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9A Page 5 A copy of the Governor's budget can be accessed at http://www.ebudqet.ca.qov/. 'State of the State' Continued from Page 1... In the address, Gov. Schwarzenegger pointed to years in the past when revenues rose dramatically, spurring an increase in expenditures that could not be sustained when revenues fell. He also acknowledged that previously, in times of budget shortfalls, the Legislature took money from local governments, transportation, bonds and pension funds. Those avenues, however, are now limited due to several voter-approved initiatives including Proposition 1A of 2004. California's projected budget deficit for the 18 month period which began Jan. 1, 2008 is estimated at $14.5 billion. The Governor spoke of how automatic spending increases are contributing to this year's budget problems even though revenues will remain steady, resulting in spending vastly in excess of available revenues. His proposed a solution modeled on a plan in place in Arkansas and is designed to cap spending in growth years to save money for future deficits. Infrastructure was another theme of Gov. Schwarzenegger's State of the State address. Our aging system. he reminded the Legislators, was built to accommodate 18 billion people, not California's current population of 37 biilion. With a projected $500 billion in infrastructure needs, the governor wants to expand public-private partnerships because he believes they will produce more cost effective and efficient results. For additional details on Gov. Schwarzenegger's proposed budget for FY 2008-09, please see "Governor Outlines Solutions to Fill Current Year Budget Gap and Address Projected Deficits for FY 2008-09" on Page 1. 'PEBC Report' Continued from Page 1... The report was based on a statewide survey of state and local government agencies in California. PEBC recommended the establishment of a prefunding policy in order to overcome the deficit. For a copy of the report, and PEBC's various press releases on the process, visit www.lao.ca.Qov/retireehealth. under the heading "California: California commission advises funding $118 billion of OPES liabilities." League Activity on the Issue The League of California Cities has been active on the pension and retiree health benefits issue, attending various PEBC hearings throughout 2007. The League submitted recommendations from its working group with the California State Association of Counties (CSAC). The League's proposal for pension reform includes the need to provide full-career employees with adequate benefits to continue their standard of living into retirement through fiscally sustainable contributions by the employers and taxpayers. Public benefits must be supported by proper actuarial analysis, viewed in the context of compensation, recruitment and retention. The League also stressed to PEBC the importance of addressing any abuses of the defined benefit system and the fiduciary responsibility for the system by the California Public Employees Retirement System (CaIPERS), employers and employees, For a list of the recommendations made to PEBC, see "Governor's Post-Employment Benefits Commission Prepares for Final Report," at wwwcacities.orQ/er, 5