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8A Page 2 'Budget' Continued from Page 1... City leaders were again pleased to hear the Governor reiterate his strong belief that it is "unwise" and irresponsible to balance the budget by borrowing local government or transportation revenues. Many city officials voiced dismay however, about a surprising proposal to divert redevelopment tax increment revenues for three years to fund schools instead of building sustainable neighborhoods and supporting the state's economic recovery through redevelopment projects as provided in the state constitution. In brief, the Governor proposes: . No borrowing of city and county Proposition 1A or Prop. 42 funds; . Restoration of COPS and Booking Fees to the Governor's May revise level; . Three year Redevelopment ERAF shift of 5 percent or $225 million per year, whichever is greater; . Transit funding at essentially the May revise level with additional revenues deposited in the general fund due to increased motor fuel tax collections; . Three year, 1 percent sales tax increase, except for motor fuels. After three years, the sales tax would be reduced by 1.25 percent permanently, includino the tax on motor fuels; . Major program reductions ($2 billion deeper than the Budget Conference Committee proposed) for a total of $9 billion in reductions in base (or workload budget) spending below the previous year; and . Budget Reform to strengthen various elements and expand the required size of the Prop. 58 reserve fund. In addition, the Governor would have mid-year budget reduction authority (up to 7 percent) when revenues decrease. Following the press conference on Wednesday, the Governor joined a conference call Finance Director Mike Genest held with local government representatives. He thanked the callers and asked for their support of his budget proposal, telling them that it's imperative that local government leaders push loudly against proposals that include local government or transportation borrowing. In a conference call yesterday morning (Aug. 21), members of the League board of directors were briefed on the proposal. Board members were unanimous in their praise for the Governor in putting a new budget blueprint on the table that avoids borrowing and spreads the pain. League Executive Director Chris McKenzie commented, "The League board believes the Governor has once again shown all the attributes of true leadership in trying to lead state government out of its addiction to borrowing and toward achieving long-term budget reform." McKenzie added, "The League board believes strongly that the Governor's new budget proposal deserves our careful consideration. We have already communicated our appreciation for his steadfast opposition to borrowing, his tough stand on spending and his commitment to budget reform. All of these are critical to our state government's fiscal reform. "We also have shared our surprise about an apparently unconstitutional proposal to seize local funds for redevelopment projects that are so vital to the state's economic recovery and sustainability. We will work closely with the Administration to support the Governor's efforts to pass a budget that is truly balanced with state, not local, funds. This Governor knows and cares about strong cities and reducing greenhouse gas emissions, and he has been an outstanding partner of local governrnents since the first day he was elected." California Cities on Forefront of Budget Battle It has been an extremely busy week for California's cities as momentum builds with the budget battle. More than 115 cities have now passed resolutions objecting to borrowing local government or transportation revenues, calling such a proposal irresponsible. Press coverage of these resolutions and editorials on the negative impacts of a potential borrowing solution has been mounting. The Governor and Senate Pro Tem Don Perata remain firmly opposed to borrowing 2