AgdaPkt 2009-03-23 - Laserfiche WebLink

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9A Page 2 'AB 155' Continued from Page 1... The Committee would consist of the State Controller, the State Treasurer, and the Director of the State Department of Finance. The bill is supported by the California Professional Firefighters. Los Angeles County Fire Fighters Local 1014, and Production Strategies Inc. The League's concerns focus on why the author believes it is necessary to amend a long- standing statute related to municipal bankruptcy (Chapter 9) and substitute, in a local decision- making process. the judgment of state officials for that of the local officials elected to represent a community. Cities Not Responsible for State's Poor Credit Rating. An information sheet on the bill prepared by the author's staff argues that the bill is needed to protect against a weakening of the state's credit that might potentially occur if a city were to declare bankruptcy. We frankly are astonished by this argument. The state today has one of the worst credit ratings in the nation - not due to a city, but due to lack of confidence among major bond rating and financial institutions that the state can't solve its own budget problems. Further, municipal bankruptcy is rarely used - and when it is used. it is a last resort. Since the adoption of Chapter 9 of the state Bankruptcy Code, 60 years ago in 1949, only two cities have petitioned for its use: the City of Desert Hot Springs in 1994, and last year the City of Vallejo. Municipal bankruptcy is not an attractive alternative for local communities, nor is it an easy process. It is difficult, and certainly not popular with local voters - the ultimate decision- makers at the local level. State Should Focus on Solving State Budget Problems. The League believes that if the state is concerned about agencies petitioning for bankruptcy, the most important assistance it can provide is to fix its own budget problems quickly, and do so without borrowing, shifting, or taking local revenues. Since 1986 the state budget has been late 22 times - in good economic times and bad. Local agencies working to solve their own budget problems are greatly affected by the uncertainty of whether a state budget will take, borrow or shift funds from local sources. AS 15515 A Questionable Solution In Search of a Problem. AB 155 will do nothing to address the factors 'affecting the state's credit rating. It will insert state elected officials into what is fundamentally a local decision-making process, and substitute the judgment of those state officials for that of the local officials who are elected by a community to manage a city's affairs. Moreover, most cities are doing a good job of managing their affairs. Status: The bill has been referred to the Assembly Local Government Committee, but has not yet been set for hearing. To view a copy of the League's letter of opposition, visit www.cacities.ora/billsearch. 'LAO' Continued from Page 1... As noted in last week's story about the final budget and trailer bills comprising the budget package, these measures are needed to implement key components of the budget agreement passed two weeks ago. The following ballot measures comprise this package: Proposition 1A. State Finance (Budget Reform. Reserve Funds and Spending Cap), Makes major changes to the way in which the state sets aside money in one of its "rainy day" reserve accounts and how this money is spent. Creates a Budget Stabilization Fund, which requires the annual deposit of 3 percent of state General Fund (GF) revenues, except when the amount in that fund would exceed 12.5 percent of the GF revenue estimate. Also creates a state expenditure cap, limiting the Legislature's ability to withdraw money from the Budget Stabilization Fund to one of three narrowly defined criteria. 2