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HomeMy WebLinkAboutMINUTES - 01231990 - 2.1 TO: BOARD OF SUPERVISORS Contra Phil Batchelor, County Administrator FROM: Costa 5 January 17, 1990 _ County DATE: 4rrA_coax GOVERNOR' S PROPOSED BUDGET SUBJECT: SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: Receive this report summarizing the Governor' s Proposed 1990-91 State Budget. FINANCIAL IMPLICATIONS: If implemented as proposed, counties will absorb over $800 million statewide in actual reductions or erosion of cost of living adjustments. Impact on Contra Costa County programs is still being evaluated, but is expected to be most significant in the health and welfare area. BACKGROUND: The Governor' s Proposed Budget is a growth budget which establishes a reserve of about 30, fully funds schools, and leaves counties with the brunt of the negative impacts necessary as a result of lower revenue estimates for the current year which will be "made up" in 1990-91 . ECONOMIC OUTLOOK: Nationally, continued moderate growth is projected, with wages being increased by slightly less than 5% and housing starts static. In California the economy is assumed to expand. "moderately" in both 1990 and 1991 . Personal income is expected to outpace national trends. Earthquake recovery will contribute to business growth, predicted at 8 . 80. While ongoing demand for housing is expected to remain strong, non-residential activity will remain "soft" for the next two years. CONTINUED ON ATTACHMENT: YES SIGNATURE: AA41t4_ L/11 RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITT APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON January 23, 1990 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. CC: County Administrator ATTESTED 0713 1990 HIL BATCHEL ,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR M382 (10/88) BY DEPUTY -2- It is against this backdrop that revenue and expenditure estimates are made. REVENUES• Current year revenue estimates are projected to come in at $500 million below the 1989-90 Spring forecast. From this lower base, a healthy 8 . 4% growth in revenues is projected for 1990-91. Personal Income taxes and sales taxes make up 88. 60 of the total State general fund revenues. Personal income taxes are expected to increase by 9. 6% and sales taxes are projected at 6. 4% growth in 1990. EXPENDITURES• Total general fund expenditures of $42.6 billion represent growth of 80. The reserve for economic uncertainties will be increased by 1000 over end-of-year estimates for 1989-90, to $1 billion. Schools spending will increase by 8. 20,_ and all other programs. will be increased by 5 . 2%. Schools (K-14) : Schools will be provided with $1 . 1 billion in additional funds, pursuant to Proposition 98 requirements, to address both enrollment increases and cost-of-living adjustments. Included in this increase is additional funding of $110 million for a project to reduce class size in selected programs. Health and Welfare Cost-of-Living Adjustments The major area of impact in the health and welfare area is the proposal to eliminate cost-of-living adjustments in some key areas, for a total savings of $278 million, statewide. Savings Program Description Proposed SSI/SSP Welfare Program for Disabled $130 . 6 AFDC Aid for Families w/Dependent Children 104.1 AB-8 County Health Services 22. 5 Medical Medical Assistance for Welfare 17 . 9 Recipients IHSS In-Home Services to retain 2. 6 independent living The county would theoretically benefit from the State not providing for COLA' s, as a county match is required in most cases. However, when a COLA is not provided, it increases the need to provide services from other programs which are generally 100% county funded. The proposal to eliminate the AB-8 COLA, would represent a dollar for dollar increase .in general fund expenditures, or corresponding program reductions. Other AB-8 Reductions: A 31.7% reduction for County Health Services subsidy is proposed in the Governor' s budget, a statewide impact of $150 million. The assumption is that new federal funds for certain services to pregnant women and undocumented aliens are covering these costs, thereby reducing the need for AB-8 State funding to counties. Since the AB-8 program currently provides . for less than half the cost of County Health Services, the logic seems farfetched. Contra Costa County can expect to experience major impacts if this proposal is implemented. -3- GAIN: A $91. 6 million reduction in the Greater Avenues to Independence (GAIN) program is proposed. This will mean. that services will need to be provided to those AFDC recipients who have been on aid for the longest time. Medi-Cal• .A reduction of $74. 5 million is proposed in the Medi-Cal program based upon the proposed elimination. of six optional medical benefits: medical transportation, psychology, chiropractic, podiatry, acupuncture and heroin detoxification. Childrens Mental Health: A reduction of $41 . 1 million is proposed in Childrens Mental Health via a return of the program to the schools from the department to mental health budget. This may be viewed as a position change, as the new funding source will be more certain than the current general fund source. Other Mental Health: Mental Health local assistance is proposed for a $10 million increase. This appears to be a positive, although the amount is unlikely to even address cost-of-living. Deferral of Payments: To provide a balance budget, the Governor proposes to delay certain 90-91 payments to counties and providers for mandated services until fiscal year 91-92: Medically Indigent Services Program $25 million Medi-Cal Checkwrite $90 million Justice Programs: Trial Court Funding is proposed to be fully funded, including a statutory cost-of-living adjustment. The County . Justice Subvention program is proposed to be allocated the same level of funding as in the prior two years. Other Reductions: Unlike last year, the Governor did. not propose to cut other specific programs if the Legislature does not "go along" with the proposed reductions to the budget. This may indicate an increased willingness to negotiate on the proposals outlined in the budget. To the extent the negotiation proceeds, negative county impacts can be overted. However, it appears that those negotiations will be long-lasting so that, like in prior years, the final, outcome will not be known until after the County' s budget is adopted.