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set up to spend more money each year than it reliably receives in recurring revenues. Elaborating on the State's financial condition is beyond the scope of this budget memo: However, from the perspective of a recreation and park district trying to offer the best recreation programs and park facilities possible, it is worth noting that since 1992/1993 the State has shifted approximately $26,700,000 in local property tax revenue from the Conejo Recreation and Park District to pay for State obligations. This has been referred to as the Educational Revenue Augmentation Fund or "ERAF" shift of property taxes from cities, counties and special districts to the State of California. After years of these ongoing property tax transfers from local governments to the state government - and the ever-present specter of the State taking even more local property tax revenues - the voters passed an Initiative to limit the State's- ability to take money from local governments to pay for state services. This initiative was approved by nearly 84% of the voters in 2004. Now the State cannot simply take local revenue, but may, under certain conditions, borrow local property tax revenues to be repaid with interest before they can borrow again within 10 years. In an effort to balance its budget, the State is considering borrowing 8% ($2 billion) of property taxes from local government. Although cities, counties and districts throughout the state oppose such action, it remains part of the Governor's recommended budget balancing plan. One scenario includes taking one-quarter of the amount ($500 million) from enterprise special districts, which, assuming the remainder was equally allocated, would mean less than an 8% take -away from m non - enterprise districts (such as CRPD). Eight percent (8%) of the District's property taxes is approximately $1,000,000. The question of whether the State will indeed borrow local government money has not been formally and finally decided as of this writing. Since local governments (cities, counties and special districts) are facing budget challenges (especially falling sales tax, transient occupancy tax, property tax) similar to the State, the State may yet determine that a "shot -gun loan" from local governments is an imprudent and harmful approach to solving its financial problems. The attached proposed two-year budget does not include state property tax takeaways. If the State, in fact, borrows District funds, the District will need to make a policy decision regarding whether to further cut current year services or use reserves to fund the loan. Local Level Conejo Valley businesses, governments and residents are certainly facing economic challenges not experienced in many years. The City of Thousand Oaks is reporting drops in sales taxes & transient occupancy taxes while also experiencing reduced fee-based revenue associated with construction permits. The drop in real estate sales activity and prices has been dramatic. With the decline in the housing market comes a reduction in the pace at which property tax revenue grows. Fortunately, the Conejo Valley was approaching build -out prior to the run up in housing prices in the early 2000s and as a result, there are fewer property tax re -assessments than in communities that experienced much more new development during that time. Accordingly, property taxes (the Districts primary revenue source) are forecasted to be generally flat for the two proposed budget years_ Park Dedication Fees (aka "Quimby Fees"), which are assessed on new residential construction, were a tremendous source of revenue for new park land acquisition and park development as the community was growing. However, since the Conejo Valley is approaching build -out, those once reliable revenues continue to dwindle and are no longer a sufficient source of income for capital projects as well as necessary infrastructure improvement and replacement projects. HILLCREST CENTER 403 WEST HILLCREST DRIVE, THOUSAND OAKS, CALIFORNIA 91360-4223 (805) 495-6471 FAX: (805) 497-3199 E-MAIL:parks@crpd.org