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wary of the "Triple Flip" because the State's proposed repayment to cities is merely a promise. Despite the State's promise that sales tax losses will be repaid with equivalent property tax money, there is no guarantee that this repayment will occur. As a charter city, Cerritos' primary argument in the lawsuit will be that charter cities do not need authority from the Legislature to impose a tax due to the "home rule" powers of charter cities. Although much of the argument against the "Triple Flip" is based upon its potential impact upon charter cities, Cerritos believes that general law cities will also benefit from its legal challenge against the State. Cerritos maintains that if over 100 charter cities are exempt from the Legislature's "raid" on local taxes, including some of the largest cities generating the greatest amount of taxes, the State would be hard put to leave this burden on the backs of smaller general law cities. In addition, Cerritos will argue that the State has other options to mitigate its budget problems other than usurping local taxing authority or confiscating existing local revenues. These options could include either increasing the overall sales tax or reducing the State's portion of sales tax and imposing a corresponding tax to repay the deficit reduction bonds. This scenario, labeled the "double -flip" by its proponents, would enable the State to assume the entire responsibility for its budget shortfall and therefore would leave cities "whole." FINANCIAL IMPACT: As explained above, the City of Cerritos requested that general law cities join the lawsuit in name only, with no financial commitment. Therefore, no financial impact from joining the litigation is anticipated. ENVIRONMENTAL IMPACT: No environmental impact is anticipated from joining the City of Cerritos litigation. CONFLICT OF INTEREST — Gift Disclosure Requirements Not applicable. RECOMMENDATION: We believe that the City of Colton would benefit from participating in the Cerritos' legal action against the State. As requested by Cerritos, the City should consider joining as a co -plaintiff in name only, with no financial commitment. Prepared by: Dean Derleth, City Attorney REVIEW TEAM ONLY City Attorney: Finance Director: City Manager: OTHER: