IN THIS ISSUE: May 9, 2008
Issue #18-2008
Page 3: Budget Action Day Scheduled for Wednesday, May 21
Page 4: Opposition Letters Needed for AB 983
Support Letters Needed for Public-Private Partnership Legislation
Page 5: $46 Million Now Available for Federal Safe Routes to School Funds
League and Partners Offer Financing Pools for Street Repairs
Page 6: Conference on Public-Private Partnerships Offered
Sustainable Cities Feature: Guest Article by Brian Gitt, Build it Green
Page 7: Find a Bill, Legislator, Leg Committee, or Ask League Staff
LEGISLATIVE ANALYST’S REVISED PAROLE REALIGNMENT PROPOSAL
INCLUDES TAKE OF CITY VLF FUNDS
In a May 5 letter to Senate Budget Committee Chair Denise Moreno Ducheny (D-San Diego), the
Legislative Analyst’s Office (LAO) submitted a revised proposal on how the Legislature could
successfully transition the supervision responsibilities of state parolees to counties. The LAO’s
revised proposal contains various suggested modifications governing the number of parolees
eligible, excluding those with prior violent convictions, and alternatives for revoking parole.
For more, see Page 2.
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REGISTRATION DEADLINE EXTENDED FOR MAYORS AND COUNCIL MEMBERS
EXECUTIVE FORUM
The deadline to register for the 2008 Mayors and Council Members Executive Forum and
Advanced Leadership Workshops has been extended to Monday, May 19. Slated for Wednesday,
June 4 - Saturday, June 6, the annual event will be hosted at the Resort at Squaw Creek in
Squaw Valley. For more, see Page 2.
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SUPPORT LETTERS NEEDED FOR PROPOSED DENSITY BONUS LAW
Proposed Law Includes Important Fixes
Cities are urged to send their Assembly representatives letters supporting AB 2280, a bill that
proposes important changes to density bonus law. This bill, authored by Assembly Members Lori
Saldana (D-San Diego) and Anna Caballero (D-Salinas), who respectively chair the Assembly
Housing and Community Development and the Assembly Local Government Committees, will
come up on a floor vote in the next few weeks and needs the support of cities across the state.
For more, see Page 3. 2
‘Parole Realignment Proposal’ Continued from Page 1…
In the LAO’s original proposal, the state would fund the realignment of parole services from the
state to counties with $178 million (all) of city Proposition 172 public safety funds, $188 million of
property taxes shifted from water and waste enterprise special districts to counties, and taking
$130 million in administrative revenues from the Department of Motor Vehicles (DMV). The
League and the California Police Chiefs Association vigorously oppose the idea to take city public
safety dollars, and the special districts strongly defended their property taxes.
The LAO’s May 5 letter contains an “alternative financing” proposal that includes two basic
features:
1) Shifting Vehicle Licensing Fee (VLF) revenue that currently goes to cities (estimated by
the LAO at $149 million) and the DMV (estimated by the LAO at $363 million) to the
counties to support state parole realignment. (To simplify, for cities VLF revenue for FY
07-08 amounts to about $4.50 per capita plus special allocations for inhabited
annexations since 2004.)
2) Shifting all property tax revenues currently going to water and wastewater enterprise
special districts to counties and giving counties the option to: a) offset some or all city
VLF losses, b) supplement county resources for the new parole responsibilities, c) use
funds to contract back with special districts for water/waste disposal services, or d) give
property tax reductions to taxpayers.
The League is continuing to analyze this proposal, including its potential legality. A copy of the
proposal can be obtained by visiting the Legislative Analyst’s Web site (www.lao.ca.gov) and
searching for “LAO Parole Realignment Proposal: Additional Options.”
Whatever the policy merits of shifting state parole responsibility to county probation, the LAO’s
initial financing proposal, as well as the May 5 revision, serves as a stark reminder to local
governments that a perspective still exists among some in Sacramento that the state’s budget
priorities supersede all community priorities and conditions. Proposals which attempt to pit cities,
counties and special districts against each other for the state’s gain should be strongly rejected.
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‘Mayors and Council Members’ Continued from Page 1…
Created for mayors, mayor pro-tems, council members, city managers and assistant city
managers, the three-day conference is designed to equip city leaders with the skills they need
and offer practical workshops for planning ahead for the challenges their city is facing. Sessions
include:
• Achieve Substantial Water Saving in Your City
• Strategies for Council-Manager Conflict Resolution
• Gang and Violence Protection
• Delivering Messages in the Media Interview
• Land Use and Climate Change
• And much more!
Advanced Leadership Workshops will be offered Friday, June 6 – Saturday, June 7. Participants
may choose from one of three workshop tracks: economic development, meeting management or
city finances. A separate fee is required for Advanced Leadership Workshops.
To register online, visit www.cacities.org/events.
For more information, contact Brian Sanders, the League’s education program director, at
bsanders@cacities.org or (916) 658-8238.
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‘Density Bonus’ Continued from Page 1…
Here are the bill’s highlights:
Fairness in Timing. A number of cities have reported that developers are asking for new
concessions or incentives in the middle or toward the end of a project. This bill would put
into state law the requirement that such requests would have to come at the beginning of
the process, or at least before the first discretionary decision is made on the project, to
assure that whatever requests are made can be considered in the supporting
environmental documents.
