Local governments buck state’s threat to borrow.

The financially desperate state of California may have the power to take more money from local governments. But the county of Monterey, and most of its cash-strapped cities, are crying “no fair.”

In early May, the state Department of Finance announced a proposal to borrow more than $2 billion in local property tax revenues as soon as July 1 – to be repaid with interest within three years – in an effort to partially backfill the $24 billion budget hole.

But most local governments are already hurting from their own declining revenues. They can apply for loans in the amount the state borrows, according to a state report, but short-term financing may be expensive and hard to come by.

That means cities and counties may be forced to cut even more from already strained services such as police and fire, road maintenance and libraries. Most local cities are looking at six-figure reductions.

For the state to borrow the local money, Gov. Arnold Schwarzenegger would have to proclaim a “severe fiscal hardship” and two-thirds of the Legislature would have to approve the bill. The proposal is included in the governor’s May budget revision.

In the pre-emptive Save Your City campaign, the League of California Cities asks local governments to pass a resolution saying it would be irresponsible for the state to siphon funds from already-stressed city and county budgets.

Local governments are quickly signing on, including Monterey County and the cities of Seaside, Sand City, Carmel-by-the-Sea and Salinas.

“A number of our sister cities have passed these already,” Carmel Mayor Sue McCloud said at the May 27 City Council meeting, “and they would like to get them all together and send them up to Sacramento.”

Take that, state.