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8A Page 3 These proposals will continue to be developed as more specific details for the federal package become known. The working group convened by Caltrans will also continue to meet to reach a final consensus on what is best for California. If your city has any comments or questions on the proposals above, please email Jennifer Whiting at iwhitinq@.cacities.oro. Updates to the negotiations will also be included in future issues of Priority Focus. 'TARP Legislation' Continued from Page 1... The League supports the measure, which has been referred to the Senate Committee on Banking, Housing, and Urban Affairs. The League will provide additional information as this bill moves through the process. 'Budget' Continued from Page 1... The Governor and budget experts agree that the deficit increases with each day that passes without a budget solution. The State Controller has cautioned that without a budget solution, the state will run out of money to pay its bills in February. Governor Explains Veto. In a letter this week to Democratic legislative leaders and in a subsequent press conference, the Governor explained that he had vetoed the package of bills because he concluded they did not go far enough in cutting expenses, and would punish taxpayers by establishing a new withholding requirement for independent contractors. He questioned the constitutionality of legislation that would give the Department of Finance the authority to raise taxes administratively, without legislative approval, based on annual revenue projections. He also was concerned with legislation that would increase the price of gasoline 13 cents above current levels "at a time when hard-working Californians are already suffering." The Governor also objected that the package fell short of reforms that he believes are essential to stimulate the state's sluggish economy. These include providing relief from environmental and labor laws for infrastructure projects, and granting the state greater authority to use design-build and public-private partnership agreements to build infrastructure. He also faulted the Legislature for failing to put forward bills that will help families facing foreclosure. Administration Posts Early Release of 2009-10 Budget Proposal Gov. Schwarzenegger's Department of Finance rolled out the Administration's own proposal to solve the state's budget deficit on New Year's Eve. The proposal would close the deficits in the current 2008-09 fiscal year and the budget year that starts on July 1,2009. It would achieve this, and create a $2.1 billion reserve by cutting $17.4 billion in services over the next 18 months and increasing revenues by $14.3 billion. Additionally, the proposal assumes that the state can both increase lottery revenues by $5 billion and borrow that money; and that the state will be able to ease its fiscal problems by issuing $4.6 billion in revenue anticipation warrants (RAWs), which will be repaid in the 2010-11 fiscal year. (View a copy of the budget proposal on the Department of Finance Web site. The Legislative Analyst has produced an initial review ofthe budget, available at www.lao.ca.aov.) The plan includes many concepts put forward in earlier budget proposals made by the Governor or the Legislature. League staff are still studying the proposal, but there does not appear to be any significant Impacts on cities, including no raids or borrowing from property taxes (includrng redevelopment) or transportation sales tax revenues (Prop. 42/1A). (See also "Governor's Budget Proposal: Summary of Actions of Interest or Concern to Cities" on page 4.) The Governor followed up his veto, however, by calling together the "Big Four" (Democratic and Republican Senate and Assembly Leaders) to meet with him today in a new effort to negotiate a budget solution. Court of Appeal Declines to Intervene In Democratic Budget Proposal. Also this week, the Court of Appeal denied a petition filed by the Howard Jarvis Taxpayers Association and the 3