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yJ THE CITY OF - -• -- ~" CITY COUNCIL AGENDA REPORT j~L~~S~4NTONe September 16, 2008 City Manager TITLE: RESOLUTION OPPOSING STATE BUDGET DECISIONS TO USE LOCAL GOVERNMENT, REDEVELOPMENT AND TRANSPORTATION FUNDS TO FINANCE STATE OPERATIONS. SUMMARY Approval of the California State budget remains at an impasse. On July 1, 2008, the State Legislature missed its Constitutional budget deadline. With an estimated $15.2 billion deficit, local governments, transportation and redevelopment programs are at risk from losing critical revenues and may be the solution to the State budget. The Legislature and Governor remain divided on a budget solution. Local government organizations such as the League of California Cities have urged legislators to balance the state budget with state funds and not local government, redevelopment or transportation funds. RECOMMENDATION Adopt a resolution opposing State budget considerations to use local government redevelopment and transportation revenues to finance state operations. FINANCIAL STATEMENT Beginning in 2009, Proposition 1A (2004) will allow the State to borrow up to 8% of local government property tax revenue. This can occur if the Governor declares a fiscal hardship and requires atwo-thirds vote of the legislature. The loan has a maximum of three years, must be paid back with interest and may only be approved twice in a ten- year period. In Pleasanton, the State's ability to borrow local revenues could result in a loss of at least $3,140,000 for property tax revenue alone.