticipated State-imposed budget reductions will have a huge impact on all cities by reducing city services. The Oceanside City Council and management team will continue to do everything within their power to mitigate the effects of these pending cuts; however, it is inevitable that many valuable programs and services will be severely impacted.