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9A Page 10 Health Care Legislation Will Have No Fiscal Impact on Cities Analysis by League staff has determined that cities would not have to address the funding issues contained in ABX1 1 (Nunez and Perata), the California Health Care Security Cost Act. Passed by the Assembly on Dec. 17, the legislation is designed to provide coverage for most uninsured Californians. Gov. Arnold Schwarzenegger supports the bill. ABX1 1 has many moving parts, but the mandated employer contribution is one of the most significant portions of the bill impacting employers. The bill calls for employers to contribute/pay a health care fee equal to 1-to-6.5 percent of annual Social Security wages in the prior calendar year depending on size of the entities' payroll. The fee portion of the proposal is scheduled to be on the November 2008 ballot. Because cities are self-insured and meet the existing contribution levels for the bill, cities will not have to address the funding issue involved with the California Health Care Security Cost Act. Counties however have a different situation. Counties serve as "providers of last resort" for the uninsured. The proposed legislation calls for the state to institute coverage for the uninsured. The authors contend that this will provide savings for counties because they will no longer be responsible for this function. County officials however believe that there is too much discretion to determine the actual amount of county savings if ABX11 passes. Democrats say that the $14 billion plan will pay for itself via proposed fees and taxes on employers, workers and the tobacco industry. Republicans expect the proposal to meet its demise at the ballot box due to the anticipated fee and tax hikes. Funding from the proposal will come from the following sources: . Employerfee in lieu of providing coverage: $1.6 billion . Employers who provide coverage through the pool: $900 million . Hospital tax: $2.3 billion . Federal funds: $4.7 million . Tobacco tax: $1.6 billion . Individual premiums to pool: $2.1 billion The bill has moved on to the Senate Health Care Committee where it is scheduled to be heard Jan. 23. The League will continue to monitor the legislation and will provide updates through Priority Focus and the League's Web site at www,cacities.orQ. Highway Users Tax Primer Available Gov. Arnold Schwarzenegger has proposed a series of cash management solutions to address projected state general fund revenue shortfall for FY 2007-08 including "a one to five month delay in gas tax disbursements for local streets and roads, increasing borrowable resources: This proposal would delay approximately $500 million of Highway Users Tax payments to cities and counties, in the amount of about $100 million per month starting in April. These taxes, also known as the "Motor Vehicle Fuel Taxes" or "Gasoline Excise Taxes," would be paid in full to cities and counties without interest in September 2008. League Fiscal Policy Advisor Michael Coleman has prepared a detailed explanation of city Highway Users Tax revenue allocations with city-by-city estimates of the amount of revenue that would be delayed. The primer can be accessed at wwwcaliforniacitvfinance,com " (http://www.californiacitvfinance.com/HUT080110.pdt) The League is continuing to gather information on the Governor's proposal and potential impact to cities and is conducting a close review of the size and scope of the state's cash flow challenges and other possible solutions to address the deficit. 3