Borrowing Local Government Funds Not the Answer to State Budget Crisis

2008-08-06 23:58:02 -

- The leaders of California counties, cities and special districts are joining together to make it clear to legislative decision makers that borrowing local government funds to close the state's $15.2 billion budget deficit is not the answer and will only hurt local governments and California residents.

In a letter sent Tuesday to the Governor, Senate and Assembly, presidents

from the California State Association of Counties, League of California Cities and California Special Districts Association voiced their strong opposition to any budget deal that relies on suspension of Proposition 1A and Proposition 42.

"This is a fiscally irresponsible solution that does nothing to resolve the state's budget problem and undermines any effort to restore the state to fiscal stability," the presidents stated in the joint letter.

Passed in 2004, Proposition 1A prohibits the state from taking local tax property taxes except during true fiscal emergencies. Proposition 42, passed in 2002, requires revenues from the sales tax on gasoline to be used solely for transportation purposes. Both propositions were overwhelmingly supported by California voters.

In the joint letter, local leaders are also reminding the Governor and Legislature that these voter-approved propositions required borrowed revenues be repaid within three years, with interest, "causing more debt and delaying real solutions."

In addition, local governments are facing their own financial difficulties due to the economic downturn and a drop in sales and property tax revenues. Most local governments have already adopted budgets and made tough decisions to come up with balanced plans. The state's borrowing of local revenues would only put holes in these budgets by requiring even deeper cuts at the local level.

The well-being of California's future requires lawmakers to address the state's fiscal challenges in a responsible manner. Local government leaders are eager to work closely with the Governor and Legislature to find a long-term budget solution for California.

For more information about the impact on local governments, contact the executive directors of the California State Association of Counties, League of California Cities or California Special Districts Association.

For a copy of the letter, visit the CSAC Web site at www.csac.counties.org

CSAC
Paul McIntosh, Executive Director, 916/327-7500 ext. 506
or
League of California Cities
Chris McKenzie, Executive Director, 916/658-8275
or
CSDA
Neil McCormick, Executive Director, 916/442-7887