By Linda Taaffe

California State Assemblyman Joe Simitian told Los Altos city officials last week that he expects this year easily to be the state’s worse budget year in the past decade.

He said state revenues over the past three months have been even lower than anticipated. Officials project the state’s budget deficit for the fiscal year to be between $8 billion and $14 billion, according to statewide media reports.

“The disparity between revenues and the dismal projections are getting worse and worse,” Simitian said.

Simitian said this means the state legislature will more than likely raise taxes, cut some government programs and take a larger tax share from local municipalities as it did in 1992 with the Educational Revenue Augmentation Fund (ERAF).

Gov. Gray Davis already announced Nov. 3 plans to increase sales taxes by a quarter of a cent starting in January.

Santa Clara County supervisors are talking about a possible hiring freeze for some of the county’s approximately 1,900 vacant jobs in order to prepare for the $43.6 million county deficit expected in the next fiscal year, which begins in July.

If the state decides to divert more funds from cities, Los Altos could be greatly impacted since it doesn’t have “big box” stores or a large industrial tax base.

When the state diverted a bigger portion of property taxes from cities in 1992 through ERAF, Los Altos lost about 7 percent of its annual revenues, or about $9,000 in the first two years. Even after the state’s budget rebounded, it continued to collect a higher portion of property taxes from cities. The state has diverted about $9 million from the city since 1992.

The drop in the city’s salary scale has significantly impacted the city’s operating expenditures and has left little money for its reserves.

The city’s new hotel tax increase that voters approved last week is intended to replace some of the funding that the state took away through ERAF.

California city leaders are collectively talking of putting a statewide measure on next November’s ballot that would break up the ERAF and bring revenue flow back into cities.

Assistant City Manager Starla Jerome-Robinson said the city is anticipating a $200,000 drop in sales tax revenues this year due to the economy.

She said the state could take away another estimated $1 million this fiscal year if it decides to redirect a portion of the vehicle liscensing fees that city typically receives back to the state.

Jerome-Robinson said those fees amount to about 5 percent of the city’s operating budget.

Jerome-Robinson said the city can proably make it thorugh the first period of such cuts, but would have difficulties in the future.