The League of California Cities: Four Budgets in Three Months Without Borrowing Prove It Can Be Done

Market Wire, August, 2008

The League of California Cities issued the following statement about the budget released Saturday, Aug. 30 by the Senate Republicans and the previous budget proposals released in recent months that close the budget gap without borrowing local government or transportation funds:

The Senate Republican budget plan released Aug. 30 is the fourth budget proposal in the last three months and the sixth since January that does not rely on "borrowing" practices that would rob local government of critical public safety and transportation funding and deepen the state's structural deficit.

Negotiators are clearly making progress towards resolving California's budget crisis. The League congratulates Senate Republican Leader Dave Cogdill and Assembly Republican Leader Mike Villines for joining the ranks of Gov. Arnold Schwarzenegger, Senate Pro Tem Don Perata, and the Senate-Assembly Budget Conference Committee in proposing state budget solutions that avoid the fiscally irresponsible practice of borrowing local government and transportation funds.

This opposition to borrowing is responsible leadership from both parties and is not only strongly supported by the League, but also, as demonstrated in the poll release by the Public Policy Institute of California last week, 96 percent of likely California voters.

While every budget plan avoids borrowing local government and transportation funds, most contain an unconstitutional seizure of local redevelopment funding that will harm the state's economy, kill thousands of good jobs (most in construction) and reduce state revenue collections. One proposal to divert $675 million of redevelopment funds over three years is estimated to cost the state $466 million in lost income and sales tax revenue -- an outrageously poor return on investment. Still another proposal to take an additional $349 million from housing set-aside funds will worsen California's housing crisis and cost the state additional critical revenue.

The Governor and Legislature have made great strides toward constructing a fiscally responsible spending plan without borrowing. We now call on them to complete their critical work in a timely way and to reject harming our economic recovery by taking local redevelopment funds. California needs many more good paying jobs and new infrastructure, and redevelopment is one of the few economic forces today producing them.

Balance the state budget with state funds.

Contact: Eva Spiegel (916) 658-8228 Cell, (530) 400-9068 1400 K Street, Suite 400 Sacramento, California 95814 Phone: (916) 658-8200 Fax: (916) 658-8240 www.cacities.org