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The sponsors of the LOCAL initiative (California State Association of Counties, League of California Cities and the Special Districts Association) have reached agreement with the Schwarzenegger administration on a funding deal with local government to help deal with California's budget crisis. Association of California Water Agencies (ACWA), which represents 425 special district public water agencies, provided input to the local government negotiators on the package and issued the following statement:
ACWA members and other special districts today have agreed to accept painful short-term financial impacts in exchange for long-term financial stability. With this agreement and the Governor's commitment, we can put an end to endless raids on local government property tax revenues.
Through the agreement, special districts will shift an additional $350 million to the state this year and next to help solve the budget crisis. In exchange, special districts have the Governor's commitment to restore those financial revenues back to special districts, including the revenue growth that occurs during the two-year shift, and to place an initiative on the ballot this November to constitutionally protect local government against any future property tax shifts. The Governor has also agreed to actively campaign for this permanent protection.
There will be real impacts as a result of this shift and special districts will be greatly challenged in their efforts to maintain service to communities. These impacts could include delays in vital infrastructure investments and water, sewer and electric rate increases and reduced services. However, this agreement will save billions of dollars in the long run by protecting property tax revenues, including the growth of those funds into the future.
ACWA has long opposed the original or additional property tax shift, but believes this deal is vital in securing the long-term fiscal integrity of local governments. The combined total of this shift and prior shifts is close to $1 billion each year for all special districts and the total grows every year. The constitutional protections this agreement provides is the only way to ensure that long-term fiscal integrity.
ACWA will diligently support this package to ensure that the components of the Governor's deal remain intact and are fully reflected in the budget proposal the Legislature sends to the Governor's desk.