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HomeMy WebLinkAboutMINUTES - 02021993 - 2.1 0 2. 1 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on February 2, 1993 by the following vote: AYES: Supervisors Powers, Smith, Bishop, McPeak, Torlakson NOES: None ABSENT: None ABSTAIN: None SUBJECT: Proposed Process for Addressing the County' s 1993-1994 Budget Phil Batchelor, County Administrator, presented his report on the proposed process for addressing the County' s 1993-1994 Budget in light of the impact of the State' s action on this County and the 73 recommendations contained therein. (A copy of the report is attached and included as a part of this document. ) The following persons spoke: Jim Hicks, AFSCME, 1,0,00 Court Street, Martinez; Henry L. Clarke, Contra Costa Employees' Association, Local I ; Reverend Curtis A. Timmons, I .M.A.P. , P. O. Box 8213 , Pittsburg. Board members commented on the seriousness of the problem facing the County and of the need to develop a strategy for educating the public on the issues. which are involved, and particularly the erosion of property taxes allocated to counties by the State. Supervisor McPeak noted that Contra Costa County receives less property taxes percentage wise than most counties ( 31 cents on the dollar) with Contra Costa' s share being 21 cents on the dollar or a difference of $20 - 30 million. Supervisor McPeak spoke on the need to work with the California State Association of Counties (CSAC) Task Force on the development of measures for the' June 1993 ballot to prevent the State from taking local property taxes to balance its budget and referred to her Agenda Item S. 3 . Therefore, IT IS BY THE BOARD ORDERED that the 73 recommenda- tions of the County Administrator are APPROVED with the following additions: 74. Implement a "time out" thinking day for all employees when the County would shut down for a half day so all employees could consider what would make the County work better; 75. Examine all the legal issues surrounding retaining the property tax and having the voters order the Auditor-Controller and Treasurer-Tax Collector not to forward any property tax revenue to the State, incorporating Item S. 3 into this motion. The concept is to have all 58 counties place a measure on the ballot which would do the following: Order the Auditor-Controller and Treasurer-Tax Collector not to forward any property tax revenue to the State. ♦ Call on the legislature to 'enact legislation which would do the following: - Allow the property tax distribution to remain as it was in the 1991-1992 fiscal year; - Provide a dedicated revenue stream outside of the State General Fund Budget for counties and schools; and - Provide an ironclad guarantee against further unfunded mandates. •y Budget Process Board Order February 2, 1993 Page 2 76. Request the Health Services Director to report to the Board of Supervisors on the status of Contra Costa County's efforts to contract out some or all of the County' s State Hospital beds; 77 . Consider any and all options to increase the number of jobs in the County which pay a living wage, placing more emphasis on the need for economic stimulus and economic development in the County. It needs to be noted that many service sector jobs that pay $5 to $10 an hour do not produce enough income to allow an individual to support a family and pay the level of taxes that are needed to sustain government services; 78. Amend Recommendation No. 42 to include police, fire and ambulance services cooperation, along the lines suggested to Supervisor Smith by Lafayette Councilman Donald Tatzin (currently being tried in Sunnyvale and Rohnert Park) . It is noted that the City of Lafayette is ,interested in piloting this program since the County provides the City with both police and fire service. 79. Refer to the Finance Committee and Internal Operations Committee the responsibility to develop an overall strategy on how to handle the budget and to develop a strategy for educating the public 'on the issues which are involved. I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: PHIL BATCHELOR, erk of the Board of Supervisors and County Administrator cc: County Administrator By _ , _ . 2Lf: - ,Deputy I r 31!. GSA$4333 Eat'E 61tS 8tkl?SJ?3S}�r Zo m w �.... .m.,.... ... ., :G3T8.--"'f A TO: BOARD OF SUPERVISORS Contra.' .. FROM: Phil Batchelor � ..Costa �- County Administrator '�.; '" ti:4° County DATE: January 28, 1993 °at3; SUBJECT: PROPOSED PROCESS FOR ADDRESSING THE COUNTY'S 1993-94 BUDGET IN LIGHT OF THE IMPACT OF THE STATE'S ACTIONS ON THIS COUNTY. SPECIFIC REQUEST(S),OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION(S): INTRODUCTION: 1. Accept this report on the unprecedented nature and extent of the financial problems faced by the County in approaching the County Budget for the 1993-94 fiscal year. Acknowledge that the problems result from the State's deficit situation and the Governor's insistence on taking $2.6 billion in local property tax revenue in order to balance the State's Budget. A careful reading of the Governor's Proposed Budget for the 1993-94 fiscal year leads one to the following conclusions: * It seems apparent that the Stdte neither knows nor cams what will happen to individual citizens or to local public safety and protection programs after the State takes away their funding sources. * The State requires