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<br />8A <br />Page 2 <br /> <br />'2009-10 Session' Continued from Page 1... <br /> <br />Term limits continue to result in a large turnover in both houses of the legislature: 29 new <br />members in the Assembly, and 12 new members in the Senate. These new members will have a <br />steep learning curve as they settle into their new offices and positions. The issues will not be new <br />to all members, however, as several are moving from the Assembly to the Senate, and many <br />others are transitloning to the legislature from local government. <br /> <br />The Governor's action has already decided the first item on the agenda - the budget. <br /> <br />The state deficit is currently estimated at $28 billion over the next year and a half. The Governor <br />indicated that the state would be out of money by February or March if the legislature doesn't act <br />quickly. <br /> <br />The Governor's proposals are similar to those he offered last month. They are intended to <br />address the budget shortfall, solvency issues of the Unemployment Insurance Fund, and the <br />foreclosure crisis. His plan also includes an economic stimulus package. <br /> <br />The real challenge for legislators is to find a package of budget actions that can garner the two- <br />thirds vote needed to pass. Republicans have once again indicated that they oppose any tax <br />increases. They argue now, as they did last year, for budget reforms, principally a hard cap on <br />year-to-year budget growth, keyed to inflation and cost of living increases. They also hope to use <br />the budget debate to leverage changes on non-budgetary issues that top their list of concerns. <br />These include changing a number of state laws and regulations to achieve what they believe will <br />lead to a more business-friendly environment and greater investment in California's economy. <br /> <br />Under the proviSions of Proposition 58, the legislature has 45 days to act on the proposals <br />submitted by the Governor, or submit proposals of their own. If they do not act within the 45-day <br />period. the legislature will be prohibited from acting on any issue other than those included in the <br />Governor's proclamation. <br /> <br />'Lawsulf Continued from Page 1... <br /> <br />Yesterday the Califomia Redevelopment Association and the City of Moreno Valley's <br />Redevelopment Agency filed a lawsuit in Sacramento Superior Court seeking to block budget <br />trailer bill AS 1389, the legislation which authorizes the one-time raid of $350 million in <br />redevelopment funds. The lawsuit seeks both to invalidate AS 1389 and prohibit the state from <br />forcing county auditors to divert redevelopment funds to the Educational Revenue Augmentation <br />Funds (ERAF). <br /> <br />The lawsuit contends that state raids of redevelopment funds to balance the state's budget violate <br />Article XVI, Section 16 of the constitution on multiple counts. First, the constitution requires that <br />redevelopment funds can only be used to finance specified redevelopment activities. Diverting <br />redevelopment funds to pay the state's obligations Is therefore illegal. Second, raiding <br />redevelopment funds could also unconstitutionally impair bond contracts. Click here to read a <br />Dress release. fact sheet and Q&A on the Iitiaation. <br />fhtto:/Iwww.cacities.orq/resource files/27 484. CRALawsuit-Release-F acts-QA.Ddf) <br /> <br />We believe we have presented the courts with strong legal arguments, but time will tell if the court <br />agrees with our position. These cases can take months or longer to resolve. We will keep you <br />apprised of developments. <br /> <br />In the meantime, if you have any questions, please contact the Califomia Redevelopment <br />Association at (916) 448-8760. <br /> <br />2 <br />