AgdaPkt 2010-02-01 clsd and regular

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local streets and roads. Since the alternative funding source would no longer be from the state sales tax on gasoline, these funds would no longer be earmarked as directed by the voters or receive Prop. 42 protections. Under Prop. 42, shares can only be changed after a two-thirds vote of the Legislature and revenues can be borrowed only if the following conditions are met: . An emergency proclamation is issued by the Governor; . Two-thirds of the Legislature agrees; . Repayment source is identified; . Repayment is made within three years; and . Revenues can be borrowed only twice in 10 years. 8A Page 3 Under the Governor's proposal, transportation funding would be "protected" by Article XIX of the state constitution - the same law that protects the current 18 cent per gallon HUT A excise tax allocations. This is also the same law under which the Administration believed it was possible to take all local government shares to fund state debt payments, and was narrowly defeated. The protections provided by Article XIX are much more limited than the protections provided under Prop. 42 for the gasoline sales tax. Local transportation could be more easily shifted away the next time the state runs into difficulties. Only a majority vote of the Legislature is required to change the HUT A allocation formulas or to borrow the revenues. While Article XIX requires borrowed revenues to be paid back within three years, the state does not have to pay interest nor is there a restriction on the number of times revenue can be borrowed (in other words, the state can borrow the funds every year). WiIIlncreasina State Debt Service Erode Local Fundina? State transportation debt service costs will rise to around $1.3 billion annually over 10 years. Under this proposal, the gas tax rate will increase up to the 34 cent per gallon level over that time. The Administration has stated that the intent of the proposal is to cover the increase in debt service costs plus cover the Prop. 42 allocations (except the eliminated transit funding), including a level of growth that those allocations would have seen under the current system. In the future, additional transportation debt could be added into this debt service cost if additional bonds are approved by the voters. The recent history of the state-local relationship with local funding does not justify any confidence that these projections will be met, suggesting the local shares of HUT A will be at risk for many years. Eliminatlna Jobs When the State Should be Creatlna Jobs. A reduction of transportation funding resources will severely impact economic recovery and threaten job stability throughout the state. The unemployment rate for the construction industry is hovering at 20 percent. This is the worst time to eliminate funding that will put people to work. Footnotes' , Sales lax on gasoline funds Prop. 42, valued in FY 2010-11 at $1.573 billion for the State Transportation Improvement Program (40 percent), local streets and roads (40 percent), and the Public Transit Account (20 percent) plus $897 in "Spillover" revenues used for transit. 2 (1) 28.8 cents for FY 2010-11; (2) 29.2 cents for FY 2011-12; (3) 29.7 cents for FY 2012-13; (4) 30.7 cents for FY 2013- 14; (5) 31.5 cents for FY 2014-15; (6) 32.0 cents for FY 2015-16; (7) 32.4 cents for FY 2016-17; (8) 33.3 cents for FY 2017-18 and 2018-19; (9) 33.6 cenls ror FY 2019-20; and, (10) 33.9 cents for FY 2020-21 and each fiscal year thereafter. 3 Proposition 111 (1990) raised the excise on gas from 9 cents to 18 cents. The state sales tax revenues from the 9 cent increase are dedicated to transit funding. In FY 2010-11. this Is estimated at $61 million. 'Meetings' Continued from Page 1... Held at the Hyatt Regency in Sacramento, the New Mayors and Council Members' Academy featured a variety of sessions designed to inform newly elected officials about essential resources and strategies that can be applied as they assume office. The academy is the first introduction to the League and the organization's education and advocacy work for the new mayors and council members. Some of the key sessions included: . City finance; . Land use; . Legal issues; and . Advocacy. 3