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9A Page 16 'Budget' Continued from Page 1... With the Governor promising to veto any budget proposals that did not address the entire projected $24.3 billion deficit, Senate Republicans withheld votes for a three-bill package designed to score budget savings in the FY 2008-09 and provide temporary cash flow adjustments to forestall the need for the State Controller to issue registered warrants (IOU's). One of the measures that failed passage was a proposal to attempt to work around the recent successful redevelopment lawsuit and take $350 million from redevelopment agencies. Because of the failure to adopt a comprehensive solution prior to the beginning of the fiscal year, the Governor says that (due to complicated education funding fonnulas from Proposition 98) the size of the state deficit has grown by $2 billion. Some Legislative estimates, however, project that the deficit may be as much as $7 billion higher. All this means that for the first time since 1992, the Controller is now scheduled to issue IOU's for various state obligations that are paid out of the general fund. IDUs will be paid to private businesses, taxpayers and local governments (primarily counties). Because cities receive very little from the state's general fund, it is not anticipated that this will have a substantial impact on cities. The Controller's Web site has additional infonnation on IDUs. htto:/Iwww.sco.ca.Qov/eonewsreQisteredwarrants.html While the details of state budget proposals can be confusing, the choices remain simple: it will take more cuts, new taxes, or a combination of the two and/or the use of borrowing. The Governor and Republicans say they won't support tax increases, and the Democrats -up to this point-say that the $11 billion in cuts they have already agreed to are already decimating the social safety net too far, so they won't agree to further program reductions. The Democrats also voted to support a revised majority vote budget proposal that did not include the previously proposed $2billion in new taxes Proposed HUTA and RDA Grabs Not Yet Approved On a positive note for local governments, the Assembly did not take up the bills passed by the Senate that include the three-year $350 million annual redevelopment agency (RDA) funding seizure or the proposed $1.7 billion Highway User Tax Account (HUTA) gas tax grab. The three bills in play with the RDA and HUT A takes are: . S8 80 includes the one-year RDA grab of $350. The Assembly passed it last week but the Senate failed to pass it Wednesday night. It is unclear whether this bill can be taken up again now that the 2008-09 fiscal year has expired. htto:llinfo.sen.ca.oov/oub/09- 10/bill/senfsb 0051-0100/sb 80 bill 20090625 amended asm v98.html . SB 3x 29 contains a three-year take of $350 RDA funding. It passed the Senate Wednesday night as part of the Democratic majority vote package (the Governor promised to veto) but needs to be approved by the Assembly. htto:/linfo.sen.ca.aov/oub/09-10/bilUsen/sb 0001- 0050fsbx3 29 bill 20090629 amended sen v98.html . AB3x 4 contains the $1.7 billion two-year HUTA grab. The Senate passed it Wednesday night as part of the Democratic majority vote package (the Govemor promised to veto) but needs Assembly approval. htto:/Jinfo.sen.ca.aov/oub/09-10Ibill/asmJab 0001- 0050/abx3 4 bill 20090629 amended sen v96.html League Maintains Opposition to Borrowing-Local Funds at Risk Of great concern for cities is the fact that the longer the state goes without a budget and the larger the deficit grows, the more at risk are city funds. The Govemor's spokesperson, Aaron McLear made an erroneous statement on Tuesday, June 30, by telling reporters that California cities are 'okay' with the state borrowing local property taxes to balance its budget. The League 2