an Environmental impact'Report on all manner of endangered species of plants and animals before actions can be taken at the local level, but the State cannot even begin to define what the-impact of its budget cuts will be on human beingsl * The State does not recognize .that most state—mandated, county—run health, welfare and public .protection programs not only provide services to individuals, but ensures social stability...and that the riots experienced in Los Angeles demonstrated the cost, both to persons and property by social disruptions. CONTINUED ON ATTACHMENT: _YES SIGNATURE: OU � RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE _APPROVE —OTHER SIGNATURE(S): a ON OF BOARD ON APPROVED AS RECOMMENDED_OTHER VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A _UNANIMOUS(ABSENT 1 TRUE AND CORRECT COPY OF AND AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: A PHIL VIATCHELOR,CLERK OF THE BOA§D•QF SUPERVISORS AND COUNTY A ISTRATOR cc:CAO 8Y .DEPUTY RECOMMENDATIONS (CONTU * The State's objective seems to be to blindly assemble the State Budget without weighing and evaluating various alternative methods that might be utilized to balance it in an informed and Intelligent way. * Many of the assumptions made in the Governor's Budget are unrealistically optimistic. As a result, the deficit may grow by several more billion dollars. * What is clearly proposed in the Budget is to totally eliminate funding of mandated State- sponsored programs for which the counties have been receiving funding since 1979, but to leave in place the mandates. * The State of California is eliminating all local control for counties. Therefore, it is unlikely that there will be enough discretion left to county boards of supervisors to respond to gny local priorities. * The State Budget proposes hi-jacking locally generated non-AB-8 property taxes which .counties use to fund police, fire, and library services. * Counties will be left with amaze of State-determined mandates, but no State funding to carry them out and no discretion to terminate those programs which are judged not to be a priority in a particular.community. This'is clearly an intolerable situation! * Enactment of the State's proposals will cause a further economic downturn in California by discouraging local agencies from approving further development since local agencies will not receive enough property tax revenue to serve new residents. 2. Acknowledge that, because of the casual manner in which the Governor's Proposed Budget for 1993-94 has been prepared and presented, the Board of Supervisors' ability to anticipate the impact of the State cuts on Contra Costa County's 1993-94 Budget is made much more difficult than might otherwise.have been the case. 3. Despite the lack of finite decisions from the State on which to base planning, there is still a need to act early in the process in order to: A. Blunt the detrimental impact which a further delay would cause on services which are required and expected by the public. Although we certainly hope to have an outcome which does not involve a $2.6 billion reduction in local government property taxes, we need to realize that some reductions will have to be made. Many of these can and should be made now without complete information. B. Continue to act in a fiscally responsible manner, and C. Reduce the magnitude of the layoff of County employees which would result if the Board were to wait until final State Budget information is available (which took until September 2 for the 1992-93 fiscal year). 4. In view of the disastrous consequences which will occur if the Governor's Proposed Budget is adopted as presented, :and in view of the fact that there has, to date, been little outcry from members of the Legislature to the Governor's Proposed Budget, order each County department head to submit to the County Administrator by March 1, 1993, a plan that allows for the reduction of at least 40% of the department's net County general purpose revenue during the 1993-94 fiscal year. We would recommend that the Board use the information provided by these planning documents to establish program priorities for the 1993-94 fiscal year during a series of Budget Workshops beginning on April 1, 1993. * Asking departments for 40% reduction plans should not be construed as a capitulation to the State's unreasonable proposals. * These 40% reduction:plans should be seen as a vivid description of what will happen in Contra Costa County if the State's proposals are enacted. * If enacted,the State's proposals will increase unemployment and compound the economic downturn in California. 