Fixing a Bad Precedent. The density bonus law currently includes a provision that entitles
a senior affordable housing development to a 20 percent density bonus. A California
court of appeal, however, interpreted this to mean that any project that included a senior
affordable housing project of at least 50 units was entitled to 20 percent density bonus
across the entire project, not just for the senior development. (Friends of Lagoon Valley v.
City of Vacaville, A113236, 2007). Thus, a developer of a 1,000-unit housing
development that included 35 units of moderately affordable senior housing is entitled to
an additional 200 units. The court admitted that this interpretation would often result in a
“windfall” for the developer. This bill clarifies that the 20 percent density bonus applies to
the senior affordable housing only, not the entire project (of course, local agencies could
always grant more generous bonuses under the law).
Consideration for Inclusionary Housing Programs. Another goal of the bill is to protect
those communities that have adopted inclusionary housing programs that include their
own concessions and incentive packages. Some of these communities have experienced
developers who take advantage of these packages, then demand more under the density
bonus law. However, many other communities directly incorporate the concession and
incentives of the density bonus law directly into their inclusionary programs. This bill
seeks to restore a balance in these provisions by respecting local incentive packages
without limiting other local agencies’ reliance on current provisions in the density bonus
law.
The bill addresses several other minor and technical issues. Cities are strongly encouraged to
send a support letter to their local assembly member within the next two weeks to help assure
this bill moves off the Assembly floor.
A sample letter, with the appropriate contacts to which to send copies, is available at
www.cacities.org/billsearch. Plug in AB 2280 to the bill search function to access the sample
letter of support, along with faxing instructions.
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Budget Action Day Scheduled for Wednesday, May 21
The League is holding a special one day event on May 21, following the release of the May
Budget Revise, to bring city officials to Sacramento to lobby their legislators and administration
officials on the impact of the budget on cities. The session is designed so city officials can come
just for the day.
With California’s fiscal crisis, the FY 2008-09 budget negotiations are predicted to be extremely
difficult. The final signed budget will likely include a combination of significant cuts and revenue-
generating solutions, and the May Revise (scheduled to be released May 15) will set the tone for
the coming weeks of negotiations. California cities need to join forces to respond to any relevant
May Revise proposals to ensure cities’ needs are heard and understood in the Capitol.
Schedule of Events
10 – 11:30 a.m., May Revise Budget Briefing
Sheraton Grand Sacramento Hotel, Bataglieri Room
1230 J Street
Sacramento, CA 95814 4
11:30 a.m. – 3:30 p.m., Time for Scheduling Lunch and Lobbying Appointments with
Legislators
3:30 – 4:30 p.m., Post-Lobbying Debrief (Stop by the League offices for light snacks and
refreshments)
League of California Cities
1400 K Street, 4th floor conference room
Sacramento, CA 95814
R.S.V.P.
Please R.S.V.P to League Staff Meghan McKelvey by Wednesday, May 14 at
mmckelvey@cacities.org or (916) 658-8253.
District Budget Meetings
City officials who are unable to make the trip to Sacramento on May 21 are encouraged to
contact their League public affairs manager to schedule a district meeting with their legislator.
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Opposition Letters Needed for AB 983
City officials are urged to review and send letters of opposition on AB 983 by Assembly Member
Fiona Ma (D-San Francisco), which represents a major shift in public contracting by requiring
local agencies to provide full, complete and accurate plans and specifications, including cost
estimates, for public works projects before entering into any contract. This would essentially
absolve a contractor from any responsibility for reviewing plans before submitting a bid on a
public works project.
The League opposes AB 983 because under the proposed contracting law revision, a contractor
would have no desire or incentive to report any omissions to a public agency prior to submitting a
bid, resulting in expensive change orders to the benefit of the contractor and the detriment of the
city.
Public contracting is a collaborative process wherein a public agency and contractor work
together to identify omissions or changes to provided plans and specifications. In fact, public
agencies often rely on the expertise of contractors, who are professionals in their field and are in
the best position to notify a public agency if project plans may be incomplete or inaccurate.
AB 983 is being heard in the Senate Judiciary Committee on Tuesday, May 13. Please fax your
letters as soon as possible to help defeat this legislation.
Take Action
A sample letter is available for your city to fax to the Senate Judiciary Committee and other key
contacts at www.cacities.org/billsearch. Plug in AB 983 to the bill search function to access the
sample letter of opposition, along with faxing instructions.
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Support Letters Needed for Public-Private Partnership Legislation
Cities are urged to send letters in support of AB 2278 by Assembly Member Anna Caballero (D-
Salinas). This bill would authorize the Governor’s Office of Planning and Research (OPR) to
advise and educate local agencies about the role that public-private partnerships can play in
planning, studying, designing, financing, constructing, operating, maintaining or managing local
infrastructure projects.
Background
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The League supports AB 2278 because it will promote the use of innovative funding
strategies to maximize opportunities for timely and cost-effective completion of public works
projects through public-private partnerships. The public-private partnership assistance from
OPR would be an invaluable educational resource to increase awareness of alternative
contracting options at the local level.
