By Kent Gray

Triplicate staff writer

Local governments are breathing a cautious sigh of relief after reviewing the latest budget proposal from Gov. Gray Davis.

andquot;Based on what we know at this point, and there are still several things that are unclear, we will be in better shape than the earlier proposals,andquot; said Crescent City City Manager Dave Wells.

Faced with opposition from his own party to suggested cuts in services, Davis released his new proposal on Wednesday which shifts his balancing act from cuts to increased taxes to tackle a projected $38 billion state budget deficit.

Although there is no guarantee Davis' new proposal will survive a legislative battle, where Republicans are anticipated to put up a fight because of tax increases, some elements of Davis' plan are being noticed.

Wells was particularly focused on a return to previous vehicle licensing fees rates, which are crucial to local funding. The fees were cut in the 1990s and the state has been compensating local governments for the difference.

andquot;When the state's revenues fall below a certain point, it triggers an increase in the VLF fees back to previous levels,andquot; said Wells. andquot;The state will no longer have to backfill on those and that is the advantage for them.andquot;

When contacted on Wednesday, Del Norte County Chief Administrative Officer Jeannine Galatioto said she had not read the proposal in its entirety, but it appeared promising.

Administrators at the Del Norte Unified School District, who were analyzing the proposal, said they were andquot;excited about the possibilities.andquot;

andquot;It appears the impact is not going to be as bad as we thought initially, but the full effect won't really be known until next week,andquot; said Superintendent Frank Lynch. Lynch said Assistant Superintendent of Business Rodney Jahn and Director of Fiscal Services Lori Bomke will return from Sacramento with greater detail about the budget proposal.

According to the May revised proposal, schools will have $700 million more than in the January projection. Lynch said this will have to be factored into the district's enrollment before the local effect will be known.

Community colleges will receive $304 million in Proposition 98 funding above the January proposal.

andquot;Governor Davis deserves credit for taking significant steps to reduce the magnitude of the disproportionate reductions that he proposed for community colleges in January,andquot; said Thomas J. Nussbaum, chancellor of the California Community Colleges. andquot;While items of concern remain, the governor has clearly shown that he is listening, that he is willing to reconsider earlier proposals, and that he wants to do right by the community colleges and the students we serve.andquot;

President Casey Crabill, of College of the Redwoods, said that while it was too early to tell specifically what the new proposal would mean for the local institutions, funding in 2003-04 was andquot;a step in the right direction.andquot;