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<br />'FACT Acf Continued from Page 1... <br /> <br />8A <br />Page 2 <br /> <br />It is important for city officials to understand that they may be considered a "creditor" as it is <br />defined in the act, according to the Federal Trade Commission. A city could be considered a <br />creditor if they provide for deferred payments on goods or services. "Deferring payments" refers <br />to postponing payments to a future date and/or installment payments on fines or costs. Likely <br />examples for cities may include providing public utility services or providing a payment plan for <br />parking tickets. <br /> <br />To comply with the new FACT Ad regulations, known as the Red Flag Rules, entities will be <br />required to provide for the identification, detection, and response to patterns, practices, or specific <br />activities ("red flags") that could indicate identity theft in their identity theft prevention programs. <br /> <br />To learn more about these new regulations and what your city can do to prepare please visit: <br />www.cacities.oralRedFlaaRules <br /> <br />Contact League LegislatiVe Analyst Natasha Karl with questions at (916) 658-8254 or <br />i1kar1@cacities.ora. <br /> <br />'Budget' Continued from Page 1... <br /> <br />'"What happened" is a series of extraordinary events in the economy coupled with a state budget <br />that falls far short of any standards of excellence. The United States economy is in turmoil with no <br />clear indication of where, when or if it will ultimately recover. Congress has acted to bail out major <br />financial instltutions, a 500 point drop in the stock market is becoming routine and unemployment <br />statistics continue to climb. <br /> <br />With this backdrop, the "get-out-of-town,' gimmick-filled, state budget passed by the Legislature <br />and sighed by Gov. Arnold Schwarzenegger on Sept. 23 is beginning to unravel. The revenue <br />estimates used to put the budgettogether, albeit over 80 days'late, are already outdated due to <br />whafs happened in the economy in just these short weeks. Jf the infant budget is already $5 <br />biUion short, it's likely that when the Legislature begins to tackle the FY 2009-2010 budget, the <br />state may be facing another $15 to $18 billion deficit. <br /> <br />The most immediate fiscal chaDenge to California is trying to sell a Revenue Anticipation Note <br />(RAN) in the teetenngfinancial markets.RANs ensure that the state has the cash to meet its <br />obligations until tax revenues start to come in later in the fiscal year. The state routinely does this <br />annually but it may be considerably more difficult this year in a financial market that, to be kind, Is <br />having its own problems and where the practice of lending Is hard to find. <br /> <br />Earlier this ....eek. the Governor announced that he was concerned about the difficulties the state <br />would face trying to sell a RAN to meet cash flow demands. He said he would seek a federal <br />bailout if the markets don't/can't buy the state's RAN. In addition to getting into the banking <br />business in a big way. it looks as though the federal government could also find itself in the 'state <br />business: Could California become a federal subsidiary or have we already become one? <br /> <br />It riO'vV appears optimistic that California and other states witl be able to sell short term debt. <br />M"aSS~chusetts went to the short-term m~rket for the same reasons and found multiple institutions <br />interested In purchasing the state's paper. <br /> <br />If California can also be successful in the market, this may provide at least some short-term <br />stability for the state budget, although "stability" is a word not much in fashion in leday's financial <br />world. Most importantly for cities, California's ability to secure the sale of its RAN, means the <br />state will be able to deliver the money to the programs outlined In its budget, including money that <br />goes to local governments. It is a critical first step to calming the financial climate. <br /> <br />The Governor and legislative leadership met this week to talk about a special session to open up <br />the FY 2008''()9 budget to make adjustments that will reduce the problem before the next fiscal <br />year. No decision was made in regard to a special session. Many question whether a special <br />session would be productive given the entrenchment on both sides of the aisle in the taxes <br />versus cuts debate. <br /> <br />2 <br />