2 " If enacted, the State's proposals will force counties to terminate the many valuable preventive services which seek to avoid involving some of'our citizens in the even more expensive criminal justice system. The most reasonable solution 'to this problem is to work with the State Legislature on logical alternatives to what has been proposed by the Administration. ACTION STEPS TO ACHIEVE BOARD PRIORITY-SETTING: 5. Agree to respond to the State's removal of funding from the County and balance the County's 1993-94 Budget through a three-phased approach tentatively scheduled as follows: A. It is recommended that the Board of Supervisors, meeting as the Budget Committee, begin hearings on the 1993-94 Budget in Apn'f by advancing the date to begin considering the Proposed Budget by four months. This can be accomplished by conducting a Workshop on Phase I reductions on Thursday and Friday, April i and 2, 1993. The purpose of the Workshop would be to: 1). Provide the Board of Supervisors with an opportunity,to identify and establish its priorities for the Budget for the 1993-94 fiscal year, 2). Give each department head an opportunity to explain to the Board of Supervisors the impact of the recommended reductions, and 3). Provide an opportunity. for the County Administrator and department heads to answer questions generated by the Board members. Schedule a Public Hearing before the Board of Supervisors'on Tuesday, April 6, 1993 and plan to take action at that time on Phase I reductions. The County Administrator should be expected to return to the Board of Supervisors on April 6, 1993 with recommendations for budget adjustments for the 1992-93 fiscal year as well as the 1993-94 fiscal year, based on the priorities established by the Board of Supervisors. B. Request the County Administrator to recommend the appropriate timing for Phase 11 budget workshops and hearings following release of the "May Revise" by the State Department of Finance and staffs review of that document and its impact on the County's financial picture and on the status of the adoption of the State Budget. It is anticipated that these workshops and hearings would be scheduled during June or July. C. Request the County Administrator to recommend the appropriate timing for a similar workshop and public hearing on Phase III reductions and on the adoption of the final County Budget for the 1993-94 fiscal year. This should occur in September, or as soon after the enactment of the State Budget as staff are able to .complete the refinements necessary to determine exactly how much additional money must be cut from the County Budget in order to insure that it Is balanced for the 1993-94 fiscal year. 6. In preparation for the April 1-2, 1993 Workshop on the County Budget, request the County Administrator to: A. Update the Board of Supervisors on the expected size of the potential deficit for the 1993- 94 fiscal year. B. Provide each affected department with a target budget reduction level which must be achieved for the 1993-94 fiscal year. C. Obtain plans from each affected department regarding how the department recommends that the necessary cuts be implemented and in what rank order priority the cuts should be made to achieve the 40% reduction, if the State persists in its unrealistic and intolerable recommendations to decimate the property tax base of the counties. D. Revise and amend those plans as necessary in order to insure that the plans are accurate, appropriate, and responsive to the Board's need to maintain a balanced budget for the 1993-94 fiscal year, and 3 3. In view of the problems resulting from the State's deficit situation and the Governor's insistence ori taking money from local government in order to balance the State's Budget, acknowledge the establishment. of the Revenue Task Force, consisting of representatives of employee organizations, the Contractor's Coalition, the Council of Chairs, the Contra Costa Taxpayers' Association, Pacific Gas and Electric Co., industrial associations- chambers of commerce, the Contra Costa Council and the County Administrator's Office. Request the Revenue Task Force to determine the feasibility of implementing a utility users' tax in'the unincorporated area of the County and report their findings and recommendations to the Board of Supervisors. 14. In addition, request the Revenue Task Force to determine the desirability of supporting legislation to authorize the Board of Supervisors to accomplish any of the following and report their findings and recommendations to the Board of Supervisors: A. Implement a countywide utility users' tax. B. Implement a property tax override to fund the County's retirement system. C. Implement a 1/4 cent or 1/2 cent sales tax for general revenue purposes. D. implement a benefit assessment throughout the County or portions of the County for law enforcement and/or library purposes. E. Increase the existing alcoholic beverage tax. F. increase the tobacco tax. G. Expand the existing sales tax to cover additional items such as entertainment tickets or admissions. H. implement a local gasoline taxa I. Implement a local income tax. J. Consider any other local revenue raising measures of which the Revenue Task Force may become aware. 15. Authorize the County Administrator to examine the feasibility of doing another audit of the discount the County receives for prompt payment of accounts payable to insure that the County is receiving all discounts to which it is entitled. 16. Authorize the County Administrator to continue the current audit of the distribution of sales tax revenue by the State Board of Equalization to the County and cities'within the County, to insure that the County is receiving all of the sales tax to which the County.is.legally entitled. PERSONNEL—RELATED ISSUES: 17. Authorize the County Administrator to continue a freeze on filling vacant positions; considering exceptions only for positions which are judged to be critical to meeting the County's public protection, public safety, or health and welfare responsibilities. 