AC TRANSIT DISTRICT GM Memo No. 07-225 Board of Directors ...

one month after passage of the tardy state budget. When the budget was signed last
month, Department of Finance was estimating a $5 billion shortfall based upon reduced
income tax revenues. That projection is now up to an $8.6 billion deficit, according to
latest DOF numbers which consider reduced revenues and base-line spending needs.
Among other FY 2007-08 Budget assumptions that cause even wider discrepancies are:
• EdFund will be sold for $1 billion. This is a precarious number, at best. Nobody
really knows how much EdFund would generate in one-time funding, or if it can
be sold at all.
• Ballot initiatives by rival tribes could block compacts just approved for additional
slot machines. In addition, the per-machine revenues may not be achievable.
• The California Transit Association has sued to block divergence of $1.3 billion in
mass transit funds to the state general fund.
• STRS sued and won at trial and appellate court levels to block tapping the refund
for $500 million. The Governor has agreed to return the $500 million to STRS,
an amount that would severely cut into the state’s reserve account.
• The budget does not fund major state employee pay raises, including a stalled
contract with the CCPOA - - an amount estimated at $300 million during Sessionend
attempts at legislation sponsored by prison employees.
• Plummeting home sales are steeper than predicted, and will cut further into state
income tax revenues. The following is a link to DOF’s September revenue
forecast: http://www.dof.ca.gov/HTML/FINBULL/2007_FB/September/
Legislation
The Legislature adjourned on September 12 th , which was two days earlier than scheduled.
This has sparked a debate over the Governor’s signing deadline. As you know, at the end
of session the Governor has 30 days to act on bills. Many assumed that the deadline this
year would be October 12 th . While Legislative Counsel initially agreed with this date,
Leg Counsel has rescinded that opinion and now declares the Governor has until
midnight on October 14 th to sign or veto bills.
That extra time will be needed. To date the there remain 596 bills pending on the
Governor’s desk. Given the large number of bills still pending, we will send an updated
bill chart prior to the Board meeting next week.
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