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q.A -IZ PEACEfrom page1 .................. ............................... Referring to the state's huge deficit he said, "The quicker you fix the problem the quicker you whittle it down, but it also makes you Public Enemy #1. The feelings of anger and betrayal experienced by local government are the same as the feelings in the education and health care communities." He said that the core of the Administration's proposal is the $8.2 billion "realignment" piece — the proposal to shift health and welfare programs from the state to counties and accompany those pro- grams with dedicated revenues. This approach makes sense, he said, because the services are at a level of government that is closer to the popula- tions being served. Passing the realignment keeps the services, but also keeps state government funded at a level that doesn't trigger the constitu- tional requirements to increase funding for educa- tion. But achieving the realignment requires pas- sage of the $8.3 billion in tax increases proposed by the Governor — a 1 cent increase in sales tax; a $1.10 per pack increase in cigarette sales; and raising the personal income tax level for the top income levels. "We haven't been able to get people to focus on the consequences of not getting the tax increases the Governor has asked for," said Peace. Board members had many questions for the new Finance Director about why the Governor proposed to break a promise made to local govern- ment about continuing VLF funding for cities and counties. Many spoke strongly about the sense of betrayal felt by local officials, and the difficulty of working with the state on structural reform issues when the state was again proving itself untrustwor- thy. "Tell your boss that $4 billion in VLF is important to this room, along with keeping promises ", said Thousand Oaks Mayor Andy Fox. ture. He acknowledged further that the Governor would probably have to pull the VLF "trigger" and reinstate the higher VLF fees before June — even without AB 4X. "My advice to the League is that you don't win early," he said, arguing that doing so would make local government a target for other groups con- cerned about funding later in the budget process. Speaking of the Governor's announcement that he plans to veto AB 4X, Peace said, "There are fundamentally different legal opinions about the trigger. The decision last year that there was a need for clarification (of the law calling for the trigger) was based upon one lawyer's opinion. The issue for us today is which statute do we want to defend. Lawyers for the Department of Finance, the Governor and the Controller all agree that they would rather defend pulling the trigger under the current law than under AB 4X." "We believe the trigger will pull," he continued, but that it's going to pay off in the end if everyone gets involved in the budget discussions. Oakland Mayor and former Governor Jerry Brown attended the meeting and spoke following Mr. Peace's remarks about his experiences with Propo- sition 13. "If I replay the Prop. 13 movie, I should never have trusted the legislature to pass a bill (on property tax reform) ", he said. "They dallied and wasted a year. I should have gone straight to the ballot. The League needs an initiative, something real and popular." Peace agreed with this approach, and urged the League to get involved with other interests in developing a ballot measure to dramatically restruc- ture the state and local fiscal structure. "Take VLF off the table," added Oakland City Attorney and League President John Russo. "The VLF is our (cities' and counties') money." Recognizing the impact that cities and counties were having on the state budget debate, Peace acknowledged that the Governor's plan to leave the VLF backfill unfunded would not pass the legisla- "The Governor's proposal is about structural reform," he said. "There's a window of opportunity to fix this stuff. I encourage you to participate and to involve the business community." Mr. Peace also spoke at the City Managers meeting this week in Monterey, covering much of the same information. PAUL 6 /PRIORITY FOCUS Visit the League's Official Web Site -- www.cacities.org