The state adopted its latest-ever budget on Sept. 23, reducing state spending by $10.3 billion. The 2008-09 plan cuts into education, transportation, health care and assistance to low-income families; and the governor’s $510 million in line-item vetoes hacks programs for the elderly, disabled and down-and-out.

The cuts will hit home: Monterey County and its fastest-growing cities report six-figure losses in redevelopment funding. The state budget directs redevelopment agencies to deposit about 7 percent of their property tax revenue into local school coffers, which reduces the state’s contribution to K-12 education, and to settle any past-due bills to the state.

The state also deferred its “mandate reimbursement” payments to counties. Under the California Constitution, the state must pay back local governments for programs mandated under state law. The state has a $75 million backlog in those payments, according to Marianne O’Malley of the Legislative Analyst’s Office.

Cities will also have to pay 10 percent of the county jail’s booking fees for suspects arrested on their turf, according to Sheriff’s Cmdr. Mike Richards.

It could have been worse, according to Central Coast Assemblyman John Laird, who chairs the Assembly Budget Committee. “Overall, we kept the big-ticket items to cities and counties from being cut,” he says. “Given what was on the table, I think we beat back the worst of the cuts.”

O’Malley agrees: “For the most part, local government did not play a significant role in terms of budget solutions for the current-year budget.”

For the cities of Salinas, Seaside and Monterey, which all report redevelopment losses of more than $400,000, that’s little comfort. The city of Salinas, for example is projecting a $4.4 million deficit for 2009-10. “It’s going to impact our redevelopment projects,” says City Manager Artie Fields

The tiny cities of Pacific Grove and Carmel-by-the-Sea don’t expect any state funding losses this year, primarily because they don’t have redevelopment agencies.

Cities aren’t the only local agencies affected by the cuts. The 2008-09 state budget diverts roughly $1 billion from public transit operations into the state general fund. “We fought hard to keep half of it, but the governor just fought and fought to take that,” Laird says. “It’s really a disappointment, because it’s at a time of high gas prices and our efforts to decrease greenhouse gas emissions.”

The budget also extends a 10 percent cut to Medi-Cal provider reimbursements (first instituted in July) through March 1. “Natividad [Medical Center in Salinas] will feel that,” Laird says.

Complicating the financial forecast, the governor may reconvene the Legislature in November to make more cuts, Laird says. For now, the state has avoided tapping 2004’s Proposition 1A, which allows the state to borrow money from local jurisdictions if the governor declares a fiscal necessity and two-thirds of the Legislature approves it.

State revenues are already down $3 billion for the 2008-09 fiscal year. “If the markets continue to fluctuate wildly, it will be more,” Laird says.

P.G. Budget Director Jim Becklenberg is keeping that in mind. “The city remains concerned about mid-year state budget reductions, given the economy and the state’s cash shortage,” he writes by e-mail.

Seaside Deputy City Manager Daphne Hodgson has similar concerns. “There is talk now of the state doing further ‘takeaways/borrowings’ from local agencies in light of the state’s cash flow problems,” she writes. “We are taking a wait-and-see approach.”

Meanwhile local jurisdictions are experiencing revenue losses independent of the state as sales tax revenues and property values drop.

“A variety of issues are coming at us, in some areas we had expected and some areas that we had not expected,” says County Budget Director Dewayne Woods. “We’re trying to figure out how to mitigate that and restructure programs, but the state’s not [finished cutting] yet. This is just the beginning.”