In addition, it will help ensure that cities seeking to utilize public-private partnerships will have
the appropriate knowledge and tools to guide cities’ local infrastructure projects through the
contracting process, as well as obtain the most cost effective choices.
Take Action
To take action and send your letter of support, please visit www.cacities.org/billsearch and plug in
AB 2278 to the search feature. This will provide you with a sample letter that you can personalize
and share how public-private partnerships could benefit your local infrastructure projects, or cite
examples of successes with this type of contracting.
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$46 Million Now Available for Federal Safe Routes to School Funds
Local and regional government agencies are encouraged to apply for part of the $46 million now
available through CalTrans for the second cycle of the Federal Safe Routes to School Fund. The
deadline for applications is Friday, July 18.
There are two types of applications available for Cycle 2 (fiscal years 2008-09 and 2009-
10): Stand-alone infrastructure projects such as sidewalks, pathways, bike lanes and traffic
calming, and non-infrastructure activities such as public education, encouragement and
enforcement. All project awards are 100 percent federally reimbursable.
Applications for infrastructure must not exceed $1 million, and applications for non-infrastructure
must not exceed $500,000 and can be spent on activities over a four-year period. (Please note:
this Safe Routes to School Fund is for federal dollars, and is not affiliated with the State
Legislative Safe Routes to Schools funds.)
To view the updated Federal Safe Routes to Schools Guidelines and Application, please visit
www.dot.ca.gov and search for “Federal Safe Routes To School (SRTS) Program.”
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League and Partners Offer Financing Pools for Street Repairs
California Communities, the League of California Cities and the California State Association of
Counties are proud to offer cities and counties two new statewide financing pools to fund street
projects. The first pooled issuance has been completed and both programs have pools closing
this fall.
One program assists local agencies to bond against future payments of Proposition 42
allocations, which come from the sales tax on gasoline. The other program issues bonds against
future payments of the Motor Vehicle Fuel Tax or gas tax (18 cents per gallon excise tax). Both
programs help cities obtain funding for more projects today. Neither program requires a pledge of
the city’s general fund.
Together, these are the TRIP programs—Total Road Improvement Programs. As a participant in
TRIP, a city can:
• Accelerate funding of street projects
• Fund larger projects leading to better construction bids
• Reduce street maintenance costs over time
• Reduce financing fees and interest rates through economies of scale
• Enjoy streamlined application and documentation procedures
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The accelerated gas tax program has now completed its first pooled financing totaling $14.65
million and another issuance is planned for this fall. The overall borrowing rate equaled 4.67
percent.
Participating cites and counties can borrow against their annual gas tax revenues for a term
ranging from 10 to 35 years at low “AAA” tax-exempt interest rates. Participants can generate up
to $9 million in up-front proceeds for every $1 million in annual gas tax received from the state.
This example assumes a participant applies 66 percent of its $1 million in annual gas tax toward
debt payments over the next 30 years.
To participate in the fall 2008 gas tax pool, cities must sign up with California Communities and
obtain city council approval by July 31.
For more information about the gas tax program and how it can benefit your city, please contact
Terrence Murphy (California Communities) at (925) 933-9229 ext. 223 or John Kim (De La Rosa
& Co.) at (415) 999-4779. More information on both TRIP programs is available at
www.cacommunities.org by clicking on Total Road Improvement Programs in the left hand
navigation bar.
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Conference on Public-Private Partnerships Offered
An informative conference helping city leaders explore the possibilities available with public-
private partnerships will be held Friday, July 18 from 8 a.m.– 4 p.m. at the San Jose City Hall.
Titled “Performance-Based Infrastructure: Making Public-Private Partnerships Work for
California,” the event is organized by the Silicon Valley Leadership Group and co-sponsored by
the League of California Cities.
California is facing an estimated $500 billion infrastructure shortfall over the next 20 years. Public-
private partnerships are one way for cities to get more for the money when building libraries, fire
stations, transit lines, schools and other infrastructure.
In public-private partnerships, governments can shift some of the risk to private sector partners
for financing, designing, constructing, and sometimes operating and maintaining public
improvements. Done right, the partnerships pay off in lower costs, better design, faster
construction and better performance.
Attendees will learn about:
• What authority local governments have now to use public-private partnerships
• How public-private partnerships might address infrastructure needs in your community
• When and where the traditional methods for public projects still work best
• Arguments being made by unionized workers pressing for and against greater use of
such partnerships
• Other local and state agencies (and countries) who are using them to build an array of
improvements
For registration information contact Laura Stuchinsky at lstuchinsky@svlg.net or visit
www.svlg.net.
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Sustainable Cities Feature: Guest Article by Brian Gitt, Build it Green
California Cities Greening California Housing with GreenPoint Rated
These days, it seems like everyone’s talking about green homes, and for good reason.
Environmentally friendly homes not only save resources and money, they can last longer and
hold their value better than similar homes. But how can you tell if a home really is better for the
environment and healthier to live in? For dozens of California cities and counties the answer is
GreenPoint Rated.
