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8A Page 2 `Budget'Cantinued from Page 1... Proposition 1A Property Tax Loan Appro�ed ABx4 14 suspended Proposition 1A(2004}and borrows$1.9 billion in property tax funds from foca( governments. The funding will be shifted to county level Supplemental revenue Augmentation Funds to be used for K-12 schools, courts, prisoris, Medi-Cal, and hospitals. In addition to the Legislature passing ABx4 14,th�Governor was required to issue an emergency proclamation in order to suspend Prop. 1A. He did so on July 24. A copy of tl�e proclarr�ation can be fot�nd on the Governor's Web s�#e at www.go�.�a.qov/�roclama#ior�/128881. ABx4 15 confains the necessary technica(provisions instructing county auditors to shift 8 percent of each ioca!go�ernment's share of property taxes to the Suppiemental Revenue Augmentation Fund.The bill incfudes a"hardship exemptian"which must be appiied fvr by Uct. 15. If a hardship exemption is gra�fied, the amount borrowed from other jurisdictiorts witt�in that county will increase. This bifl a(so requires the state fo repay the bvrrowed funds by June 30, 2013 and contains language to allow local go�ernrnents to bond agains#t�e state's promise to repay the funds, and caps the amount of interest that can be paid on the bonds issued at 8 percent. [f a ci#y bonds against the Prop_ 1A loan,the state will pay the cost of their interest up to 8 percent. If a ci#y decides not to bond against the Prop. 1A loan,the state wilf pay the ci#y an interes#rate to be determined by the Sta#e Controller not to exceed 6 percent. � The League is preparing a detai{ed memo on how the foan and the securitization w[II be implemented.lNatch for more information in the near future. HU7A Grab Provisions Removed, Obso�ete HUTA Defierrat Remains The final budget package did not include the seizure of#he local share of the Highway Users Tax Account(HUTA}.The Assembly responded to iocaf reques#s to ki11 the plan early Friday aiternoort, July 24. However, on Thursday,Ju[y 23, #he Assembly amended ar�d passed SBx4 'f6, a rnulti-section bill that contains many payment de#errals and other budget refated clarifiica#ions including a deferrai of H UTA payments. The de#erral was part o#the ariginai budget package because the HUTA seizure would not have taken effect for 90 days. It was needed to faciGtate the sta�e's ability to take the full amount, no# just a partia[year. Under its pro�isions,the bil(contains fanguage that defers the monthly HUTA payments to cities and counties from July#hraugh December until after Jan. 1, �a10. The Senate approWed#he HUTA raid and deferrai before adjourrting early Friday morning. The Assembly took final action on#he budget Friday afternoort a�d kifled the gas tax raid. This deferral is now obsolete. The League is currently exploring aptions ot�the best and fas#es#way to have#his fanguage removed. At fihis point,the bes#option appears to be whaf is known as a ciean-up bili.The Legislature roufinely passes clean-up bi�ls fol�owing the passage of significant legislation ir�order to"fx"[anguage that is w�itten incarrectiy or is no longer needed. Whife the HUTA deferral is no longer needed, it may#ake a concerted effort of the League, Califorrtia State Association of Counties�CSAC)and our members to secure#he release of these funds on schedule. The League is already beginning the groundwork needed#o obtain a successful fix, and we will keep you updated as further developmants occur. City officials will rememb�r some of the recent deferrals of HUTA payments to cities and counties that were designed to assist the state through its cash shortfafls similar to its current position. Redevelopment Fund Seizure Approrred ABx4 26 takes$'f.7 billion in FY 2009-10 and anot�er$350 million in FY 2090-1'[ from redeve(opmen#ageneies and deposited in coun#y"SuppSemental"Educationai Revenue Au�mentation Funds(SERAF}to meet the state's Proposition 9$obliga#ions to schools within redevelopmen#areas. The structure is similar to�350 mifiion take attempted fast year that was 2