18. Authorize the County Administrator and Director of Personnel to meet and confer with all affected employee organizations regarding the need to freeze all promotions, including flexibly staffed promotions and merit step increases. 19. Authorize the County Administrator and Director of Personnel to develop, after meeting all appropriate meet and confer responsibilities to employee organizations, a structured volunteer furlough program with specified options. These might include taking a one month furlough, taking a furlough for a fixed number of days per month, or taking a furlough for a fixed number of hours per week. In addition, this program should include criteria for denial of voluntary furlough requests where the revenue generating ability of the department would be negatively affected or where a voluntary furlough would require added overtime expenditures or the need to replace the employee on a temporary basis. Finally, the program should authorize the denial of all requests for voluntary furloughs which do not meet these criteria. 5 20. Authorize the County Administrator and Director of Personnel to examine the feasibility of a mandatory furlough program which might have several options. 'These might include closing the County for a week or two weeks during the year (except for essential operations), closing the County for one full day or one—half day every other week(except for essential operations). Direct the County Administrator and Director of Personnel to: A. Meet and confer with employee organizations regarding the structure and implementation of such a mandatory furlough program, B. Consult with the Superior Court and Municipal Court to develop a program which will allow the Court to meet its Constitutional obligations while still participating in a mandatory furlough program, and C. Review and report to the Board of Supervisors on similar programs which may have been implemented in other counties. 21. Authorize the County Administrator.and Director of Personnel to explore the feasibility of implementing a mandated, fixed "9/80" work schedule where all County employees now on a 40 hour work week would work eight nine—hour days and one eight-hour day in a two week period, with all non-24—hour—a-day County programs being closed on the tenth day in the two week period (generally every other Friday). In this regard, authorize the County Administrator and Director of Personnel to enter into appropriate meet and confer discussions with employee organizations. 22. Authorize the County Administrator to examine the feasibility of eliminating the policy of allowing County employees to take County vehicles home, except where the employee is subject to being .called back to work on an emergency basis, and to meet and confer with employee organizations regarding the implementation of this policy change. 23. Authorize the County Administrator to examine the feasibility of reducing or eliminating the County's vehicle fleet,other than for law enforcement vehicles,specialized Public Works vehicles, and similar vehicles which cannot easily be replaced by an employee's private vehicle. 24. Authorize the County.Administrator to examine the feasibility of extending the provisions of "early retirement" to selected classifications for specified periods of time. 25. Authorize the County Administrator to examine the feasibility of changing the health benefit package for retired employees. Look at such items as reducing retiree health benefits for new County employees, and/or modifying the cost sharing for retiree health benefits for current employees who are not yet retired. 26. Authorize the County Administrator, Director of Personnel and Risk Manager to examine the feasibility of further reducing the percentage of salary an employee can receive while on Workers' Compensation and to meet and confer with employee organizations on such proposed changes. 27. Authorize the County Administrator and appropriate department heads to examine various organizational changes in County government where it can be shown that such reorganizations are legal, appropriate and will result in financial savings to the County;while maintaining at least the same level of service to the public. 28. Authorize the County Administrator and Director of Personnel to open negotiations with all employee organizations whose current Memoranda of Understanding (MOU's) with the County call for future cost—of—living adjustments (COLA's), in an effort to reach agreement to defer the COLA to a future date. 29. Authorize the County Administrator and Director of Personnel to examine management and unrepresented employees' salary and benefits to explore various methods for reducing the County's salary and benefit costs. 30. Authorize the County Administrator and Director of Personnel to examine the feasibility of reducing or terminating the current vacation buy—back policy for management and unrepresented employees as a mechanism for reducing the County's salary and benefit costs. 31. Authorize the County Administrator and Director of Personnel to meet and confer with all employee organizations to explore various methods for reducing the County's salary and benefit costs for represented employees. 6 7 i I i t t 7 II i making employees more productive and assisting in maintaining essential services for the public. 