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BACKGROUND The purpose of the measure, as set forth in the text of the measure (Attachment 3), is to "conclusively prohibit the State from seizing, diverting, shifting, borrowing, transferring, suspending or otherwise taking or interfering with revenues that are dedicated to funding services provided by local government or funds dedicated to transportation improvement projects and services." The ballot initiative would: Prohibit the state from taking, borrowing or redirecting local taxpayer funds dedicated to public safety, emergency response and other vital local government services (including redevelopment); and, Close loopholes to prevent the taking of local taxpayer funds currently dedicated to cities, counties and special districts; and, Revoke the state's authority to borrow local government property tax funds or divert local redevelopment funds; and, Prevent state borrowing, taking or redirecting of the state sales tax on gasoline (Prop 42 funds) and Highway User Tax on gasoline (HUTA) funds that are dedicated to transportation maintenance and improvements; and Prevent the state from redirecting or taking public transit funds; and Add additional constitutional protections to prevent the State from taking redevelopment funds or shifting redevelopment funds to other state purposes. Filing the measure with the Attorney General's office was the first step in a process of qualifying a measure for the November 2010 ballot and securing voter approval. Approximately 1 million signatures are needed to qualify for the November 2010 ballot. DISCUSSION The City Council is presented with an opportunity to adopt the attached Resolution endorsing the Local Taxpayer, Public Safety and Transportation Protection Act. Supporting the Resolution would be consistent with existing Council- adopted policy to protect local revenues. On September 21, 2004, the City Council voted to support Proposition 1A, a statewide measure that circumscribed the ability of the State to further borrow local government revenues. The local government revenue protection measure in 2004 (Prop 1A) and the transportation revenue protection measure in 2006 (Prop 1A) included provisions that allow the State to borrow these funds during fiscal emergencies. However, after several budget cycles, it has become apparent that these borrowing provisions are negatively impacting local governments and transportation services and becoming a standard budgeting mechanism for the State. Because the State has had the authority to borrow local government and transportation funds, it has created uncertainty for local governments to balance budgets. Page 2 of 3