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STATE BUDGET from page 1 . . . . . .. . . ... . .. .. . . . ... . .. . . . . . . . . . . . . ... pag~~ Also included in the 2007-08 budget is the second installment of the Governor's "Strategic Growth Plan." The first instaliment was introduced in January 2006 and resulted in the passage of the 2006 infrastructure bond package. In the current budget, Schwarzenegger proposed another round of both general obligation and lease-revenue bonds totaling $43.3 billion. This funding would be used for items he mentioned in his State of the State address on January 9, which included the expansion of pris- ons, more funding for construction and renovation of classrooms, increasing water storage and other additional funding for unmet infrastructure needs. For more on the Governor's State of the State address, see "Schwarzenegger Reveals Ambi- tious Plans during State of the State Address" on Page 1. ' . The Governor's proposed budget is a starting pOint for discussions with the Legislature. (A copy of the Governor's Budget may be viewed at www.ebudaet.ca.aov.) In May, the Governor will ~resent a revised budget after numerous legisla- tIve hearings, deliberations and negotiations before a final compromise is reached over the summer. . The budget proposal continues to support key cIty programs in the following areas: Tra ns DO rtation: Proposition 1 B: Proposition 1 B will provide approximately $7.1 billion directly to local govern- ments over the next few years. For 2007-08, the Governor proposes the fOllowing allocations of importance to cities: . $600 million for local streets and roads split evenly between cities and countie~ in FY 2007-08, $300 million split evenly for FY 2008-09, and $150 million split each year beyond that (until the $2 billion total is reached) $600 million for local transit $170 million for state and local partnerships . $340 million for State Transportation Improvement Projects (STIP) $55 million for grade separations $9 million for seismic bridge retrofitting Proposition 42 Loan Repayment: The Governor's budget proposes to fully fund Proposi- tion 42: $684 million to the Transportation Congestion Relief Program (TCRP) · $699 million to STIP $175 million to Public Transportation Account (PTA) Pursuant to a formula in current law and under a longstanding agreement that provided cities and counties with local streets and roads funds in 2001-02 and 2002-03, cities and counties will not receive any local streets and roads maintenance funds from Proposition 42 in 2007-08. However, per the existing formula, cities and counties will receive approximately double their prior alloca- tions beginning in 2008-09. Public Transportation Account: The budget proposes to divert $1.1 billion of "spillover" rev- enues from the transit programs in the Public Transportation Account (PTA) to help close the General Fund (GF) budget gap. A similar proposal last year was controversial for transit agencies. PTA spillover revenues occur when growth in revenues from the sales tax on gasoline exceed the growth sales tax revenues from other taxable goods. (Understanding the PTA account can be difficult. For an explanation please see www.californiacityfinance.com/ SpilloverFAQ060612.odf) . $627 million redirected to fund the GF for home-to-school transportation $144 million for regional center transportation services $340 million for repayment of general obligation bond debt Continued on Page 4 Visit the League's Official Website--www.cacities.org PRIORITY FOCUS. PAGE 3 January 12, 2007 - Issue #2