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The city of Saratoga has signed on to a lawsuit letting California know that "robbing Peter to pay Paul" will not be tolerated.
Saratoga joined nearly 40 other cities, including Sunnyvale, Santa Cruz, Hayward and Alameda, in suing the state over legislation that takes away sales tax funds from municipalities.
City Attorney Richard Taylor said the state legislature passed a .25 percent increase in sales tax to repay deficit reduction bonds, at the same time reducing cities' authority to levy sales tax by the same percentage. The legislation would decrease city sales tax from 1 percent to .75 percent.
"They took a source of revenue away from cities," Taylor said.
How much revenue? Mayor Ann Waltonsmith said it would eliminate more than $156,000 from the city's annual budget beginning with the 200405 fiscal year. Though she said a budget reduction would affect city programs "across the board," Waltonsmith said a couple of departments would see noticeably large cuts if the lawsuit fails to strike down the legislation.
"Our biggest budget items are our sheriff's contract and roads repair," she said. "We don't want to stop doing those things, but obviously they're going to be affected."
Both charter and general law cities are taking part in the lawsuit. Taylor said charter cities operate according to a kind of "mini-constitution," while general law cities such as Saratoga get their power from the state.
The suit claims that not only does California not have the legislative power to take away cities' right to levy sales tax, the legislation would have never passed had it only included general law cities. It also claims that there is no issue of statewide importance that warrants the reduction.
Waltonsmith said she also doubts the legislation would be temporary as the state claims. She cited the Education Revenue Augmentation Fund shift in the early 1990s that took approximately $700,000 in property taxes from the city's annual budget. That shift was supposed to be temporary, she said, but is still in place.
"We just don't have a sense that they are really going to take it temporarily," the mayor said. "It is really hard to balance your budget when someone can slip in the back door and take money out of your bank account."
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