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8A Page 11 Local gas tax funds have been a reliable source of funding since the 1970's, and losing these funds would be devastating to local road maintenance and repair. Local transportation projects also provide jobs, which in turn provide income tax and sales tax revenue to the state. Taking these funds is an "anti-stimulus" proposal which will only hurt California communitieS and businesses. and ultimately will reduce state revenues. League attorneys have analyzed the legalities of this proposal and believe it is unconstitutional on several fronts. LAO proposes both a one-year suspension of the local gas tax revenues, and a partial suspension of the Proposition 42 transfer, the sales tax on gas. Borrowing Loca/ Gas Tax Subventions: Rather than take local gas taxes as DOF proposes, LAO proposes instead to borrow $1.03 billion in gas tax funds from local governments in FY 2009-10. LAO says the state would repay it with interest within three years, as required pursuant of Article XIX, Section 6 of the California Constitution. Borrowing Prop 42 (Sa/es Tax on Gas): LAO proposes to suspend 80 percent of the Prop. 42 transfer for FY 2009-10. resulting in less funding for state highway projects and for local streets and roads. The suspended amount would be approximately $1.2 billion (approximately $600 million from cities and counties). It would have to be repaid within three years according to the same criteria that applies to borrowing local property taxes under Prop. 1A (2004). LAO has also proposed a repeal of Prop. 42. but the voters would need to approve this proposal. Transit: DOF has proposed redirecting $315 million in Public Transportation Account funds to pay for debt service on transit bonds. Corrections/Public Safety The Governor's budget includes nearly $1.2 billion in cuts to the California Department of Corrections and Rehabilitation (CDCR), in addition to a $400 million unallocated cut made in the budget passed in February. The new proposals include commutations of sentences for undocumented immigrants (which would be turned over to the federal government for deportation), early release of prisoners to be monitored by GPS, and changes in sentencing options for specific crimes that can be treated as either felonies or misdemeanors (wobblers). The largest part of the cuts would come from elimination of most rehabilitative services such as substance abuse treatment and education programs. COPS/Booking Fees: COPS. Booking Fee and other local publiC safety programs are currently being funded by the new 0.15 percent increase (Approx $500 million per year) in the Vehicle License Fee adopted as part of the February Budget. LAO has proposed taking one half of these revenues for the General Fund. Emergency Response Funding: Discussions continue over the details of DOF's proposal to allocate $76 million from a new 4.8 percent surcharge on insurance policies to partially fund CAL Fire and local response agencies. Local agencies can receive reimbursement for costs incurred for responding to emergencies as part of the state's mutual aid system. Mandates DOF released a proposal to suspend all Non Prop 98 mandates (except those related to law enforcement and property taxes), and defer payments for current mandate claims. LAO has recommended suspension of mandates related to animal shelters. Under Proposition 1A, local governments are not obligated to perform mandates that the legislature suspends. Redevelopment Cities with redevelopment agencies need to remain on guard against budget proposals affecting redevelopment. Even though the California Redevelopment Association (CRA) prevailed against the state in its recent lawsuit challenging a September 2008, legislative effort to take $350 million 3