As the state budget impasse lingers with no compromise in sight, yesterday the Governor unveiled what he referred to as a “compromise budget” that would end these budget delays forever. Reaction from both Democrats and Republicans was immediate—it’s dead on arrival.

Republicans continue to oppose any tax increases, including the Governor’s proposed 1 cent increase in the state sales tax rate for three years. Democrats voiced strong opposition to the Governor’s proposal to cut an addition $2 billion from the cuts taken earlier this year.

During his press conference yesterday to discuss his budget compromise, the Governor reiterated his opposition to borrowing of any kind. A reporter asked if that included borrowing from local governments (Props. 1A & 42) and the Governor said:

“I think it (borrowing) would be irresponsible. As I said, it is not a wise idea and I will not do that, no.” Encouraging words for sure.

Even with the Governor’s stated opposition to borrowing from local governments, a position also expressed by the Democrat leadership and a few Republicans, given this budget impasse has reached crisis proportions, we should not assume that in the end a budget compromise won’t include borrowing from local governments.

In fact, contained in the Governor’s compromise budget proposal is a provision for the state to borrow, on a permanent basis, redevelopment funds. The state would not pay these funds back to the redevelopment agencies. Additionally, legislative staffers have been directed to draft a “all borrowing budget,” in the event a compromise without borrowing is not adopted.

Finally, the Governor is urging all local governments to contact Republican legislators and tell them to support his compromise budget and not borrow from local governments.

Here’s What You Can Do

1. If your District is represented by a Republican Senator and/or Assembly Member, call or fax his/her office and RESPECTFULLY urge them not to borrow property tax revenues from local government. I would encourage you NOT to also urge them to vote for tax increases;
2. Since we don’t know what formula would be used if the state borrowed what is estimated at approximately $2 billion if Proposition 1A were to be suspended, give an example or two what programs/services would be impacted if your lost property tax revenues; and,
3. Urge them to exempt fire protection districts should the final budget compromise include borrowing from local governments.

If you receive a response, please forward to FDAC office and thank you for your continued support of FDAC’s efforts to stop the Legislature from borrowing your revenues.