"If the state comes in and raids local funds, I can't guarantee anything," Sanders said, adding that cuts in San Diego would be across-the-board and public safety is "not even immune."
At risk is about $72 million in property and gasoline tax revenues that are supposed to go to San Diego, but may be usurped by the state to overcome a $24 billion spending shortfall.
"When you are talking about the magnitude of numbers that they are talking about (in Sacramento), this starts really cutting through the entire organization," Sanders said.
Legislators have recently indicated they don't want to take local funds, but Sanders said policymakers in Sacramento are "desperate," suggesting they may abandon that rhetoric.
"They are going to run out of cash mid-July and they have got to figure out a way to plug that," Sanders said.
"We are willing to work with them if it's a borrowing, until they can get structural reform in place," he said. "We are not willing to have them just take things from us without our input."
Jay Goldstone, San Diego's chief operating officer, said a plan is being considered with legislators to allow the state to borrow some local funds if there is a "strong enough pledge" that the money would be repaid.
Goldstone said California municipalities, as a collective, may be able to borrow over the short term to cover any revenue decreases from the state while waiting for those funds to be paid back.
The impact of the state's deficit was discussed at a news conference during which Sanders signed a $3 billion municipal spending plan for San Diego for the fiscal year that begins on July 1.
Sanders' budget, which was vetted by the City Council over the past two months, overcame an $83 spending shortfall without cutting into city services, like parks, libraries and public safety.
To overcome that deficit, Sanders relied on sizable reductions in employee pay and benefits, new fees and tapping into the city's reserves.
Sanders, Councilman Kevin Faulconer and Councilman Tony Young, who chairs the city's Budget Committee, thanked San Diego's about 10,500 employees for agreeing to the $41 million in pay and benefit cuts.
"Without the employees' help, without their dedication, without their selflessness for taking a 6 percent pay decrease, we simply could not have closed this gap without cutting city services," Sanders said.
Two of the city's five labor unions -- the San Diego Police Officers Association and AFSCME Local 127 -- didn't agree to the cuts and had the concessions imposed on them.
Young said he will be prepared to convene the Budget Committee to look at revising the fiscal year 2010 spending plan as soon as July if the state moves to shift money away from San Diego.
Young said he will also begin "engaging all interested parties" to begin to deal with the projected $100 million deficit San Diego faces in fiscal year 2011.
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