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BACKGROUND The purpose of the measure, as set forth in the text of the measure (Attachment 2), 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. DISCUSSION 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. The State has regularly diverted local government revenues to the detriment of essential local services. In FY 2009 -10, the State is "borrowing" $4.4 million from the City of Pleasanton's General Fund. (Please note: the City is participating in a securitization program so there will be no service impact resulting from this current $4.4 million Prop 1A loan to the State.) City officials have repeatedly made hard decisions to balance their budgets during State take - backs, recessions and other economic downturns by cutting expenditures and /or raising revenues. Local services will most certainly be adversely impacted further if the State continues to find it easy to balance its own budget on the backs of local governments. Page 2 of 3