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10. A -7 LEAGUE FILES AMICUSBRIEF IN SB 402 CASE Things have been seemingly quiet on the judicial front, with little news to report for some time. Behind the scenes though, lawyers have been busily preparing their briefs in what is now the lead case, County of Riverside vs. Superior Court. In that case, the court of appeal ruled that SB 402 is unconstitutional for a number of reasons. In order to achieve an expeditious resolution of this issue, all sides supported review by the California Supreme Court. Briefing is almost complete before the Supreme Court. Sometime after all the briefs are in, the Court will set a hearing date. A few months after the hearing, the court will issue a decision. The Court will not lack for guidance on how to resolve the issue. In addition to briefs submitted by the Riverside Sheriffs' Union and the County, there are two sets of union friend-of-the-court briefs. The County of Tulare filed a . friend-of-the-court brief on behalf of joining counties and the League of California Cities' application for leave to file a friend of the court brief is being filed on December 20, 2002, along with its brief. The League's brief focuses on the argument that SB 402 violates article XI, section 11 of the California Constitution, which prohibits the Legislature from delegating authority over municipal functions and money to a private party. The League's brief takes issue with the unions' argument that there is an exception to that prohibition for issues of "statewide concern." The League's brief also argues that, even if there were such an exception, there is no basis for applying it with respect to SB 402. The League's brief, along with the court of appeal decision, are posted on the League's website: www.cacities.orc/sb40Z._ BUDGETfrom page ................. ............................... The Governor pointed out that under California's extremely progressive personal income tax that 10% of the personal income taxpayers pay 80% of the tax burden. He indicated that a dramatic reduction in upper income tax receipts (e.g., from capital gains and stock option income) and related revenue losses (e.g., sales tax, corporation tax, etc.) account for 51% of the shortfall, one -time reductions (including unrealized federal funding) accounted for 31% of the shortfall, and that the balance was attributable to increased expenditures and other factors. The Governor also announced the departure of Tim Gage, Director of Finance, who had indicated a year ago that he would be leaving during the Governor's second term of office. He also announced his appointment of former state senator, Steve Peace, as the new director of finance. Peace is the former chair of the Senate Budget Committee and has extensive knowledge of the state budget. Responding to the Governor's announcement, Chris McKenzie, League Executive Director, said: "I commend the Governor for providing us with an early warning of the enormity of the state's budget crisis. None of us should have any doubts of the need to redouble our efforts to work with him and other state leaders to weather this crisis without causing dramatic reductions in local services. The League and our partners in the LOCAL Coalition will support reasonable revenue enhancements, such as an increase in the Vehicle License Fee (VLF), if they help protect vital local services." On December 17 McKenzie shared with Assembly Budget Committee No. 4 the League's and the LOCAL Coalition's recommendations for helping balance the state budget, including the return of the VLF to previous levels, if it protects local services. He also explained that the Governor's proposal to shift $500 million in low and moderate - income property tax increments from redevelopment agencies to the state would eliminate subsidies for an average of 15,000 affordable housing units. League President, John Russo, appeared before another budget subcommittee in Oakland on December 18 to explain the impact of the Governor's proposed reductions in road and street maintenance funding. (See related article, page 1.) Visit the League's Official Web Site -- www.cacities.org PRIORITY FOCUS /PAGE 3