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June 28, 2011 Legislative Action. On June 28, 2011, the Legislature passed an $86 billion General Fund State Budget which closed the State's remaining $9.6 billion deficit. The 2011 -12 Budget relied on $4 billion of additional revenue, which if not realized, will automatically trigger further cuts to universities, welfare, and schools. The 2011 -12 Budget is also premised on $2.8 billion in deferrals to K -12 schools and community colleges and $1.7 billion in a controversial plan to direct funds away from redevelopment agencies pursuant to ABX1 27. The University of California and California State University funding allocations have been cut by $150 million each, and state courts also faced significant cuts. $650 million in new revenues was anticipated to come from enforcement of sales taxes collected by online merchants, rural fire fees, and a $12 car registration fee increase. Governor Brown signed the budget on June 30, 2011. The complete 2011 -12 State Budget is available from the California Department of Finance website at www.dof.ca.gov. The City can take no responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by such reference. The information referred to above should not be relied upon in making an investment decision with respect to the Bonds. Changes in 2011 -12 State Budget. As noted above, on May 16, 2011, at the time the Governor issued the May revision of his proposed 2011 -12 budget, the Governor asked the State Legislature to act by the end of June 2011 and the voters to ratify in November 2011 the extension of then - current sales tax and vehicle license fee rates and the dependent credit tax exemption level for the following five years. If those tax extensions were approved, the May revision proposed budget would have provided for an additional $3 billion for schools in 2011- 12. As of [January 1, 2012], the Governor has remained unable to obtain the votes of the State Legislature needed to call a special statewide election for voters to consider the tax extensions included in the Governor's proposed 2011 -12 budgets, and it remains unclear when, and if, the Governor will attempt to call such a special election. Also as also noted above, the 2011 -12 State Budget included a set of bills that provided for $1.7 billion in additional payments from communities with redevelopment agencies to fund school expenditures (ABX1 27) and that, initially, restricted redevelopment agency actions to create new debt and then will dissolve them (ABX1 26). Under the legislation, communities had until October 2011 to opt into the payments under ABX1 27, or the redevelopment agencies became subject to the dissolution provisions of ABX1 26. On July 18, 2011, California Redevelopment Assoc. v. Matosantos was filed in the first instance in the California Supreme Court. In this action, the California Redevelopment Association ( "CRA ") requested the Court to nullify ABX1 26 and ABX1 27 (principally on the grounds that they violate Proposition 22 of the State Constitution) and to stay the effectiveness of the two bills. On August 11, 2011, the California Supreme Court agreed to hear the case pursuant to an expedited process designed to provide a decision by January 15, 2012, the date when initial payments would be due under ABX1 27. As a consequence of this expedited schedule, both the 2011 -12 State Budget and the City's Budget for Fiscal Year 2011 -12 may be revised in accordance with the Supreme Court's decision within each such entities relevant 2011 -12 Fiscal Year. The execution of the 2011 -12 State Budget may be affected by national and State economic conditions and other factors, possibly causing the revenue projections made in the 2011 -12 State Budget to fall short. The City cannot predict the impact that the 2011 -12 State 25