The city of Goleta is taking on the big guys as it brings a lawsuit against the state, officials told community and business leaders at an event on May 30.

Calling the lawsuit a “David vs. Goliath moment” at Goleta’s annual State of the City luncheon, Mayor Roger Aceves said the city will file papers within the next week to try to recover some $18 million it spent on flood improvements to San Jose Creek. According to the city, that money was lost in the scuffle after California dismantled its redevelopment agencies. Goleta joins about 70 other government entities around the state that have taken to court to settle disputes over RDA funds.

Aceves said a revenue-sharing agreement with Santa Barbara County is also a piece of the San Jose Creek funding puzzle. He said the city ask the county for a meeting within the next months to hammer out an amendment to the revenue-sharing agreement between the entities. Originally, the revenue agreement provided for $75 million in payments from Goleta to Santa Barbara County and an additional $25 million is due to be paid in the coming years.

The problem with that agreement, Aceves said, is that the state’s decision to take away RDA funds fundamentally changes the basis for the original deal. “We need to keep our revenue local,” he said. Santa Barbara County officials have been reluctant to revisit the revenue-sharing agreement; a portion of the accord expired when Goleta hit its 10-year anniversary as a city, an event that gave the city an extra $2 million a year in sales tax revenue.

City Manager Dan Singer said Goleta is increasingly reliant on volatile tourism occupancy taxes for revenue. Thanks to higher bed taxes and relatively flat property tax revenues, TOT taxes are expected to bring in about $6 million during the next fiscal year, outpacing property taxes of $5.3 million and sales taxes, which are also expected to be in the $5.3 million range.

Bed taxes are expected to grow because of both the booming Santa Barbara County tourism industry and the construction of two new hotels in Goleta, Singer said. But the fact that travel and tourism taxes can he highly volatile means the city must be careful with its budgeting, he said.

Still, Goleta has restored most of the funding to areas that had suffered from budget cuts and rebuilt the city’s reserves, Aceves said. That’s due to rising tax revenue and the partial expiration of the revenue neutrality agreement with Santa Barbara County.

The $18 million San Jose Creek project is one of several high-profile infrastructure programs in Goleta. It involves substantially rebuilding flood control channels that run along Highway 217 between Hollister Avenue and the Santa Barbara Airport.