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8A Page 2 'Budget' Continued from Page 1... HERE'S WHAT'S AT STAKE... HUTA Grab The proposed $1.7 billion H UTA gas tax grab Is part of the potential budget deal. This proposal includes a seizure of $986.3 million of city and county HUT A funding in FY 2009-10, and an additional $750 million for FY 2010-11 to pay for transportation debt services. Multiple Redevelopment Proposals The Big Five are currently discussing three illegal proposals related to redevelopment funds. The . combined hit is $1.7 billion. . A two-year $350 million annual redevelopment agency (RDA) funding seizure. . A one-year $1 billion ERAF transfer for FY 2009-10. Under this proposal, agencies could borrow from existing balances in their low- and moderate-income housing funds. Agencies that do not or could not make their Educations Revenue Augmentation Fund (ERAF) payments would have to suspend all activities and begin setting aside 30 percent of tax increment for housing. Agencies making the payments would receive a one-year extension on their redevelopment plan limits for receiving tax increment. . An alternative proposal sponsored by the city of Industry, that faces both political and legal challenges, would allow RDA project tlmellnes to be extended for 30-40 years. In exchange, RDA's would be required to give the state 10 percent of revenues which the state would securitize. There are a variety of hybrid versions of this proposal also being discussed. (If this proposal is accepted, the concept is to limit other budget hits to local government. ) Proposition 1A Loan Cities are still threatened by a Proposition 1 A loan despite earlier statements by Legislators coming out of the June Budget Conference Committee that they "savedn local governments from taking property taxes. A property tax loan puts cities in a precarious position. If the state borrows property taxes, it will be extremely challenging for cities to secure financing to securitize the loan against the state's repayment promise. State Treasurer Bill Lockyer has warned that Wall Street is poised to downgrade the state's bond rating again. This would mean that it will be even more expensive for cities forced to securitize a Prop. 1A loan. Moreover, legislative borrowing only compounds the state's budgetary problems by "kicking the can down the road." Next Steps With all indications suggesting that a deal may be near and the legislature poised to balance its budget on the backs of local government, It is Imperative that city officials contact their legislators and the Governor TODAY and share how borrowing and/or taking local revenues will impact their communities. PLEASE ACT NOW! 2