The Thousand Oaks City Council unanimously voted to accept a staff report recommending ways to deal with the $9.8 million the state will slash from the city’s budget.

In July, Gov. Arnold Schwarzenegger and the state Legislature decided in favor of Proposition 1A Suspension, a plan that draws on local government revenues to balance the state budget by grabbing $3.95 billion over the next two fiscal years. This includes borrowing $1.9 billion from property tax revenue from cities, counties and special districts to be repaid with interest in 2013.

Thousand Oaks gets about $30 million in tax revenue subject to Proposition 1A. The state plans to takes 8 percent, or $2.4 million, as a loan, which will affect the city’s general and library funds. Finance director John Adams recommended the city use reserve funds to make the one-time loan to the state.

If all goes as expected, the three-year loan to California would be paid back, along with $80,000 in interest.

Adams recommended that the city not make the loan payment any sooner than it’s required.

At the Sept. 22 council meeting, council members Jacqui Irwin and Claudia Bill-de la Peña questioned whether the city could trust the state to pay back the borrowed money.

“What if the state fails in its obligation to repay the loan?” Bill-de la Peña asked.

“That would be unconstitutional,” Adams responded.

If Thousand Oaks joins other cities in a program to use bonds instead of reserves to pay the state, there would be no risk that the state would fail to repay it, Adams said, but the city wouldn’t get any interest.

“Obviously we’re deferring to what staff is recommending,” Irwin said.

The state is also taking $2.05 billion from redevelopment agencies statewide, with $7.4 million required from Thousand Oaks. That amount represents about one-third of the redevelopment money the city was to get from the state and is made up of $6.1 million from the 2009-10 budget and $1.3 million from the 2010-11 budget.

“The city doesn’t have a lot of options,” Adams said.

The staff report recommended setting aside money to protect the city’s balanced budget by postponing four capital improvement projects for the redevelopment agency.

Last year, the state’s efforts to take redevelopment revenues was unsuccessful in court when it was challenged by the California Redevelopment Association (CRA). This year’s attempt to raid that money is also being challenged by the CRA, but until that case is settled, Adams recommended Thousand Oaks delay the four capital projects.

Those placed on hold are the Discovery Center, setting aside $5 million; Thousand Oaks Boulevard Improvements Phase II and Phase III, $2.5 million and $1 million, respectively; and the Timber School Historic Preservation project, $1 million.

Postponing these redevelopment agency projects ensures that they won’t be started before the redevelopment association lawsuit is settled in court.

All of the projects were already stalled before they were formally postponed.

Phase II of Thousand Oaks Boulevard includes design and construction of streetscape improvements on the boulevard between the 23 Freeway and Conejo School Road. Phase III includes those same improvements between Conejo School Road and Duesenberg Drive.

Both phases were waiting for the Thousand Oaks Boulevard Association’s new plan to move forward, which is expected to happen sometime next year, said community development director John Prescott after the council meeting.

The Discovery Center money had been set aside while waiting for a community group to raise a significant amount of additional funds to get the center planned and built on grounds next to the Civic Arts Plaza, Prescott said.

The money for the Timber School preservation will assist Conejo Valley Unified School District with reuse and preservation of the historic building at the southeast corner of Newbury and Kelley roads.

The school district is having its own funding issues that are slowing down that project.

“If the CRA lawsuit is unsuccessful, staff will have to revisit the city’s current 10-year RDA development plan and make necessary adjustments to the current RDA projects due to the proposed reduction in the funding,” Adams said after the council meeting.

Thousand Oaks already cut $6 million in spending to make up for revenue reductions this year so the city could have a balanced budget.

The city accomplished it through several measures, including an early retirement incentive program for some employees, a reduction of hours for police, the use of workers’ compensation reserves, an increase in the solid waste franchise fee and contracting for street-sweeping services.