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i i.A-3 BUDGETflrom page1 ................ ............................... The total VLF hit to cities: $553 million in the current year, and $1.2 billion in FY 2003 -04. (See related article on page 1 for detailed informa- tion on how VLF is allocated. See also the Budget Page on the League's website: www.cacities.org/ budget.) Cities are concerned about the entire VLF "take- away" not only because the impact on counties ($700m in FY 02 -03 and $1.7b in FY 03- 04) could have a trickle -down effect, but more importantly because the state is once again taking away money that is not theirs: the constitution dedicates VLF as a direct local revenue. this total today are as high as $1.2 billion. The state will use these funds to support schools; they become part of the ERAF (Education Revenue Augmentation Fund) shift of local property taxes that has so dramatically altered local government's ability to provide services and plan for future growth. League First Vice President, Ron Loveridge, Mayor of Riverside, called the proposed redevelop- ment fund raid "the wrong idea at the wrong time for the California economy and its workers." Public safety and other essential services are clearly at risk with these cuts. On average two out of every three dollars in cities' general funds are dedicated to police, fire and EMS services. The VLF makes up an average 16% of a California city's general fund. The $1.2 billion cut in FY 2003- 04 could pay for 12,000 police officers, or 15,000 firefighters. Reacting to the VLF proposal, League Presi- dent and Oakland City Attorney John Russo said, "The state budget is clearly sick, but the patient won't get better by stealing blood from city and county budgets and taking cops and firefighters off the street. The time has clearly come for the legislature to keep its commitment and to end the VLF tax holiday by returning the VLF rate to its 1998 level. Only this will help avoid absolutely horrific public safety and other service cuts at the local level across our state." On average two out of every three of dollars in cities' general funds are dedicated to police, fire and EMS services. The VLF makes up an average 16% of a California city's general fund. The $1.2 billion cut in FY 2003 -04 could pay for 12,000 police officers, or 15,000 firefighters. Other big hits to cities: an ongoing shift of $250 million from the school district share of the increased taxes (i.e., the "tax increment' property taxes) going to redevelopment agencies for financing of public works and housing projects. The budget includes a statement of intent to increase this shift until the full amount of the school district share is diverted. Estimates on "The Governor's State of the State speech emphasized 'jobs, jobs and more jobs' ", continued Loveridge. "If jobs are the goal, taking redevelop- ment funds is one of the worst things to do. Rede- velopment agencies are a principal source of economic development and construction jobs in the state. With historic low- interest rates, many redevelopment agencies are poised to finance public infrastructure improvement and housing projects that will help jump -start the state economy. Instead, the Governor's proposals will shut down these efforts. 'This makes no sense. It would further damage our economy." In December the governor also proposed a current year shift to the state general fund of $500 million in "unencumbered" low and moderate housing funds held by redevelopment agencies. The League testified with local housing advocates at a December legislative budget hearing that "unencumbered" did not mean that funds were uncommitted, and that their loss would spell doom to many affordable housing projects in various development stages around the state. This pro- posal, and others recommended by the Governor in December (totaling $10.2b) remain part of Davis' total budget package and the Governor has asked they be acted upon this month. Another hit to cities: the loss of booking fee reimbursements, costing cities $38 million. In the early 1990's the state gave counties the authority to charge cities for the counties' booking Continued on Page 4 Visit the League's Official Web Site-- www.cacities.org PRIORITY FOCUSIPAGE 3