From NPR News, this is ALL THINGS CONSIDERED. I'm Madeleine Brand.


And I'm Robert Siegel.

In California today, Governor Arnold Schwarzenegger signed a budget deal aimed at closing most of the state's $26 billion deficit. Cities across the state will end up bearing part of the financial burden of that deal, and many of them are not happy, even after getting a last-minute reprieve from a plan that would have raided a big chunk of their revenue.

NPR's Karen Grigsby Bates has the view from one Southern California town.

KAREN GRIGSBY BATES: There is a recession going on, but if you walk into the Wizard of Bras, you'd have a hard time believing it. The shop is located in Monrovia, California nearly 40 miles northeast of L.A. But many women are glad to drive a long way to Bonnie Kaufman's store to be properly sized and fitted for their undergarments, which aren't cheap.

Ms. BONNIE KAUFMAN (Owner, Wizard Of Bras): We have customers who've, of course, had employment loss, but a lot of people who've just had tremendous cutbacks so their choices are different; and again, more basic kinds of items.

BATES: Deeper into Monrovia, the shady streets of Old Town are lined with shops and restaurants that are, like Kaufman's business, independent.

Julie Lontok is behind the counter at Twinkle Twinkle Little Store, which sells children's toys, books and clothes.

Ms. JULIE LONTOK (Owner, Twinkle Twinkle Little Store): Most of our sales are people who are looking for the unique item. They don't want to go to the big box stores anymore.

BATES: Monrovia is a picture-perfect small town, so much so that it's often used as a place to shoot movies and TV shows. Independent business owners like Kaufman and Lontok not only add to the atmosphere, they've been good for the local economy. But like just about every other California city, Monrovia has had to make some painful cuts, says Scott Ochoa, the city manager.

Mr. SCOTT OCHOA (City Manager, City of Monrovia): We did have five police officer vacancies. We have eliminated those positions. We have asked all of our associations, including public safety associations, to consent to a series of givebacks.

BATES: In addition to the givebacks, which were agreed to, some cherished town traditions were cut. There were no Fourth of July fireworks this year. And Monrovia Day, a citywide festival that celebrates the town's founding in 1887, was scaled way back. So Ochoa was particularly stung to hear that the state will be counting on cities to chip in, to the tune of several billion dollars to reduce the state deficit.

Mr. OCHOA: We made the hard choices, balanced our budget - and on time, mind you.

BATES: Jack Kyser, senior economist for the Los Angeles County Economic Development Corporation, says the state is squeezing cities at precisely the time local budgets can least afford it.

Mr. JACK KYSER (Senior Economist, Economic Development Corporation, Los Angeles County): Personal income, it's down. Business income is down. Retail sales tax revenue is down. A lot of local governments are coping with declines in property tax evaluations. So it is not a pretty picture out there.

BATES: It's so ugly, in fact, that California cities were threatening to sue over a plan to rob them of money from the statewide gas tax. At the last minute, the governor and state lawmakers agreed to take that proposal out of the budget. It leaves the cities somewhat better off, but still faced with the prospect of handing over local funds to bail out the state.

Scott Ochoa, Monrovia's city manager, isn't impressed with the state's promise to pay back what it's siphoning off.

Mr. OCHOA: We're robbing Peter to pay Paul, but we are allowing Peter to make easy payment installments over the next 30 years in order to facilitate that which the state of California cannot do.

BATES: One way or another, Ochoa says, the state will get its nickel. He knows how they're doing that this year, but he's wondering what will happen next year and the year after that.

Mr. OCHOA: What is a city like Monrovia that has done all the right things, that has made those hard choices, what are we looking at long term?

BATES: And, of course, the answer to that is anybody's guess.

Karen Grigsby Bates, NPR News.

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