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9�- z � _ BUDGETfrom page1. ............................................. special election in November 2005 that would by- The Assembiy budget subcommittee on pass the Legislature. He has three out of-state transportation also supported full funding for Prop fundraising everrts scheduled over the weekend •� 42. However, the Assembly subcommittee that as part of his effort to raise $30 million for three deals with local govemment issues did not hear reform measures. The initiatives are: calling for a the VLF loan paybadc proposal, ensuring that the panel of judges to detertnine legislative districts, . VLF item will ultimately be resolved in the budget rather than the Legislature itself; the `Live VVthin conference committee. Your Means' initiative to control state spending; and extending the period of time before teachers Timing for the start of conference committee can receive tenure. will depend entirely on when the tvw houses are able to muster the two-thirds vote necessary to The diffenences between the two parties, along pass their respective bills. with the speculation about a special election, provide a good indication that the FY 2005-06 Call or Write Your Legislators budget debate will extend well into the summer. Last year the budget debate lasted until eariy August when, in part, a final local govemment City officials are urged to wribe andlor call initiative proposal was agneed to. their legislators, to urge their support for both the Prop 42 funding and repayment of the VLF funds that the state borrowed in 2003. Even The Increased Revenues though the budget subcommittees in both houses have approved Prop 42 funding, many steps The Department of Finance has determined remain in the budget process. City officials should that there is an additional $3.9 billion in one-time continue to work for their legislators' support for revenues that can be used to make adjustments the action taken by the subcommittees. in the current fiscal year, and 2005-06 fiscal yea� budgets. These revenues primarily stem from: Legislators should be reminded that local govemments are contributing $1.3 billion a year in • Increased personal income and capital FY 2004-05 and FY 2005-06 to help the state gains tax receipts solve its budget problems. If state revenues have • Increased corporate taxes expected in FY increased, iYs appropriate to devote a portion of 2005-06 (about $ billion) those revenues to repaying the VLF debt to cities and counties, and to provide the Prop 42 funding While the January budget had proposed that is urgently needed for local transportation increased use of deficit reduction bonds and programs. To access sample letters and talking borrowing the Prop 42 funds to address the points, please visit the League's online Advocacy ongoing deficit, the additional funds have made it Center at www.cacities.org/advocacycenter. possible for the administration to propose a May � revise that eliminates borrowing, restores funding Next Steps on the Budget to some programs and begins to pay down out- standing debt obligations. While the procedural aspects of the budget bill Tough Times Expected in FY 2006-07. FY are moving along, there is a growing feeling that a 2006-07 is projected to be a tough budget year for late budget is a strong possibility. While the the state. The VLF gap loan is due; the tocal Democratic majority in both houses is pushing govemment ERAF shifts of $1.3 billion will end; strongy for $2-3 billion in additional funding for Prop 98 payments to schoots will increase; and education, Gov. Schwarzenegger is continuing his efforts to promote several reform initiatives for a Continued on Page b PAGE 2/PRIORITY FOCUS Visit the League's Official Website--www.cacities.org