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8A Page 8 'Budget' Continued from Page 1... Preliminary information indicates that the state budget package will not suspend Proposition 1A protections for local property and sales tax, nor will it shift or borrow additional funds from redevelopment agencies. Furthermore, it will preserve local public safety funds (COPS, juvenile justice and booking fees), providing the same allocations as occurred in the 2008-09 budget. Key elements of the budget package have been widely reported in the press. The $41.6 billion package is designed to resolve the state's deficit problems for the current and upcoming fiscal years. It consists of $15.8 billion in cuts, $14.3 billion in tax increases, $10.9 billion in borrowing (lottery and revenue anticipation warrants). If California gets $10 billion in federal stimulus money, cuts would drop by $1.2 billion, tax increases by $1.8 billion, and borrowing by $5.5 billion. This is not a pleasant state budget by any standard. The budget cuts are deep and painful, particularly coming on top of deep cuts made in February 2008, and in the 2008-09 budget adopted last September. Key cuts include $5 billion for K-12 education (less than Proposition 98 requires); 10 percent for UC and CSU; 10 percent for the Corrections Department's medical budget; and elimination of cost-of-Iiving increases for CALWorks and SSI'-SSP recipients. The budget eliminates two paid holidays for state workers, and continues the Governor's policy of requiring state workers to take two unpaid furlough days each month. (The final number of furlough days is still subject to negotiation.) The budget also eliminates funding for local public transit agencies. New Revenues Tied to Budget Reform. The package includes tax increases that would be in place for two years, and an additional one to three years if a state spending restriction measure is approved on the ballot. These consist of a 1 cent on the dollar increase in sales tax; increasing vehicle license fees from current 0.65 percent of vehicle value to 1.15 percent; and increasing gasoline taxes by 12 cents a gallon with proceeds dedicated to paying off transportation bonds. A new 2.5 percent surcharge on tax liability would be imposed on the income tax, increasing to 5 percent if federal stimulus assistance to California is less than $10 billion. The package also reduces tax credit for dependents from $309 to $99. The package borrows tax revenues from Proposition 63 (tax on millionaires for mental health services) and Proposition 10 (tobacco tax for early childhood education program championed by then-actor Arnold Schwarzenegger). Ultimately, Voters Have the Final Word. Voters would have to approve all the budget actions that involve changes in programs established by voter-passed measures. These include borrowing from the lottery, reducing school funding required by Prop. 98 and taking funds from Prop. 10 and Prop. 63. Voters would also have to approve the proposed new spending cap. The League will continue to gather information and a complete analysis and summary of the budget will be released as the details become available. 'Recovery Act' Continued from Page 1... Even before the Senate bill was approved t the White House met with Conference Committee members to begin working out the differences between the Senate and House versions. Late Wednesday it was announced that the Conference Committee had agreed to a $790 billion recovery package. Final votes are expected to take place in the House today followed by the Senate on Saturday. The President is expected to sign the bill on Monday. Cities Need to be Working with Their Regional Transportation Agencies The finallegistation includes $29 billion for improvements to roads and bridges. While the specific breakdown of funding has not been announced, we do know that the funding will flow through metropolitan planning organizations (MPOs)~ Cities and counties will not receive a direct ~ allocation. As such, it is very important that cities are working with their MPO to secure funding from the regional share. 2