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9.4 -2Z BUDGET BILLS from page 1 ........... Any bills that require Senate concurrence will not be acted on until after the Senate returns from recess on August 18. Language on all bills, and final vote tallies, are available at: www. cacities.org /legislativesearch. Any addi- tional budget updates can be found at www.cacities.org/budget. AB 1768 and AB 1752 —Vehicle License Fees Between the pulling of the VLF trigger (June 19) and the time the restored fees go into effect (October 1), the state would have been required to pay backfill under existing law. This "gap" was expected to cost the state a total of $825 million (a revised estimate from the Legislative Analyst's Office). This estimate includes not only the monies that are owed directly to local governments, but also the backfill money that would have been paid into the VLF realignment fund, established in the early 1990s. AB 1768 specifies that the payment of backfill money that is owed to local govern- ments during this "gap" be deferred until August, 2006. The repayment at that time is without interest. In addition, it includes a provision that would allow cities with defined "hardship" cases to receive their VLF monies now, rather than defer payments. "Hardship" is defined to include, but not be limited to: 1) any entity of local govern- ment which has pledged its vehicle license fees as security for any indebtedness and which demonstrates that delay in disbursing motor vehicle license fees will compromise repayment of such indebtedness; 2) any entity of local government whose amount of vehicle license fees, as determined by the State Controller, exceeds 37 percent of its total annual general revenue (based on the Cities Annual Report for 2000 -2001 fiscal year); or 3) any newly incorpo- rated city receiving additional Vehicle License Fee revenue under Section 11005.3. Any funds advanced pursuant to a finding of "hardship" shall be disbursed on the 10h day of the calendar month following the finding of PAGE 8 /PRIORITY FOCUS . ............................... hardship. The bill sets aside $40 million for hardship cases, an amount that was considered sufficient to cover all newly incorporated cities and cities that fall into the 37 percent category with monies left to address other requests. In existing law, 24.33 percent of VLF monies collected are dedicated to realignment, as established in the early '90s. AB 1752in- creases, for fiscal year 2003 -04, this percentage to 28.08 to make up for the realignment backfill money that would have been paid during the „ Combined, the local government VLF hit is expected to be $825 million in fiscal year 2003- 04, with repayment expected in 2006. Go to www.cacities.org /budget to find a document with a city -by -city breakdown of the loss based on the original estimate of $852 million. To deter- mine vour new estimated loss. based on the $825 million estimate. multiDly vour cities' num- ber by .968 Remember, these remain "esti- mates" on the loss based upon the totals esti- mated by the state. AB 7X and AB 1766 — Triple Flip Provisions AB 7X, the California Fiscal Recovery Fi- nancing Act, establishes the mechanisms through which the state will be able to fund the accumulated budget deficit. It details the param- eters under which the bonds can be sold and creates the California Fiscal Recovery Fund as the special fund dedicated to repaying the deficit bonds, with all associated details. AB 1766 fully defines the'/ cent Bradley - Burns sales tax for property tax "triple flip" which becomes effective in the 2004 -05 fiscal year. In sum, the "triple flip" will work as follows: 1. On Aug. 15 of each year that the "triple flip" is in effect, the State Board of Equalization will give the Director of Finance (DOF) an esti- mate, based on the prior fiscal year, of what the "countywide adjustment amount" should be. "Countywide adjustment amount" means the Continued on Page 9 Visit the League's Official Web Site-- www.cacities.org