State borrowing from city has cost Newport Beach $89 million since '93

State raids on local coffers have cost Newport Beach tax payers more than $89 million in property taxes since 1993, according to a city financial report.

The money, along with property tax revenues from cities and counties across the state, has gone to fund public schools through the Education Revenue Augmentation Fund. Newport Beach paid more than $8.5 million into the fund during the 2009-2010 fiscal year alone, according to the Orange County Auditor-Controller’s office.

“This demonstrates the risk cities have from the state’s mismanagement,” Newport Beach Mayor Keith Curry said. “The state is simply out of control and this is a big threat to local government.”

Newport Beach has already given its formal endorsement of a November statewide ballot measure that would prevent further state raids on local government property tax funds, Curry said.

With California facing another $20 billion budget deficit in the coming year, state officials could look to Newport Beach and other cities again to close some of the gap.

“We’re always concerned when the state is facing the deficits they are facing, that they will turn to cities,” Dan Matusiewicz said, a finance officer for Newport Beach.

Gov. Arnold Schwarzenegger approved a state budget in July that included a plan to borrow $1.9 billion in property tax revenues from local governments to plug California’s massive budget hole.

Newport Beach had to hand over $6.2 million in property tax revenues to the state in 2009 under the plan. The city financed the $6.2 million with bonds.

“Although the 2009-10 state budget actions thus far have largely represented short-term borrowings rather than permanent revenue shifts, we are very concerned that the state will continue to look at local government revenues sources as a means to resolve their staggering budget problems,” the report concluded.