County plans for impacts of $15B bond vote |

County plans for impacts of $15B bond vote

Unsure if Californian voters today will support Gov. Arnold Schwarzenegger’s $15 billion bond plan to fill the state’s budget hole, Nevada County officials are girding for multimillion dollar cuts to services.

If Proposition 57 passes in today’s primary election, it will allow the state to sell up to $15 billion in bonds to address its budget shortfall and make it less likely for politicians to turn to counties for relief. If it fails, it will force Schwarzenegger and state legislators to cut spending, raise taxes or both.

And if cuts come, said Nevada County Board of Supervisors Chairwoman Robin Sutherland, they will hit the county hard.

“It’s roughly a $5 million cut that will affect our social services,” Sutherland said. “We’re budgeting for the worse-case scenario, just like we did last year.”

While the California State Association of Counties and several county boards and cities across the state have come out in support of Proposition 57, Nevada County supervisors chose not to take a position either way. That’s because propositions are voter-approved items rather than bills being voted on by the Legislature or laws administered by the government, Sutherland said.

Proposition 57, which is the largest bond measure in U.S. history, is paired with Proposition 58. The latter measure would create a reserve fund and restrict future borrowing by the Legislature. For either measure to be enacted, both must pass.

Schwarzenegger’s $15 billion proposal would actually be replacing a $10.7 billion bond plan approved last year by the Legislature but is currently being challenged in court. Proposition 57 supporters say the $15 billion bond has a lower payment rate over more years.

The approximately $4 billion balance of the bond will pay counties the money they lost when Schwarzenegger recalled increases in vehicle license fees put in place by former Gov. Gray Davis.

Schwarzenegger has said the state faces bankruptcy without the bond, which would be paid back by diverting a quarter-cent of sales tax over a period of up to 14 years.

Those against Proposition 57 argue that the bond will cost $1 billion a year over its nine-year life. State Treasurer Phil Angelides said if it is passed, every household in the state would pay an average of almost $1,700 a year to pay off the bond.

State Sen. Tom McClintock, who ran unsuccessfully against Schwarzenegger in the October recall election, signed the ballot argument against the governor’s plan.

“Proponents say this won’t raise taxes,” McClintock said on his Web site. “Where do they think the money is going to come from to pay back $15 billion in loans plus billions more in interest? Ultimately, it must come from either cuts that proponents have already said they don’t want to make ” or from increased taxes.”

Sutherland, meanwhile, said the county is looking at ways to streamline its operations even more than it already has. She noted that the Sheriff’s Office lost more than $500,000 in funding last year because of spending in Sacramento.

“Unfortunately, we have to pay the price,” she said. “We’re still taking a second look at how we’re doing business in Nevada County.”

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