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8A Page 3 ruled uncvnstitutio�al. Rede�eiopment agencies are entitled#o a one-year extension on their AB 129Q time limits if#hey make timely ERAF payments. The amoun#each agency mus#surre�der is equal to half on net#ax increment(ne#of pass- thraughs}plus half on gross tax incremer�#.Agencies that do not make their payment by May 10 must increase their housing se#-aside from 20 to 25 percent. lf an agency is unable to pay its required amoun#, it must adapt a resolu#ion a�d repor#to the county auditor how it intends to fund the payment. The agency can use any available funds to make fihe SERAF paymenf. For FY 2409-10,the agency may"suspend"al1 or part of the required allocation to its low-and moderate-income housing fund.The Housing Fund must be repaid by 2015. !f the agency fails to repay the Housir�g � Fund,the Housing Fund set-aside is increased to 25 percent for as long as the project area continues#o receive tax increment. An oWerla�ping provision permits an agency to boITOw the amount required to be aliocated to the Housing Fund in order to make the SERAF payment.This provision apparen#ly applies#o FY 2�Q9-10 and FY 2010-11. It requires a finding that there are insuificient o#her funds to make the SERAF payment.Amounts"borrowed"from the current year allocation to the Housing Fund under this section must also be repaid by 2U15. The obligation to make the ERAF paymen#is subordinate to obiigations to repay other indebtedness.An agency may pay less than#he amount required if it fnds that it is necessary to meet abligativns for the applicable fiscal year.An agency that intends to pa�Iess than the required amount must adop#a resolution pr�or to Dec. 31 listing the exis#ing indebtedness and the payments required to be made during the app{icab{e fssca4 year. An agency failing maice its ERAF payment,even if it must do so to pay existing obligations,is subject ta the"death penalty." !t may not adopt a new redevelopment plan, amend an existing plan, or expend any monies deri�ed from any source except to pay pre-existing indebtedness, con#ractual ob�igations, and 75 pereent of the amount expended on agency administratio�for the preceding fiscal year.This penalty lasts un#i!the payments are made. Legislature to C�nvene Special Session in September Whi1e the bud�e#revisions signed infa iaw this week appear to address the entire$24 billion deficit the sta#e is fiacing,the Governor has already caited a specia!session for Iate September for the 1.eg+slature to consider recommenda�ions made by the Commiss'son on the 2'f st Century Economy.This commission was created ir� February to examine and modernize Califomia's tax laws, and is expected to re(ease their recommendatians on Sept. 2Q,just a week after the Legislature's regular session ends, In additian to moderr�izing tax laws, no one is ruling out the possibiiity o#additional mid-year cuts in late 2�09 or early 2�10. Even if that the economy begins to reco�er ir�2010,the Go�ernor's Adminisfration is already projecting a deficit of$7 billion to$8 biElior� in FY 2010-1'[. Additional Budget Br�[s League staff has�rovided a summary of the approved budget bills highlighting the most important impacts for cities. Legislati�e bip analyses can be found at www.cacities.or�lbil3search. Rssembty Bill X4'� —Sudget Act of 2009 Revisions AB X4 '1 made n�merotas changes to the budget bill appro�ed by#he Leg�sfature in February. Among the many provisions,the foilowing are of par#icufar note to loca!governments: The new budget bill makes$'I2 miliior�available from t�e Safe Drink'tng Water,Water Quaii#y and Suppfy, F(aod Confrof, River and Coasfaf Pratection Fund of 2Q06 for plannir�g grants and incentives.These incenti�es include revolving loan programs and are des'sgned to assist local government in complying wi� SB 375�2008}. Budget lartguage states t�tat the funds should be committed by Ucfiober. 3