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BUDGET UPDATE: PROP 42 AB 2987 from page 2.............. REPA YMENT STILL UNKNOWN The Budget Conference Committee continued Additionally, the bill defines "right of way" as to meet this week to work on a compromise "the area along and upon any public road or between the Governor's proposal, and Assembly highway, or along or across any of the waters or and Senate recommendations on state budget lands within the state." Therefore a holder of a expenditures. Most outstanding budget items have state franchise could theoretically place facilities been agreed upon, but the fate of Proposition 42 on any land within the state, public or Drivate. repayments is still undecided. With AT&T planning to install large utility The League has heard several ideas circulat- boxes in order to deliver its "Project Lightspeed" ing about the Proposition 42 repayments, includ- service, neighborhoods could be significantly ing: impacted by a loss of control over the rights-of- way. . It will be part of negotiations between the "Big 5" as a closer for the entire budget Solution: Amend the bill to provide that package. (The Big 5 includes the Gover- nothing in the bill affects the authority of local nor, Senate President pro Tem Don Perata, agencies to regulate the time/place/manner of the Senate Minority Leader Dick Ackerman, use of the public rights-of-way provided it is done Assembly Speaker Fabian Nunez, and in a manner consistent with the bill. Develop a Assembly Minority Leader Kevin McCarthy) better definition of rights-of-way. . The transportation portion of the budget will be one package that includes Prop. 42 PEG Funding - Amount and Use repayment and spillover revenue pay- ments, instead of two separate items. For Problem: AS 2987 currently includes a blank more information on spillover revenue, see for the percentage of gross revenues that the "What Are the Spillover Funds?" located state franchised provider would pay to support at www.cacities.org/revandtax. public, education and government channels . $460 million of the Governor's proposed ("PEG") - but an earlier version gave the provider $920 million payback is being considered the choice of paying either 1 percent of gross to fund urban parks. The Senate recom- revenues or, at the provider's option, a pro rata mendation was to fund the payback at share of the unpaid cash obligations of the $460 million (half of the Governor's pro- incumbent to fund both PEG channels and an posal) and put $460 million back in to the Institutional Network (i.e. telecommunications General Fund. lines connecting schools, libraries and other public buildings). With a budget deadline of June 15 fast ap- One percent is woefully inadequate to even proaching, Legislative staff members have ex- pressed extreme optimism that a state budget will fund PEG, let alone an I-Net, and is far less than be passed on-time, or close to on-time, so we what many existing local franchises require. anticipate action on the Proposition 42 repayment Further, the option to pay a pro rata share of budget item soon. unpaid cash obligations of the incumbent will often be little or nothing, either because the The League appreciates all correspondence incumbent paid a large share of the funding up cities have made urging the early repayment of front or because the incumbent provides in-kind $920 million of borrowed Proposition 42 funds, services and equipment rather than funding. including $245 million for local streets and roads. In addition, the bill limits use of the funds to capital expenses, whereas many local franchises Continued on Page 4 Visit the league's Official Website--www.cacities.org PRIORITY FOCUS - PAGE 3 June 2, 2006 - Issue #22 . -. "'-"'~-"'._'-"--" .. .._---_._-"~,_._,--,..^. ....,,_..