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Think of GreenPoint Rated as a report card for home construction, with points awarded in five
categories: energy efficiency, resource conservation, indoor air quality, water conservation and
community. If the home meets minimum point requirements it qualifies for the GreenPoint Rated
label. Because GreenPoint Rated homes are evaluated by independent, certified raters,
homeowners feel confident that the rating has integrity and value.
GreenPoint Rated and the Green Building Guidelines it is based on have been developed since
2000 by a diverse set of residential building stakeholders: production builders, contractors,
architects, multifamily developers, state and local officials, suppliers and green building experts.
The result is a credible and accessible program that is being promoted by groups as diverse as
the Home Builders Association of Northern California and California’s investor owned utilities.
Over 65 jurisdictions are developing or implementing local green building programs based on the
GreenPoint Rated program or its associated Green Building Guidelines.
GreenPoint Rated is a program of Build It Green — a professional nonprofit membership
organization whose mission is to promote healthy, energy and resource-efficient buildings in
California.
For cities interested in finding out more about green building or GreenPoint Rated, Build It
Green’s Public Agency Council (PAC) is available for participation. A unique collaborative effort of
more than 150 participating public agencies, the PAC meets quarterly to create consistent green
building guidelines, share information and support each other’s programs and initiatives. PAC
chapters meet in the San Francisco Bay area, Sacramento region, L.A. basin and San Diego.
The PAC is open to all public agencies without fee or membership requirements.
Contact Brian Parker at bparker@builditgreen.org or (510) 845-0472 ext. 115 to be invited to the
next PAC meeting in your area.
For more information about GreenPoint Rated or Build It Green, visit www.builditgreen.org.
Brian Gitt is the executive director of Build It Green.
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Find a Bill, Legislator, Leg Committee, or Ask League Leg Staff
Visit (and bookmark!) the League’s Legislative Resources Web page
(www.cacities.org/legresources). You’ll find a roster and contact information for the League’s
legislative staff; the online Bill Search program, background materials on lobbying your
legislators, and more.
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IN THIS ISSUE: May 16, 2008
Issue #19-2008
Page 7: Support Letters Needed for SB 1236
Monday Is Last Day to Register for Mayors and Council Members Executive Forum
Page 8: Governor’s Office of Homeland Security Conference: May 28-30
California Climate Action Network Launches Survey
Page 9: Green Purchasing Workshop Offered by U.S. Communities
U.S. House Passes Mortgage Relief Legislation
Page 10: Find a Bill, Legislator, Leg Committee, or Ask League Leg Staff
GOVERNOR KEEPS PROPS. 1A AND 42 COMMITMENT AS CITIES STRUGGLE
WITH LOCAL REVENUE LOSSES AND BUDGET CUTS
On Wednesday, May 14, Gov. Arnold Schwarzenegger released his May revision to the 2008-
2009 state budget. The Governor’s revised budget proposes a number of creative solutions to a
now-estimated $17.2 billion shortfall. One aspect of the Governor’s proposal includes seeking
voter approval in November to “securitize” $15 billion based upon future state lottery revenues,
using $5.1 billion of that amount for the FY 2008-09 budget and placing the remainder in a
reserve fund mechanism which would also need to be approved by voters. If voters reject the
lottery proposal, a 1 percent sales tax increase would be triggered for three years.
For more, see Page 2.
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CITY OFFICIALS URGED TO ATTEND BUDGET ACTION DAY ON MAY 21
The League is holding a special one-day event on Wednesday, May 21 to bring city officials to
Sacramento to lobby their legislators and administration officials on the impact of the Governor’s
revised budget on cities. For more, see Page 5.
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SUPPORT LETTERS NEEDED FOR TWO REVENUE AND TAXATION BILLS
The League encourages cities to send letters supporting two revenue and taxation bills that
benefit local government, AB 1957 (Eng) and AB 1836 (Feuer). The first relates to the collection
of use taxes, and the second concerns infrastructure financing districts. For more, see Page 6. 2
‘May Revise’ Continued from Page 1…
Important to cities is the fact that the Governor’s plan does not propose to borrow cities’ share of
property taxes through Proposition 1A and continues to provide full Proposition 42 transportation
funding.
The Governor’s reluctance to borrow local funds to fill the deficit appears to be based upon his
philosophy that the state must address its own budget problems. In his annual State of the State
address in January, the Governor acknowledged that previously, in times of budget shortfalls, the
Legislature took money from local governments, transportation, bonds and pension funds. He told
Californians that those avenues are now limited due to several voter-approved initiatives.
This theme was reiterated when the Governor discussed his May revise proposal on May 14. In
response to a reporter’s question about proposed additional cuts to Health and Human Service
programs, he said, “Everyone has to tighten their belts. Local government has to tighten their
belts, we have to tighten our belts.”
The Governor also mentioned his recent travels and town hall meetings held throughout
California this spring. In those meetings, he said he repeatedly heard that the state must fix its
budget system and not spend beyond its own means. The Governor said in his opening remarks
on May 14, “What they want us to do is to fix our dysfunctional budget system once and for all, so
that we don’t have to go through this pain every time the economy cools off.”
The Governor’s revised budget retains the proposed 10 percent across-the-board cuts to state
agencies, but increases funding for K-12 education to meet the minimum threshold for
Proposition 98, eliminates the prior proposal for the early release of 20,000 inmates, and prevents
state park closures by increasing fees.
