Although the $150 billion state budget still takes almost $5 million from Sunnyvale's funds over the next two years, the city's budget for this year was forged with that loss in mind.

The controversial state budget affected Sunnyvale as finance director Mary Bradley expected, taking just under $2.1 million in each of the next two years, with a promise that $2.4 million in vehicle license fees would be repaid a year later in 2006 and 2007. The city planned for the situation, even though the governor said he was setting out to create a budget free of "short-term fixes."

"I think the governor believes that the economy is going to grow and improve and help us out," Bradley said. "The worst that could happen to Sunnyvale is that the state can't pay back the VLF fees and then they can't borrow from us again."

Part of Sunnyvale's relief came from legislation put into effect, along with the state budget, that protects public funds from being redirected by the state. The League of California Cities fought hard for the legislation earlier this year, and its efforts paid off, preventing additional "borrowing" from city coffers.

"California cities really made their voice heard, and we're all really impressed the governor stuck with us, because it would have been very easy for him to throw us to the wolves," Bradley said.

Bradley said that there are two loopholes in the legislation that will have to be carefully watched. The first is that redevelopment funds set aside by cities are not specifically named in the legislation, although she says the intent of the law covers them. This would not present much of a problem for Sunnyvale, which has a relatively small redevelopment agency, compared to cities like San Jose with significant redevelopment budgets.

The second loophole is that there is no provision preventing the state from taking local funds and redirecting them into schools—which Bradley also said shouldn't be a problem.

Sunnyvale is also getting $178,000 back from the state as reimbursement for booking fees charged by Santa Clara County. The county charges Sunnyvale Public Safety a fee every time it books suspects into county jail. At one time the state did refund the money, but in recent years it cut it off. However, the funds are only being restored for one year.