59. Request the County Administrator to contact members of this County's legislative delegation and invite each member to meet with the Board of Supervisors to*discuss the local impacts of the Governor's Proposed Budget, were it to be implemented as Introduced to the Legislature on January 11, 1993.. . INVOLVEMENT OF OTHER PARTIES: 60. Encourage-the County Administrator to issue "Budget Bulletins", as he has been doing, on a periodic basis as events warrant, in an effort to keep all employees informed of developments both in Sacramento and locally. which affect the County's 1993-94 Budget. Expand the distribution of the Budget Bulletins to organizations such as churches, chambers of commerce, the Contra Costa Council, industrial associations,the Building Industry Association, large service clubs and selected community groups, as well as specific.individuals who may be identified by individual members of the Board of Supervisors as being concerned with this issue. 61. Authorize the County Administrator to request that all employees consider ways in which the County could save money, reduce costs or generate additional revenue, and forward their suggestions to the County Administrator and appropriate department heads. 62. Recognize the Management Council as a group of dedicated middle managers in the County who are knowledgeable and able to assist the Board of Supervisors and County Administrator in a number of ways. Encourage the Management Council to do the following: " Provide the County Administrator and department heads with their comments and suggestions for ways in which the County could be reorganized to be more productive, efficient and cost-effective. Appoint a representative to the Ad Hoc Budget Committee. Review and comment to the County Administrator on ways in which the County's salary and benefit costs can be reduced. Review and comment to the County Administrator on areas in which the County should consider entering into public/private partnerships involving the privatization of services. Review and comment to the County Administrator on areas in which the County should consider taking back responsibility for the direct operation of programs which are currently contracted out to other agencies where doing so will result in financial savings to the County. 63. Request the County Administrator to prepare a"Productivity Report" and forward it to the Board of Supervisors on February 16, 1993. This report should compare the productivity of programs and departments in Contra Costa County with other comparable counties in California. In addition, the report should compare the current level of productivity of programs and departments in Contra costa County with comparable historical data which identifies changes in productivity over a period of several years. 64. Request the County Administrator to prepare and forward to the Board of Supervisors on March 16, 1993, a revised "Economy and Efficiency in Contra Costa County" report, along the lines of previous versions of this report which identify actions which have been taken by the Board of Supervisors and County staff to increase the efficiency of programs in Contra Costa County and which demonstrate steps taken to reduce the cost of providing services to the public. 65. Authorize individual members of the Board of Supervisors, the County Administrator, and appropriate department heads to cooperate fully with the*California State Association of Counties (CSAC) in presenting the counties' case to the Legislature and the Administration. 66. Acknowledge that the County's lobbyist is working closely with CSAC in presenting to the Legislature and the Administration the likely impact of the actions which the State appears to be planning at this time in regard to reductions of funding to local government. 67. Authorize individual members of the Board of Supervisors, the County Administrator, and appropriate department heads to cooperate fully with the Central Labor Council, employee 9 . organizations, the Contra Costa Council, the Contra Costa Taxpayers' Association, various industrial associations, individual corporate representatives, private non—profit agencies which provide human services on contract with the County, advisory boards, committees and commissions to the Board of Supervisors, and groups of individual concerned citizens, in presenting to the Legislature and the Administration the likely impact of the actions which the State appears to be planning at this time in regard to reductions of funding to local government. 68. Expand the Board's Ad Hoc Budget Committee to include representatives from the Council of Churches, Contra Costa Mayors' Conference and Management Council, each of which should be asked by the County Administrator to name a representative to the Ad Hoc Budget Committee. 69. In order to support the work of the Board's Ad Hoc Budget Committee, authorize the County Administrator to continue to meet with the Ad Hoc Budget Committee to keep the members of the,Committee informed regarding developments which impact the County's 1993-94 Budget, work with the Committee in reviewing and refining the criteria for budget reviews which were prepared in 1992, and request the Committee's assistance in reviewing and commenting on the steps which are recommended for action by the Board of Supervisors. 