Through executive order, the revised budget would also create a bipartisan tax commission called
the Tax Modernization Commission. The created body would be comprised of legislative and
gubernatorial appointees charged with budget reform that would improve the state’s tax laws.
Funding Areas of Specific Interest to Cities
The Governor’s revised budget includes funding allocations for these programs of importance to
California cities.
Public Safety
COPS/Juvenile Justice Grants. The Citizen Option for Public Safety (COPS)/Juvenile Justice
Crime Prevention Act Program is subject to the Governor’s across-the-board January proposed
10 percent cuts to state agencies. The revised budget would continue to fund these programs at
a level of $214 million.
Booking Fees. Payments to counties for Local Detention Facilities (Gov Code 29552) were also
subject to the January budget’s proposed 10 percent reduction. The revised budget maintains the
amount proposed in January of $31.5 million. Current law stipulates that in any year that the
budget appropriation is less than $35 million, counties may impose booking fees on cities in
proportion to the amount under appropriation. In this case, it would be up to 10 percent of cost.
Early Release/Summary Parole. While the Governor’s May revise withdraws the “early release”
proposals, the summary parole program included in his January budget continues as a proposal
for a cost savings of $173.6 million, approximately $75.7 million more than previously estimated
for FY 2008-09.
“Summary parole” is defined as the status of a person who is under the jurisdiction of the
California Department of Corrections and Rehabilitation (CDCR) during their parole period but is
not subject to regular and active supervision by the CDCR. The CDCR has the authority to
continue to provide services, as deemed necessary, to any person on summary parole.
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Summary parole applies to all inmates serving a sentence in state prison at the expiration of their
term except those who have been sentenced for, or committed in prison:
• A violent or serious felony, including murder, mayhem, rape, lewd or lascivious acts, or a
threat of great bodily harm, or serious felonies involving dangerous or deadly weapons;
or
• An offense requiring registration as a sex offender.
Additional conditions of summary parole include:
• Summary parolees are subject to drug testing and search and seizure, with or without a
warrant, at the request of any peace officer in the performance of his or her duties.
• The parole authority may revoke an individual’s summary parole status and order that
person return to prison only upon conviction of a new offense, not related to the original
cause for incarceration.
• An individual will be released from summary parole if he or she has been continuously on
summary parole for one year since the time of confinement in a state prison, unless the
CDCR recommends to the Board of Parole Hearings to retain that person on parole.
Law enforcement associations and agencies are continuing to review this proposal to estimate
the impact it will have on public safety in local communities.
Adult Secure Re-entry Facilities. The revised budget maintains funding to bring the Northern
California Re-entry Facility online and operational in 2009.
Emergency Response Initiative. The revised budget includes the creation of the Emergency
Response Initiative (ERI) (formerly known as the Wildland Firefighting Initiative). Through this
program, the emergency response capabilities of the California Department of Forestry and Fire
Protection (CAL FIRE), the Office of Emergency Services (OES) and the Military Department are
increased.
The new initiative proposes two levels for the surcharge assessed for those carrying insurance on
residential or commercial property. For those in “high-hazard zones” as determined by CAL FIRE
and OES risk maps, there is a 1.4 percent surcharge. This is roughly equal to the average cost of
$12.60 per household annually. For those in the “low-hazard zones” the surcharge is 0.75
percent, roughly equal to $6.75 per household. Total revenues from the surcharge are estimated
to reach $69.3 million for 2008-09.
Collected monies will be deposited into the Emergency Response Account and will be used by
CAL FIRE and OES in FY 2008-09 to cover full staffing for CAL FIRE fire engines during peak
and transition fire seasons, maintenance for existing OES emergency vehicle fleet, and General
Fund backfill for program and administrative costs.
Transportation
Highway User Tax Account Payments. The Governor’s May revise makes no changes in the
expected repayment to local government of approximately $500 million in the Highway User Tax
Account (HUTA) funds that were deferred for state cash-flow purposes as part of the FY 2007-08
mid-year budget cuts. The payments for the period between April and August are expected to be
paid in full without interest in September.
Proposition 42 Funds. While the Governor’s revised budget estimates a decrease in total Prop.
42 revenues from $1.49 billion to $1.43 billion, there are no changes to the payment schedule for
FY 2008-09.
A city-by-city breakdown of allocations is posted online at
www.californiacityfinance.com/Prop42alloc.pdf.
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Proposition 1B Funds. As originally outlined in the Governor’s January budget, there is no
additional allocation of Prop. 1B Local Streets and Roads funds to cities for FY 2008-09. As of
May 15, the Department of Finance reports that $339.5 million has been allocated to 323 of
California’s 478 cities (from the total FY 2007-08 allocation of $550 million).
The May revise contains no major alterations to any of the additional proposed allocations of
Prop. 1B transportation funds that were listed in the Governor’s January budget.
“Spillover” Funds from Gasoline Tax Revenues. Due to the increase in gas prices, the
“spillover” monies collected from gasoline sales tax revenues are $286 million higher than
estimated in the Governor’s proposed January budget, for a total of $1.177 billion. The spillover is
produced when the growth in revenue collected from sales taxes on gasoline sales taxes is
higher than the growth in revenue derived from all other taxable sales.
