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/D. o4 LEAGUE TESTIFIES ON STATE FUNDED MANDATES Monday, June 2, the Assembly Select Commit- tee on State Mandates held the second in a series of hearings to more thoroughly examine the Governor's May Revise proposal to defer, repeal or suspend funded state mandates to schools, coun- ties, cities and special districts. The initial meeting of the committee, held last week, provided an overview of the mandate process and the Governor's proposal through testimony from the Legislative Analysts Office (LAO), Department of Finance (DOF), and Commission on State Man- dates (COSM). Members of the committee include Assembly Members John Laird (Chair), Ed Chavez, Lynn Daucher, Loni Hancock, Doug La Malfa, John Longvilie, Bill Maze, Cindy Montanez, and Simon Salinas. Monday's hearing focused exclusively on the non - education state mandates and included a review of each mandate contained in the Governor's proposal. League Legislative Repre- sentative Jean Korinke and Steve Keil from the California State Association of Counties (CSAC) provided testimony responding to the Governor's proposal, as well as proposing reforms of the processes (legislative and COSM) that would help both the state and local agencies. The League and CSAC reminded committee members of the constitutional obligation of the state to reimburse local governments for mandates approved through the COSM process, and the desire of cities and counties to receive full reim- bursement for outstanding claims. Recognizing the magnitude of the state's fiscal problems, it was stressed that should a deferral option be forthcom- ing it should include a specific "repayment date" in the deferral language. In addition, the obligations should be recognized in the state's audited financial records. These amendments are critical to allow local agencies the opportunity to pursue indepen- dent financing to cover the costs deferred. The Governor's May revision identified a number of state mandates that would either be repealed, or suspended (some of which were intended to be repealed in the 04 -05 budget year). The League and CSAC discussed the different impacts of suspension versus repeal, and stressed that overall, outright repeal would be preferable in that it would provide local governments finality on. the individual mandates. Reform of Mandate Process Must Start in the Legislature Absent from the earlier select committee meet- ing was a focus on reforming the legislative process to shed more light on the impacts of legislation on local governments. In the current session, over 400 pieces -- iegislation were identified that, as introduces, could have impacts on local govern- ments. While some of these may be exempted from mandate reimbursement, the League and CSAC stressed the importance that the legislature under- stand the total financial impact they are imposing on local governments through their activities. It was suggested that all bills having a fiscal impact on local governments be scrutinized in the same manner as bills having a fiscal impact on the state — these bills should be referred to the appropriations committees and subject to the same suspense rules. This would focus more attention on the total costs of these items, some of which would be borne by the state, before having them become law. A number of reforms to the COSM process were proposed including: initiating a thorough manage- ment audit of all entities involved in the process (COSM, State Controller, DOF); requiring the state to pay interest on payments claimed for newly approved mandates (retroactive to a year from when the legislation was passed); adding an automatic sunset date to any legislation creating a state - funded mandate (5 years from when the mandate was approved); and more. For a complete copy of the testimony provided, go to www.cacit under the State - Funded Mandates section. Governor's Repeal of the Open Meetings Act Mandate Opposed While the Governor's May revision of the budget identified a large number of mandates for recommended repeal in fiscal year 04 -05, the only one singled out for immediate repeal was the Open Meetings Act mandate. The League has expressed its strong opposition to the repeal of this mandate. In 1986, the Open Meetings Act was passed that required local governments to post agendas regarding items to be considered at meetings, as Visit the League's Official Web Site-- www.cacities.org Continued on Page 8 PRIORITY FOCUSIPAGE 3