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State Plans to Borrow Millions of Dollars from San Diego

— The state plans to borrow $36 million from the city of San Diego and another $70 million from the county to help close its $24 billion budget deficit, it was announced today.

As part of his so-called "May revise," Gov. Arnold Schwarzenegger proposed that the state temporarily shift $2 billion in funds away from local governments to balance the fiscal year 2010 budget.

He has also called for massive cuts to education and health and human services, the early release of prisoners, selling off state properties and slashing funding for universities.

Schwarzenegger's plan to borrow money designated for local governments means San Diego will likely be out $36 million in funding for next fiscal year, Job Nelson, San Diego's director of intergovernmental relations, told a City Council budget review committee.

According to San Diego County Board of Supervisors Chairwoman Dianne Jacob's office, $70 million in funds that are supposed to go to the county would instead be shifted to the state.

Jacob, San Diego Mayor Jerry Sanders, county Supervisor Greg Cox and mayors from around the region were scheduled to gather at City Hall this afternoon to oppose the state's proposal.

In April, Sanders proposed a budget for the coming fiscal year, which overcame a $60 million deficit through sizable reductions in employee compensation, but contained no service cuts.

Since that time, the city's proposed fiscal year 2010 budget was revised down due to a $22.8 million anticipated drop in revenue, caused by a greater- than-anticipated drop in property and hotel taxes.

During today's budget review hearing, Councilman Tony Young expressed frustration at having to repeatedly revise down the city's spending plan as the dire financial picture becomes clearer.

"It's almost like we're running a marathon and we are about a mile away from finishing the marathon and somebody yells and says, `Hey, when you finish, we got to climb some mountains,"' he said.

"We have done a lot of work, but it never ends," Young told his colleagues. "It seems like it never ends."

Councilman Kevin Faulconer said he is 99 percent sure the $36 million is going to be taken away from the city.

"The cuts that we have made are important, difficult, but I think all of us on this council realize that there's more action that will likely need to be taken," he said. "Not likely -- more action will need to be taken.

"We're going to make some mid-year adjustments, I would say sooner rather than later, once we know what's going on with the state," Faulconer added.

The City Council has until the end of the month to pass a budget for the fiscal year that starts on July 1.

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