An explanation of the “spillover” is posted online at
www.californiacityfinance.com/SpilloverFAQ.pdf.
The May revise allocates $306 million to the Public Transportation Account (PTA) with remaining
funds from the “spillover” revenues going to K-12 home-to-school transportation and debt service
on current and prior year transportation-related general obligation bonds.
The California Transit Association (CTA) provides an analysis of the PTA allocation for FY 2008-
09, concluding that the allocation to transit should be greater than the amount stated in the May
revise based on applicable statutory formulas and the historic intended use for these funds.
The CTA analysis of the PTA FY 2008-09 allocation is available at
www.cacities.org/resource_files/26813.2008-09MayRevision.pdf.
Housing
The May revise contains no major alterations to any of the additional proposed allocations of
Prop. 1C housing-infill funds that were listed in the Governor’s January budget.
Resources and Environment
The Governor’s revised budget proposes an additional $13.3 million in funding for the Department
of Parks and Recreation to provide funding for 48 state parks. The proposal provides $11.8
million from the General Fund plus $1.5 million generated by increasing state park fees ($1-$2
per person at selected parks).
The California Air Resources Board (ARB), under the revised budget, would transfer $48.7 million
from its Air Quality Improvement Fund to finance loans and loan guarantees to assist truck
retrofits proposed by ARB. This would be a one-time transfer.
Local government fleets, to the extent that they qualify under the new regulations, may qualify for
the loans and loan guarantees offered by ARB.
Propositions 84 and 1E. The May revise makes several minor adjustments related to specific
projects funded by Props. 84 and 1E.
Debt Repayment and Local Government Finances
Reimbursement State Mandates Program
The Governor’s January budget proposed payment of state mandates to local government as part
of the repayment of mandates for costs incurred prior to July 1, 2004. Instead, however, the
revised May budget would defer $75 million in state mandate repayments. Cities receive about 30
percent of mandate repayments.
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Details on Governor’s Lottery and Budget Stabilization Proposals
The Governor is proposing to securitize the California State Lottery to finance the “rainy day” fund
that would be created through his Budget Stabilization Act. Essentially, this process would borrow
money against future earnings from the lottery. The Governor says that “modernizing” the lottery
would improve its performance and increase pay-out in prizes to spur an elevation of ticket
purchases and thus revenue. Generated funds would be used to make the initial down-payment
to the Revenue Stabilization Fund.
The Administration estimates that this would provide about $15 billion. For FY 2008-09, $5.1
billion would be used to help reduce the deficit and the other $10 billion would remain in the
reserve account for future budget shortfalls.
The Budget Stabilization Act and lottery proposal would go before the voters for approval in
November.
In presenting the revised budget, Gov. Schwarzenegger also put forth an insurance policy to
protect the revenue streams that will help close the deficit for FY 2008-09 and into the future. He
says, however, that he is confident this mechanism won’t need to be used.
If revenues fall short, or if the lottery doesn’t get approved, a temporary 1 percent sales tax
increase would be triggered until the Revenue Stabilization Fund has a sufficient balance.
Californians will receive a tax rebate equivalent to the revenues collected through the
mechanism. This mechanism is similar to what Gov. George Duekmejian created in 1983.
Next Step in the Budget Process
The fiscal year officially ends June 30; however, since FY 1977-78, the Governor has only signed
the next year’s budget by that deadline eight times.
The LAO and the legislative budget subcommittees will review the May revise in-depth in the
coming weeks. Given that some of the initial legislative reactions to the Governor’s lottery and
other proposals were both critical and skeptical, it is not clear how much traction this proposal will
have as part of the budget solution.
The Governor has proposed a budget that cuts some state subventions to cities (COPS, booking
fees, etc. by 10 percent) but does not propose using local tax funds to shore up the state budget.
If the Legislature doesn’t support the Governor’s direction, the result will be a fresh effort to
identify other ways to close the budget. This could involve additional proposals for cuts to state
programs, raising tax revenues through various means, transferring or borrowing local
government revenue, or other solutions. In short, expect the political climate to be volatile. City
officials should remain on alert and ready to respond quickly to budget-related action
alerts.
The League’s Budget Action Day is May 21. Please see “City Officials Are Urged to Attend
Budget Action Day,” on page 1.
Budget Resources
A copy of the Governor’s budget can be found online at www.ebudget.ca.gov.
The Governor’s revised budget remarks can be found on his Web site at http://gov.ca.gov/may-
revise/webcast.
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‘Budget Action Day’ Continued from Page 1…
With California’s fiscal crisis, the FY 2008-09 budget negotiations are expected to be extremely
difficult. The final signed budget will likely include a combination of significant cuts and revenue-
generating solutions, and the May revise (released May 14) has set the tone for the coming 6
weeks of negotiations. California cities need to join forces to respond to relevant May revise
proposals to ensure cities’ needs are heard and understood in the Capitol.
