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9A Page 2 'Budget' Continued from Page 1... In both his January budget and May revise budget, Gov. Arnold Schwarzenegger stood by local government, promising to maintain Proposition 1A protections of local revenues. Since early 2008, he has made numerous comments about the state's responsibility to close the state budget deficit without taking from local government to make up the shortfall. Here are a few recent quotes from the Governor: State of the State Address, Jan. 8: "It used to be that Sacramento plugged its deficits by just grabbing money anywhere it could; pension funds, local government, bonds, gas taxes that were meant for transportation. But we tightened that noose by taking away those options. We passed Proposition 1A, Proposition 58, and Proposition 42. We now have no way out except to face our budget demons. n Charlie Rose, Television Program, April 17: "So we canY steal any more money from local government if we run out of money." State Capitol, Sacramento News Conference, July 16: "What message is it that that you go and you have spent too much and then you don't have a rainy day fund to cover yourself and then you go to the cities and counties where they do have a rainy day fund set aside for emergencies and now grab their money. See thars what you are talking about when you talk about borrowing. They're saying we didn't have a rainy day fund set aside to cover ourselves from the decline, they did. But let's grab their money now because we made a mistake." What City Officials Can Do: With these quotes in mind, city officials should thank the Govemor for his leadership on this issue and also ask your own legislators about where they stand on this matter. Most Assembly and Senate members have returned to their home districts or are on vacation with instructions from their leadership to be available to return to Sacramento on short notice. A majority of each house of the legislature is made up of former city council members and county supervisors. But some tough questions need to be asked: Where are they on this issue? Do they agree with the Governor's position? Where does protecting local revenues and transportation funds rank in their priorities? Urgent League Action Alert: Earlier this week, the League distributed the alert below to city officials through the League's regional public affairs managers, Iistservs, and blast fax. Keep Local Dollars Local: Tell the State To Cut Up Its Local Government Credit Card! Executive Summary: Refusing to compromise on budget cuts, taxes and budget reform, state leaders may be headed toward Prop. 1A property tax and/or transportation sales tax "loans" from local govemment ~ city officials call it what it is: fiscally irresponsible. dishonest and a clear violation of the voters' mandate on the 2004 and 2006 revenue protection measures. This memo explains how we can stop the state from using its city credit card again, worsening its own structural deficit and harming local services. Background: The Legislative Budget Conference Committee concluded its work last week, adopting a budget on a party line vote because it included substantial tax increases and restored most of the budget cuts in the Governor's May Revise. Neither the Govemor's budget nor the Budget Conference Committee supported any Prop. 1 A "Ioans.n That may be about to change.. .at least in the Legislature. Both Prop. 1A in 2004 (property tax protection) and Prop. 1A in 2006 (transportation funding protection) contain provisions for "loans. from local govemment and transportation if the Governor declares a "severe state fiscal hardship; but!!2! because the legislature fails to act responsibly. Two 2