La Mesa’s $1.9M Payment to State Could Be Cut in Half, Says City Manager

La Mesa won’t lose any essential programs or have to cut staff as a result of the state’s surprise demand for $1.9 million, the city manager says.

And the city may get away with having to pay only $900,000, instead of the whole amount, says City Manager Dave Witt.

“We’ll make the adjustments and tighten our belts and get through this, primarily because this is a one-time expenditure,” Witt said. “So we hope that the state and the county agree with the new analysis” of what La Mesa owes.

The sudden announcement at Tuesday’s City Council meeting that the city would have to to the state in the wake of the now-dissolved redevelopment program came as a shock to city officials.

But after working tirelessly the past few days, it now looks as if the city may  be on the hook for about half of that amount, according Witt.

Witt told La Mesa-Mount Helix Patch on Thursday that city officials have been working with the state and the San Diego County Auditor and Controllers Office to analyze the way the payment should be calculated.

He said the county has agreed with the , and is willing to support the position of a reduced payment.

“So we wired our funds [Thursday] with some documentation for what we feel the correct calculations is, which is about half of that $1.9 million,” Witt said. “We made a statement that we would continue to work with them to try and convince them that we’re correct. If not, we’ll make the full payment.”

He said state officials are “overwhelmed” at this point, and he didn’t know the time frame in which a decision would be forthcoming, “but they were at least understanding of what we were providing. So that’s where we’re at.”

The disparity in the figures, Witt said, comes from what money is being calculated as recognized obligation payments (ROPS)—bond payments, outstanding loans, etc.—due to the state, and what is calculated as the redevelopment tax revenue. 

“Part of the dispute is what is counted as an obligation. What were the funds from last year used for?” he said. “So the way it showed up on the charts, it looked like it was sitting in a reserve account. It wasn’t. It all got spent.

“So when you take another look, we feel that there is this portion that we paid to the state ($900,000), and there is the other portion ($1 million) isn’t appropriate because it was all spent on recognized uses.

“We hope we can work that out, but we’ll see. It’s kind of a work in progress,” he said.

Witt then described AB26, the measure that ended local redevelopment programs in California, and why it was ended in June 2011.

“Basically, they are property taxes that constitute what we refer to as tax increment. So when there was a ready project area, there was baseline for that project, and any development that took place was above that increment.

“The programs that developed things like the Fletcher Parkway areas, you’re required to spend those monies in those areas in order to provide public improvements, remove blight, those sorts of things.

“And that occurred. It had been going on in La Mesa for over 40 years, and had been approved by the state of California since the ‘60s,” Witt said.

But when Gov. Jerry Brown was attempting to set the budget last year, he determined that the state could no longer afford to replace those tax increment payments at the local level.

Brown’s decision to dissolve the redevelopment program was upheld in the state Supreme Court in February 2012.

Which leads us back to this week, and the urgent action that was needed for the council to approve the expenditure—not only to avoid a 10 percent late fee, but also because it is money not originally in the city’s budget.

Witt said city officials are still investigating where the payment appropriation is going to come from, but added that “some of it will have to come out of reserves. There’s no question about that.”