AgdaPkt 2003-05-12 - Laserfiche WebLink

Browse Search

q.A BUDGETfrom page ................. ............................... The package came together this week, follow- ing weeks of seeming dormancy on the budget. The heightened activity was driven by the need to pass pension obligation bonds by an early May date to help cover the state budget deficit. If the bonds failed to meet this deadline, the state would lose a substantial amount of financial benefit from the bonds. The Story Isn't Over As implied in Burton's statement, just because local government escaped cuts in this package does not mean we have escaped all cuts for the 2003 -04 budget year. The real cuts and decisions have yet to come. It is still very early in the budget "dance.' Pension obligation bonds are one of many deficit- reducing actions proposed by the Demo- crats, including the Governor. These bonds have been used by a number of counties in the past to refinance pension debt. They work by permitting these agencies to issue bonds at current favorable interest rates and use this to pay off portions of retirement system debts. Republicans generally reject this approach to deficit reduction, but are willing to deal with Democrats if the Democrats agree to deeper cuts in on -going state programs. The earlier part of the week saw a considerable amount of action in the Assembly, with Democrat and Republican proposals and counter proposals. The leadership in both houses finally agreed on a package of cuts to go along with the approval of pension obligation bonds to help close the gaping hole in state general fund. Local Government Services Spared Cuts While the Assembly Democratic proposals had targeted a $500 million cut to cities and counties and .a $100 million cut to redevelopment agencies, the final package included no reductions to direct local government programs or rev enuesl The package includes approximately $1.8 billion in expenditure reductions and $1.85 billion in pension obligation bonds. This dedicates approxi- mately $3.65 billion to reduce the general fund budget deficit in 2003 -04. To quote Senator John Burton in this morning's Sacramento Bee, "We cleared away all the weeds with this action. Now we've got to worry about pruning the rose bushes in a way that they will end up growing and bloom- ing." The League recognizes the seriousness of the current budget deficit and understands that cities will be expected to share in the pain of closing this debt. We argue, however, that the pain should not fall disproportionately on local governments. In some of the proposals floated this week, dispropor- tional hits to cities and counties were a serious part of the budget debates. The primary focus of the League on any final budget package is to ensure that it includes provisions to prevent the state from making future intrusions into local finances. For details of the new budget cut package, see "Summary of April Budget Reduction Bills, May 1, 2003" elsewhere in this issue of Priority Focus, or visit the League's Web site at www.cacities.ora! budoet. For details of the new budget cut package, see "Bipartisan POB Budget Package Details" on the State Budget Page of the League's Web site at www.cacities.oro /budoet ............................... : 2003 CALIFORNIA CITIES HELEN ; PUTNAM AWARD FOR EXCELLENCE CALL FOR ENTRIES: DEADLINE MAY 16 : Cities with innovative programs in a wide : range of categories are encouraged to • compete for awards through the League's prestigious Helen Putnam Award for Excel- lance program. Additional information and applications are available on the League's website at htta: //www.cacities.org/ • helenoutnam ............................... Visit the League's Official Web Site-- www.cacities.org PRIORITY FOCUS /PAGE 7