AgdaPkt 2004-03-08 - Laserfiche WebLink

Browse Search

1, A-I (0 LAO REPORT from page 1 ............................................ On the general fiscal picture, the report offers . Be Mindful of Effect on Land Use Incentives the following observations: . ConsidBr the Impaci of Revenue Reductions . The fiscal problem (deficit) facing the state in the 2004-05 budget $17 billion Alternative Approach . Of the $17 billion deficit, $15 billion relates To accomplish the cuts to local govemment to an ongoing structural imbalance between and follow the above principles the LAO proposes revenues and expenditures in 20O4"()5, while the the 'altemative approach' outlined below. While the remainder of the problem is a $2 billion current- LAO acknowledges that this altemative represents year shortfall. an undesirable intrusion into local finance, they state that it would have fewer negative effects on . The budget proposed by the Govemor fails local govemments and their residents than the to address the ongoing structural shortfall. The administration's approach. The proposal mirrors LAO predicts that a $7 billion ongoing gap be- the Govemor's target of $1.3 billion, but accom- tween revenues and expenditures would occur in plishes that cut level is as follows: FY 2005..()6 and continue in subsequent years, absent any further corrective action, . Reduce $216 million in "Restricted Purpose Subventions." Specifically they propose to eliminate Report Questions New Property Tax Shift the COPS program at $100 million; the Juvenile Justice Challenge Grants at $100 million and the Public Library Foundation money at $16 million. The LAO took a very bold step in this year's report in commenting on the Govemor's proposal . Shift $400 million in unspecified property tax to cut local govemment property taxes by $1.3 cuts to special districts. Local communities would billion. In the report it states: have full flexibility to implement this cut. The prop- erty tax shift amount would be established by the "This proposal raises questions concerning Legislature for every county. The Board of Supervi- the state's role regarding the property tax. In our sors in each county would hold hearings and take view, the Legislature should use Its authority testimony and then revise the amount of property over this tax for the overall betterment of taxes received by special districts in their county to local government, not as a state rainy day accomplish the target shift. fund. We recommend the Legislature reject this proposal." (Emphasis added.) . Implement a focused shift of $320 million in The LAO went on to say, however, that if the property taxes from redevelopment agencies. This would be accomplished through a "sliding scale" Legislature does pursue cuts to local govemment that reduces the incentive for cities and counties to because of its difficult financial situation that the form or expand redevelopment agencies. following principles be applied to any such course of action: . Shift $200 million each from cities and . Minimize Reductions to General Purpose counties (total of $400 million), The shift would take place through a reduction in the Bradley-Bums tax Revenues rate from the current 1 % down to .92%. This would produce $400 million annually. In tum, the state's . Leave Past Formulas in the Past sales tax is increased by an equivalent percentage. City sales tax losses exceeding $200 million would . Allow Local Control be offset through a statutory revision to the existing Continued on Page 5 PAGE 4/PRIORITY FOCUS Visit the League's Official Web Site--www.cacities.org