When Gov. Arnold Schwarzenegger finally signed this year's long-overdue state budget on Sept. 23, City of Milpitas said goodbye to more than $2 million in redevelopment agency monies.

Statewide, as part of the budget adoption, any municipalities' operating redevelopment agencies public entities meant to create development projects to rejuvenate formerly blighted neighborhoods, build affordable housing for low-income families and improve overall quality of life will see a total of $350 million slated for specific improvement projects taken by the state in order to mitigate California's more than $15.2-billion budget deficit.

"While California is certain to face a difficult budget situation again next year, this budget does not take money out of people's paychecks or borrow from voter-approved local government or transportation funds, and it includes real budget reform with teeth," Schwarzenegger said at the time of the budget signing. "These budget reforms, when approved by voters, will finally put California's budget on a path toward long-term fiscal stability."

Milpitas officials see it differently.

"By passing the budget, they are going to get the RDA money," said Milpitas Finance Director Emma Karlen, of the state's take of $2.43 million out of Milpitas Redevelopment Agency's current $43.1 million budget.

In comparison, San Jose's redevelopment agency will lose about $12 million.

Since 2002, City of Milpitas has also had to direct nearly $13

million to the state as part of an Educational Revenue Augmentation Fund, a financial source meant to support California Department of Education's programs and services.

Karlen suggested that although the loss of monies here doesn't represent a major blow to the city, any state takeaways affect future neighborhood improvements. She also worried the state's plan to take monies this year from cities would continue despite claims to the contrary.

"They say this is a one-time thing. My concern is that it's not going to be one time," Karlen said.

For Milpitas officials, loss of redevelopment agencies monies is painfully reminiscent of the state's takeaway five years ago of more than $1 million in car registration or vehicle license fees monies that help pay for basic city services like police, fire and street maintenance.

Karlen said much of those funds were never paid back. And although the RDA funds just taken were not necessarily tied to any specific projects, she added those monies are gone forever.

"The money may not be dedicated, but it doesn't mean we didn't have plans to use it," Karlen said. "By taking it away, it's less for us and more for them."