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laws relating to the imposition of fees or charges as a condition of property development; however it is not clear whether the initiative power is therefore unavailable to repeal or reduce developer and mitigation fees imposed by the City. No developer fees imposed by the City are pledged or expected to be used to pay the Lease Payments. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. Proposition 62 On November 4, 1986, California voters adopted Proposition 62, a statutory initiative which amended the California Government Code by the addition of Sections 53720-53730. Proposition 62 requires that (i) any local tax for general governmental purposes (a "general tax") must be approved by a majority vote of the electorate; (ii) any local tax for specific purposes (a "special tax") must be approved by a two-thirds vote of the electorate; (ili) any general tax must be proposed for a vote by two-thirds of the legislative body; and (iv) proceeds of any tax imposed in violation of the vote requirements must be deducted from the local agency's property tax allocation. Provisions applying Proposition 62 retroactively from its effective date to 1985 are unlikely to be of any continuing importance; certain other restrictions were already contained in the Constitution. The requirements of Proposition 62 have generally been superseded by the enactment of Article XIIIC of the Constitution (Proposition 218) in 1996. Most of the provisions of Proposition 62 were affirmed by the 1995 California Supreme Court decision in Santa Clara County Local Transportation Authority v. Guardino, which invalidated a special sales tax for transportation purposes because fewer than two-thirds of the voters voting on the measure had approved the tax. By its terms, Proposition 62 applies to cities, but because the City does not receive any material amount of tax revenues from any tax levied in contradiction to Proposition 62, the City has not experienced nor does it expect to experience any substantive adverse financial impact as a result of the passage of this initiative or the Santa Clara decision. Future Initiatives Article XIIIA, Article XII'B, Proposition 98, Proposition 111, Proposition 218 and Proposition 62 were each adopted as measures that qualified for the ballot under the State's initiative process. From time to time other initiative measures could be adopted, further affecting the City's finances or the City's ability to raise or expend revenues. State Budgets The State of California is likely to continue to face significant budget issues for the foreseeable future. In connection with its approval of former budgets, th'e State Legislature enacted legislation that has a direct impact on the financial situation of cities and counties in the State. The Budget Process. Through the State budget process, the State can enact legislation that significantly impacts the source, amount and timing of the receipt of revenues by local agencies, including the City. As in recent year~, State budget deficits can result in legislation that adversely impacts local agency budgets. -33-