70. Request the Ad Hoc Budget Committee to assist the Board of Supervisors in lobbying the Legislature in Sacramento, specifically in support of the following goals: A. Leave the County's property tax base, including the AB-8 "buy—out", untouched unless and until the State.advises counties which programs that were bought out in 1979 are to be terminated by counties. B. Provide counties with sufficient revenue—raising authority to blunt the impact of at least a portion of the State's cuts. C. Leave the Special District Augmentation Fund untouched or at least reduce it in a way which does not disproportionately reduce funds to Contra Costa County and other counties which happen to rely heavily on special districts to provide essential public services such as police, fire and library services. D. Educate members of the Legislature and the general public to the specific program impacts which will occur if the level and manner of reductions proposed by the Governor are implemented. 71. Authorize the County Administrator to schedule a meeting with the Cost Containment Coalition to continue to review whatever suggestions the Coalition would like to recommend to the County. Request the Cost Containment Coalition to assist the Board of Supervisors in lobbying the Legislature in Sacramento, specifically in support of the following goals: A. Leave the County's property tax base, including the AB-8 "buy—out", untouched unless and until the State advises counties which programs that were bought out in 1979 are to be terminated by' "counties. B. Provide counties with sufficient revenue—raising authority to blunt the impact of at least a portion of the State's cuts. C. Leave the Special District Augmentation Fund untouched or at least reduce it in a way which does not disproportionately reduce funds to Contra Costa County and other counties which happen to rely heavily on special districts to provide essential public services such as police, fire and library services. D. Educate members of the Legislature and the general public to the specific program impacts which will occur if the level and manner.of reductions proposed by the Governor are implemented. SUMMARY: 72. Request the County Administrator to report back to the Board of Supervisors on any of the above recommendations as events warrant such reports. 73. We believe that the Board of Supervisors wants to continue efforts to be as creative, innovative and cost—effective as possible in the delivery of services to the public whom we serve. 10 • Therefore,we would recommend that the Board of Supervisors authorize the Finance Committee and Internal Operations Committee to consider how the choice of which services are provided is to be made and how the system.by which those services are delivered to the public will be determined. In this regard, authorize both Committees to rethink the organization and structure by which services are provided, jointly create a document designed to solicit information from County departments regarding how the department might be operated without all of the locally- generated mandates, contracts and MOU's under which the department presently operates. Further, that the Board of Supervisors authorize the Committees to work with the County Administrator to forward this document to department heads, receive and analyze the results of the surveys, and make any recommendations to the Board of Supervisors that the Committees believe appropriate. BACKGROUND: NATURE AND EXTENT OF THE STATE'S PROBLEM: The Governor's Proposed Budget makes a number of wildly optimistic assumptions about revenue estimates and cost reductions in concluding that the State's deficit is onli$7.5 billion between now and June 30, 1994. From the record of the past two fiscal years, when the deficit announced in January has steadily climbed until adoption of the budget some months later, it seems unlikely that the deficit will be held to exactly what it is stated to be today. This is demonstrated in the following table, which identifies some of the assumptions which lead the Governor to conclude that the deficit is only $7.5 billion. ITEM OPTIMISTIC IF PREDICTIONS SCENARIO PROVE INVALID Governor's Projected Deficit $ 7.5 billion $ 7.5 billion No Receipt of Federal Refugee Funds to fully fund program $ 1.4 billion No repeal of Renters' Credit $ .4 billion No repeal of optional Medi—Cal services $ .2 billion Unable to recover "overpayment" to schools resulting from optimistic revenue estimates $ 3.0 billion SUB—TOTALS $ 7.5 billion $12.5 billion Impact of Additior ial Program Cuts ? Impact of Additional Optimistic Revenue Estimates ? TOTAL POSSIBLE DEFICIT $ 7.5 billion ? LOCAL IMPACTS FROM THE STATE'S DEFICIT: A. Failure to allocate the cuts to various local governments. One of the major problems with the manner in which the Governor's Proposed 1993-94 Budget is presented is that it simply identifies "local government" as the source of some $2.6 billion in property tax reductions to assist in balancing the State's deficit. 