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8A Page 1 0 this increase will be determined by the Treasurer and the Director of the Department of Finance, or designees, who are required to meet and confer at a public hearing to be held on or before April 1, 2009. The Treasurer and DOF, pursuant to language contained in AS x3 16 (Evans), will determine whether or not sufficient federal funds have been made available to offset not less than $10 biHion GF expenditures. If they do not determine that sufficient funds are available. the tax increase win be 0.25 percent. If they do determine that sufficient funds have been made available, then the tax increase will be 0.125 percent. If the voters approve Prop. 1 A then the tax increase will continue until Jan. 1, 2013. . Dependent Tax Credit. Reduces the current dependent tax credit of $309 to $227 and the personal Income tax credit of $99 (given to taxpayers who are over 65, and to taxpayers filing a joint return with their spouse/domestic partner) to $52, for the years 2009 and 2010. If the voters approve Prop. 1A, then the tax increase will continue until July 1, 2013. ACA 1 tNiellol - Budget Reform: Reserve Funds and Spending Cap: Modifies and expands the state budget reforms agreed to as part of the 2008-09 budget (SeA 3D), but which has not yet been submitted to voters. The revised measure - if approved by the state voters (as Prop. 1A) at the Special Election on May 19,2009 - does the following: Budaet Stabilization Fund Requires 3 percent of state GF revenues to be deposited annually in a Budget StabiHzation Fund, except when the amount in that fund would exceed 12.5 percent of the GF revenues estimate. Under the existing law, deposits are no longer required when the amount in the fund would exceed 5 percent of the GF revenues estimate. . Diverts half of these contributions to repay amounts owed to public education under Proposition 98 for 2007-08 and 2008-09 fiscal years ($9.3 billion). . Of the contributions that continue to flow into the Budget Stabilization Fundt diverts half of those revenues (not to exceed an aggregate of $5 billion) to repay the previously issued Deficit Recovery Bonds. Once repayments to education and Deficit Recovery Bonds are completed, then) full 3 percent contribution will flow into Budget Stabilization Fund. State Expenditure CaD: Places two limitations on the state's expenditures. First) funds may be withdrawn from the Budget Stabilization Fund for only one of three reasons: (1) to satisfy any "gap" that may exist between the total GF revenues available in the prior fiscal year and the "expenditure forecast amounf (the total expenditures for the prior fiscal year adjusted for population growth and increases in the Consumer Price Index); (2) to respond to a natural disaster or other extreme emergency declared by the Governor; or (3) to be loaned for cash flow purposes to the GF to be repaid within the same fiscal year. Second, any unanticipated revenues received by the state (Which would exceed the threshold of 12.5 percent of the GF) are required to be spent on any of the following outstanding budgetary obligations: (1) any unfunded prior fiscal year obligations required to be paid to schools under Prop. 98; (2) any repayment obligations owed local governments from property taxes borrowed under Prop. 1A; (3) any repayment obligations for amounts owed for transportation revenues borrowed under Proposition 42 to repay the 2004 state deficit reduction bonds. Any additional amount of unanticipated revenue may be used for any of the following: (1) transfer additional amounts to the Budget Stabilization Fund; (2) pay for one-time infrastructure projects; (3) retire outstanding state general obligation bond debt; (4) return funds to taxpayers through one-time revision to tax rates; or (5) fund unfunded liabilities for vested nonpension benefits for state annuitants. ACA x3 2 (Bass) - Education Repayment: This measure will appear as Proposition 18 on the May 19, 2009, statewide ballot, and is contingent upon provisions contained within Prop. 1A (spending cap). If both Prop. 1A and this measure are approved, schools and community colleges will receive supplemental education payments totaling $9.3 billion in funding obligations to schools commencing in FY 2011-12. These payments are In lieu of designated maintenance factor payments to.schools under Prop. 98 for FY 2007-08 and FY 2008-09. 3