Schedule of Events
10 – 11:30 a.m., May Revise Budget Briefing
Sheraton Grand Hotel Sacramento, Bataglieri Room
1230 J Street
Sacramento, CA 95814
10 a.m.—Introduction:
Jim Madaffer, President, League of California Cities
Chris McKenzie, Executive Director, League of California Cities
The speakers below will discuss their reactions to the May Revise.
10:20 a.m.— Michael Genest, director, Department of Finance
10:40 a.m.—Assembly Member Roger Niello (R-Sacramento), vice chair, Assembly Budget
Committee
11:15 a.m.—Assembly Member John Laird (D-Santa Cruz), chair, Assembly Budget Committee
11:30 a.m. – 3:30 p.m., Time for Scheduling Lunch and Lobbying Appointments with
Legislators
3:30 – 4:30 p.m., Post-Lobbying Debrief (Stop by the League offices for light snacks and
refreshments)
League of California Cities
1400 K Street, 4th floor conference room
Sacramento, CA 95814
R.S.V.P.
Please R.S.V.P to League Staff Meghan McKelvey immediately at mmckelvey@cacities.org or
(916) 658-8253.
District Budget Meetings
City officials who are unable to make the trip to Sacramento on May 21 are encouraged to
contact their League public affairs manager to schedule a district meeting with their legislator.
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‘Revenue and Tax Bills’ Continued from Page 1…
AB 1957 (Eng): Collection of Use Tax
This bill improves the collection of use tax revenues owed to state and local government by
consumers and businesses by clarifying the state’s income tax forms to properly alert taxpayers
about their use tax obligation. Consumers and business may be unaware of the existence of this
tax.
A “use tax” is a tax imposed by a state to compensate for the sales tax lost when an item is
purchased out of state, but is used within the state.
Each year, millions of dollars in state and local revenues owed by consumers and businesses in
the form of use taxes go uncollected.
Assembly Member Eng’s legislation is of growing importance in an economy where people are
doing more and more of their shopping through the Internet. Although sales taxes are not
collected for online purchases made at out of state retailers, use taxes, of the same amount, are 7
owed by the purchaser. Improved collection of these revenues could provide an important source
of funding for vital state and local programs.
A sample letter can be found at www.cacities.org/billsearch. Search for AB 1957.
AB 1836 (Feuer): Infrastructure Financing Districts
This bill streamlines existing law related to the formation of Infrastructure Financing Districts (IFD)
by removing an unnecessary voter approval requirement. The IFD law is a mechanism placed
into statute in 1990 to allow local governments to finance projects through bonds secured by the
growth of property tax revenues within that district. The law states that consent is required by
local agencies in the district which would be affected by the diversion of the property tax for the
IFD.
In the past, this law has been infrequently used due to cumbersome requirements. Essentially,
AB 1836 is an attempt to improve its usefulness. Some communities may find this a helpful option
for building local infrastructure that can spur local business and housing development and create
jobs.
A sample letter can be found at www.cacities.org/billsearch. Search for AB 1836.
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Support Letters Needed for SB 1236
City officials are urged to send letters of support on SB 1236 (Padilla). The bill would ensure that
the Maddy Emergency Medical Services (EMS) funding stream can continue to provide
physicians and hospitals with crucial funding reimbursements to retain the emergency care staff
essential to city fire departments and citizens.
The California statute that allows a county board of supervisors to establish an additional $2
charge on every $10 fee collected on criminal offenses and deposit the increased fee into the
Maddy EMS fund is set to expire this year. The funds collected through this additional fee are
used to reimburse trauma centers for the treatment of uninsured patients, and SB 1236 extends
the law’s sunset date by five years until 2014.
Hospital emergency departments have continued to lose staff and discontinue their operations
because of the high costs associated with treating uninsured patients. In the past decade, more
than 65 emergency rooms have closed, and city fire department paramedic units have
consistently been redirected to emergency service centers or hospitals due to low staffing or
patient overcrowding.
Take Action
A sample letter is available for your city to fax to the Assembly Public Safety Committee and other
key contacts at www.cacities.org/billsearch. Plug in SB 1236 to the bill search function to access
the sample letter of support, along with faxing instructions.
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Monday Is Last Day to Register for Mayors and Council Members Executive Forum
The last day to register for the 2008 Mayors and Council Members Executive Forum and
Advanced Leadership Workshops is Monday, May 19. Slated for Wednesday, June 4 – Friday,
June 6, the annual event will be hosted at the Resort at Squaw Creek in Squaw Valley.
Created for mayors, mayor pro tems, council members, city managers and assistant city
managers, the three-day conference is designed to equip city leaders with the skills they need
and offer practical workshops for planning ahead for the challenges their city is facing. Sessions
include:
• Achieve Substantial Water Saving in Your City
• Strategies for Council-Manager Conflict Resolution 8
• Gang and Violence Protection
• Delivering Messages in the Media Interview
• Land Use and Climate Change
• And much more!
Advanced Leadership Workshops will be offered Friday, June 6 – Saturday, June 7. Participants
may choose from one of three workshop tracks: economic development, meeting management or
city finances. A separate fee is required for Advanced Leadership Workshops.
To register online, visit www.cacities.org/events.
For more information, contact Brian Sanders, the League’s education program director, at
bsanders@cacities.org or (916) 658-8238.