11 The Governor's Budget does not identify how much of this should be allocated to counties. The Governor's Budget does not identify how much of this should be allocated to cities. The Governor's Budget does not identify how much of this should be allocated to special districts. Therefore, each local government must make some sort of assumption regarding what will ultimately happen to it in the final allocation of these cuts among thousands of local government agencies in California. B. Lack of any consideration for programmatic impacts of State reductions. Since the State suggests no specific mechanism by which the $2.6 billion in property tax reductions should be allocated among various local government agencies, it seems apparent that the State neither knows nor cares what the impacts will be on individual citizens or the public safety anj protection. programs on which they depend. The objective seems to balance the State's Budget regardless of how it is done and regardless of who is hurt in the process. C. "Buy-out" versus "Bail-out". As has often been noted by counties, most of the programs which counties operate are operated on behalf of and at the direction of the State of California. Fallowing the passage of Proposition 13, counties lost approximately 50% of their property tax base, but .none of the mandates for which they were responsible. The State agreed to "buy-out" a portion of those mandates in recognition of the fact that counties administered most of the State's health, welfare and criminal justice programs on the State's behalf. What was done to the counties in the 1992-93 fiscal year and what is clearly proposed in the Governor's Proposed Budget for the 1993-94 fiscal year is to eliminate the "buy-out" of those mandated programs, but leave in place the mandate itself. All that will have happened is that the State will have saved.itself several billions of dollars and will have saddled counties with an intolerable task. D. Loss of local control. Of perhaps the most significance, and the least obvious of all the impacts from the proposed reductions, is that fact that the State of California will have completed its removal of all local control from counties. There will likely be few if any discretionary programs in any county! in California and little prospect that there will be any discretion available in the near future. The Governor's Budget seems determined to cut into the historic property tax base which counties have used to respond to local priorities, local needs and local concerns as well as State mandates. It is unlikely that there will be enough discretion left to county boards of supervisors to respond to gny local priorities. It addition, counties will be left with a maze of State-determined mandates, but no State funding to carry them out and no discretion to terminate those programs which are judged not to be a priority in a particular community. Clearly an intolerably situation! E. Specific impact on Contra Costa County. The Department of Finance has indicated to CSAC that the remaining AB-8 property tax "buy- out", after the implementation of the reductions in the current fiscal year's budget, totals $1.710 .billion. This is broken out as follows: Counties $ 680 million Cities $ 647 million Special Districts $ 383 million Since the Governor's Budget proposes a property tax reduction to local government which exceeds the remaining A13-8 "buy-out", it appears that $ 365 million is being taken out of the remaining property tax base which supports local government, including counties. In the current fiscal year, the formula which was finally agreed on for the distribution of the J counties' share of the cut.to AB-8 property tax revenue resulted in Contra Costa County assuming 2.3886% of the total cut to all counties. Since the Governor's Budget for the 1993-94 12 fiscal year does not identify any formula by which the $2.6 billion will be distributed to various levels of local government, one can only assume that the same formula will be used again. If one assumes that Contra Costa County will be responsible for this same percentage of the AB-8 property tax loss and this same percentage of the $365 million cut to the property tax base, and if one assumes that the reduction to special districts eliminates the entire Special District Augmentation Fund, the impact on Contra Costa County would appear as set forth in the following table. However, it is entirely possible that the State's overall deficit will.increase above the $7.5 billion figure noted above. The State admittedly has few realistic options for balancing larger deficits other than.making further cuts to local government's property tax base or raising revenue. Since the Governor seems determined not to raise revenue statewide,further cuts to local governments seem inevitable. For each one billion dollars by which county revenues are reduced, it is reasonable to assume that Contra Costa County will be cut an additional $23.886 million, based on the 1992-93 formula for the reduction in the AB-8 property tax. EXTENT OF LOCAL BUDGET PROBLEMS When these are added to the impact of the State's proposed reductions, the picture looks like this: CATEGORY OPTIMISTIC POSSIBLE SCENARIO SCENARIO Balance of AB-8 Property Tax $16.243 million z $16.243 million Identified reduction in property tax base $ 8.718 million'' $ 8.718 million Additional $1 billion in property tax cut $23.886 millior2 Eliminate SDAF $34.300 million $34.300 million Cut to Trial Court Block Grant Funds $ 1.300 million $ 1.300 million STATE CREATED PROBLEMS $60.561 million $84.447 million Local problem $12.000 million a $22.000 million' TOTAL COUNTY BUDGET SHORTFALL $72.561 million $106.447 million Assumes that Contra Costa County will be responsible for 2.3886%of the statewide total. If the formula is revised in any way,this County could be required to surrender even more property tax revenue. It is also possible, as was the case in 1992, that the cities will end up with a more favorable share of the property tax reduction than will the counties. If the same proportion of the total property tax reduction is used which occurred in 1992-93,counties would be required to accept 48%of the total reduction to all local agencies. If this were to be true,the counties in California would have to accept$996 million in property tax reductions, rather than$680 million. This would substantially increase Contra Costa County's share of the problem. 