AgdaPkt 2003-05-05 - Laserfiche WebLink

Browse Search

9 . P- cP BUDGETfrom page 1.... es**a Osseo .. . .... 0.0 ....................... The April package includes significant cuts in city related revenues for the 2003 -04 budget year (except as noted): " $250 million reduction in unspecified city fund- ing " $38 million in elimination of Booking Fee reim- bursements " $95 million ERAF shift (2002 -03 —current year) " Unknown future ERAF shifts from redevelop- ment (to be determined) " $769 million in deferral of non - education man- date payments (city and county impacts) The $250 million proposed reduction in city funding actually exceeds the $226 million allocated to cities from the state general fund in the current fiscal year for COPS, Police Technology, Booking Fee reimbursements, and Public Libraries (see chart). This effectively means that cities would experience reductions in some local general rev- enue (e.g., VLF, property tax, etc.) while continuing to receive certain categorical funds from the state general fund, but the specifics have not yet been identified by the Speaker's Office. This could clearly set the stage for an increase in the ERAF shift or some new raid on local revenues. Transportation Funding Also Targeted Regarding transportation, the April package would include borrowing $500 million in fiscal year 2003 -04, from the Transportation Investment Fund (TIF). This would leave approximately $546 million available in 2003 =04. According to estimates from the California Transportation Commission (CTC) working with Regional Transportation Planning Agencies (RTPAs) the 141 Traffic Congestion Relief Projects will require $459 million in 2003 -04, leaving an estimated $87 million for the STIP, local streets and roads and transit. Further details are not yet available. Smaller Impact Than Governor's Proposals, But Still Significant While these proposals have a lesser overall impact than the Govemor's original proposals, they will still have the potential to significantly curtail city services because of their magnitude. And there could be more to come before the final budget is adopted. Even if the April package were adopted in total, the state would still face a deficit gap of anywhere from $7 —18 billion (when factoring in an expected increase in the deficit of $3 — 5 billion by May 10 This leaves lots of questions about how cities will fare in the final analysis. This would not be the first time the state has asked local governments to help bail them out of a fiscal crisis. Cities are still fully cognizant of the impact of the ERAF shift from the early '90s. Look- ing at the past four years, and under generous assumptions of what constituted state 'gives" to local government, cities are clearly net donors to the state, providing more funding through the ongoing ERAF shift of property taxes than they received in state funding for all programs. In fact, over the past 4 years California cities contributed over $1.1 billion more in revenue than they re- ceived in all forms of state assistance. Cities "Donor" Role Would Expand As with the Govemor's original budget propos- als, the Assembly Democratic Caucus proposals would only expand the "donor" status of the cities to the state. If approved, the net donation of cities to the state would accelerate to $747 million dollars for the 03 -04 budget year alone. The cumulative benefit of all assistance from the state general fund (exclusive of the voter - approved Proposition 172 funds) would be effectively wiped out (see attached chart). It's clear, now more than ever, that the state needs incentives to live within its own means, and disincentives to "raid" local revenues. The League of California Cities, along with its coalition partners — California State Association of Counties and California Special Districts Association — continue to advocate for a constitutional amendment that would force the state to live within its means by prohibiting future raids of local government revenues. In addition, we are exploring support for ideas that would impose spending limits or help enforce a balanced budget. Without these, the financial future of California's cities will remain uncertain. Make Your Voices Heardl Attend Legislative Condnuod on Page 7 PAGE 6 /PRIORITY FOCUS Visit the League's Official Web Site-- www.cacities.org