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Governor's Office of Homeland Security Conference: May 28 – 30
The Governor's Office of Homeland Security (OHS) invites local government leaders to attend the
2008 Annual Conference "Managing the Threats of Today and Tomorrow," slated for Wednesday,
May 28 – Friday, May 30 in Palm Desert.
Attendees will hear from national experts on the latest trends, threats and strategies to protect
California and the nation with nationally known speakers highlighting current issues affecting
homeland security. Lawrence Wright, world-renowned expert on terrorism and author of the best-
selling book, The Looming Tower: Al-Qaeda and the Road to 9/11, will be the keynote speaker.
The conference will provide resources for local officials to bring back to their communities and the
opportunity to meet and interact with homeland security partners and provide feedback on how
OHS can better secure and prepare California.
The 2008 Annual Conference will be held at the Desert Springs J.W. Marriott. Conference
agendas, speakers, and registration information can be found online at www.cce.csus.edu by
searching for “Office of Homeland Security.”
(http://www.cce.csus.edu/conferences/ohs/08/index.htm)
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California Climate Action Network Launches Survey
The California Climate Action Network (CCAN), a program of the Institute for Local Government
(ILG), continues to lead the way in assisting local agencies with networking, resources and tools
for addressing climate change. In the next week, in collaboration with the Public Policy Institute of
California, CCAN will launch a survey of city managers and county administrators to determine
climate change-related policies and programs already undertaken at the local level and the kind
of support needed for further action.
The survey will be distributed via e-mail and can be completed online or downloaded and
submitted by fax. City officials are encouraged to complete the short survey. The information it
will yield will be valuable in assessing a statewide picture of how local agencies are voluntarily
addressing climate change at the local level.
The survey is the first of its kind and the results will be used to develop tools and resources to
better assist local agencies with climate change programs.
New ‘Best Practices Framework’ Available
The new version of CCAN’s “Best Practices Framework” – a guide to climate action in 10 climate
leadership opportunity areas – has just been released and may be viewed at www.ca-
ilg.org/bestpractices.
9
“Best Practices” may be used to develop specific programs to reduce greenhouse gas emissions
or may be incorporated into broader climate change-related planning.
ILG is the nonprofit research arm of the League of California Cities and the California State
Association of Counties.
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Green Purchasing Workshop Offered by U.S. Communities
The League of California Cities, along with U.S. Communities and the California State
Association of Counties (CSAC), will present a Green Purchasing Workshop in Sacramento on
July 16.
This is the seventh and final regional workshop designed to help local officials gain knowledge
from local and national experts about green purchasing best practices and the tools they need to
successfully achieve their cities’ green purchasing goals. The seminar is free and includes a
boxed lunch.
Seminar Details
Date: Wednesday, July 16, 2008
Time: 9 a.m. – 4 p.m.
Location: CSAC Conference Center, 1020 11
th
Street, Sacramento, CA 95814
Advanced registration is requested so appropriate lunch arrangements can be made. For more
information or to register, please contact Laura Li at lli@counties.org or (916) 327-7500 ext. 560.
Hundreds of California cities use U.S. Communities for efficient and cost-effective purchasing,
including the purchase of a wide range of green products. For more information about U.S.
Communities, visit www.uscommunities.org.
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U.S. House Passes Mortgage Relief Legislation
Bills Now Go to Senate
Cities across the nation achieved a major victory on May 8 when the U.S. House of
Representatives passed HR 3221, The American Housing Rescue and Foreclosure Prevention
Act, and HR 5818, The Neighborhood Stabilization Act. Both bills would help homeowners avoid
foreclosure and ease the burden of vacant housing on cities and towns.
The National League of Cities (NLC) worked actively with House leadership to craft and advance
this legislation to help cities respond to the home foreclosure crisis, and strengthen and stabilize
the housing market.
HR 3221 would stabilize and strengthen the declining housing market by authorizing up to $300
billion in new federal mortgage loan guarantees. The guarantees would help at-risk borrowers
with adjustable rate mortgages keep their homes by helping them refinance into federally-insured
conventional mortgages.
HR 5815 would direct $7.5 million in federal grants and $7.5 million in federal loans to the states
to be used by state, county and local governments and nonprofit organizations to stabilize
neighborhoods distressed by rising rates of vacant housing caused by foreclosure. The House
also passed an amendment that would direct the grants and loans authorized under the bill to go
directly to local governments heavily affected by foreclosure.
The bills will now be heard in the Senate. Although they passed the House with strong bipartisan
support, with nearly 40 Republicans joining Democrats on the two bills, the measures did not gain
veto-proof majorities. As a result, the Senate may choose to scale the bills down to levels more in
line with President Bush, who threatened to veto the House-passed legislation.
A complete description of the legislation may be found in the May 12 issue of the NLC’s Nation’s
Cities Weekly, available at www.nlc.org. 10
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Find a Bill, Legislator, Leg Committee, or Ask League Leg Staff
Visit (and bookmark!) the League’s Legislative Resources Web page
(www.cacities.org/legresources). You’ll find a roster and contact information for the League’s
legislative staff; the online Bill Search program, background materials on lobbying your
legislators, and more.
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