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BUDGET from page 4 ................................................ - and cities pursuant to the CREA. For the FY 02- on the 2003-04 budget depending on when the 03, the above-cited federal funds received by the positions are eliminated. state will not be allocated. This provision is re- pealed on Jan. 1, 2004. · Limits on General Fund Expenditures. Total expenditure authorizations from the General Fund · ACA 11 (Richman - Northridge). This consti- for 2003-04 fiscal year shall be limited to the total tutional amendment-- to go before voters in 2004 revenues to the General Fund for the 2003-04 -- establishes the Twenty-First Century Infrastruc- fiscal year. ture investment Fund and requires a specified pementage of General fund revenues to be trans- · The Speaker's Commission on Structural ferred annually to this fund beginning in 2006-07. Challenges to Budgeting in California is These funds would be used to finance infrastruc- established. The commission shall be composed ture projects related to transportation, education, of 12 Members of the Assembly, as follows: the natural resoume preservation, parks, and water, of Speaker of the Assembly, who shall serve as which 50 pement would be continuously appropri- chair; the Minority Leader of the Assembly, who ated to local government and 50 percent would be shall serve as vice chair; five Members appointed available for state projects. Specifically, it would by the Speaker of the Assembly; five Members transfer one percent of General Fund revenue in appointed by the Assembly Minority Leader. 2006-07 and increase to throe percent in 2013-14. Members must be appointed by Dec. 1,2002 and The measure roquires the State Department of the commission's work completed by May 1, Finance to preparo an annual plan to expend 2003. these funds unless the Governor dirocts another state agency to prepare the plan. In addition to the specifics cited above, the Budget includes a number of fiscal tools, and - · Tobacco Sales Taxes. Sale of tobacco assets revenue enhancements aimed at accelerating is authorized to bring in a net $4.5 billion. The revenues to the State's General Fund. It enables large increase in cigarotte taxes proposed by the the State to loan monies from one state fund or Assembly Democrats a few weeks ago was not account, to another state fund or account (unless adopted, prohibited by law). It allows the Board of Equaliza- tion to forgive penalties to certain identified taxpay- · 5% State Operations Cuts. The Department of ers if they pay required amounts of their taxes due Finance was given the authority to make up to an by specified dates ($145m in revenues). It additional $750 million in expendituro cuts by applies property transfer withholding (at 3.5%) to reducing appropriations for state operations by up certain properties acquired from an individual to 5%. These reductions shall be reflected and ($225m in revenues). It suspends the Net Oper- .. identified in the 2003-04 Governor's Budget as ating Loss payments for two years ($1.2b in submitted to the Legislature in early January. This revenue). It suspends the Teacher Tax Credit for is similar to actions that were taken to adjust a year ($1.7b). It t provides for bank bad debt expenses for the 01-02 FY budget, conformity with Federal tax ($285b). And, the budget increases, to 9.3%, the withholding amount · Reducing State Employee Positions. There on stock options and bonus payments that consti- will be an early retirement program available, to tute wages paid on or after Jan. 1, 2002 ($400m in specifically defined state employees that will offer revenues). See page 6 for a list of budget bills. them an additional 2 years' service credit if they retire early. In addition, the Department of Finance must eliminate 1,000 positions in state govern- ment by June 30, 2004 (subject to restrictions). This tatter item could likely have a greater impact Continued on Page 6 Visit the League's Official Web Site--www.cacities.org PRIORITY FOCUS/PAGE 5