2 This figure assumes,that the State's deficit cannot be held to$7.5 billion and that the State decides to eliminate an additional$1 billion in property taxes from counties statewide. If this happens,it Is assumed that Contra Costa County's share would continue to be 2.3886%of the statewide total. 3 As was the case in the 1992-93 County Budget, there are local fiscal issues which must be addressed,quite apart from the impact of the'State's reductions. A number of one-time solutions were implemented this year which are not available in the 1993-94 County Budget There are salary and benefit increases which have been authorized. There are uncontrollable cost Increases in such items as utility bills,leases,and normal inflationary increases in the cost of all services and supplies. It appears that the total local problem will range between$12 million and$22 million. 13 Thus, it should be clear that unless steps'are taken to derail the State's Proposed Budget for the 1993-94 fiscal year, the extent of the problem in Contra Costa County can range from an optimistic low of $73 million to an entirely realistic possible high of nearly $107 million. NET COUNTY COST How do we resolve a problem of this size? While it is true that the total County General Fund Budget equals some $605 million for the current fiscal year, the Board of Supervisors has little or no discretion over more than 2/3 of that budget. From the total of $605 million, it is necessary to deduct federal and state revenues, where the revenues are tied to specific programs and can only be spent on those programs; charges for services, where the revenue must be used to support the program which generated the charge; grants, which generally are required to be used for a specific purpose; and mandated matches, where the County is required to provide a match for a mandated state or federal program like AFDC and indigent health care, leaving a balance of only $180 million from which all of the reductions described above must be taken. As we have already noted, early planning and priority—setting is essential in order to address reductions of the magnitude which may be required of the Board this year. As a result, we have recommended that departments plan for a reduction of 40% of their net County general purpose revenue. The Board of Supervisors, based on the priorities it sets in April, Will then have to determine the extent and timing of the reductions. I 14 TO: BOARD OF SUPERVISORS Contra FROM: Sunnearight McPeak � DATE : February 2 , 1993 Costa SUB"JLCT: Adth'orization . of Contra Costa County Staff to ""U' "J Assist CSAC Task Force in Studying Feasibility of Placing Measures on the June 1993 Ballot in 'All 58 Counties to Prevent the State From Taking Local Property Taxes to Balance Its Budget SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION• Authorize the County .Administrator, County Counsel, Auditor, and Treasurer-Tax Collector to provide technical assistance to the CSAC (California State Association of Counties) Task Force co- chaired by Supervisor McPeak to study the feasibility of placing measures on the June 1993 ballot in all 58 counties that will prevent the state from taking local property taxes away from counties and fire services to balance the state budget. This would involve a concentration of time and effort for the next 30 to 45 days since the deadline for each county to place such a measure on the ballot is mid-March. BACKGROUND: The Governor ' s proposal to take $2. 6 billion of property taxes away from counties, special districts (particularly fire districts) , and cities to balance the state budget is devastating to our ability to provide basic police and fire protection services. We are committed to fiercely fighting this proposal. Although we are moving ahead locally to plan for contingencies to protect the public (including considering fire suppression assessments if necessary) , we must devote sufficient energies to finding a better solution if possible. I have identified one such approach, but it will require concentrated research and expertise to succeed. That is why I am requesting the Board' s authorization of assistance from Contra Costa County personnel to the CSAC Task Force I co-chair. This task force .is charged with identifying the best strategies to achieve stable funding for local government. I have reported to the Board in the past that the Task Force has established a goal of working with the Legislature through June 30, 1993 , to seek adoption of essential financial reform measures and then, if necessary, pursuing an initiative for 1994. However, a new option has arisen: organizing all 58 counties to place on the June 1993 ballot a measure which instructs the local Treasurer-Tax Collector and Auditor to collect and distribute local property taxes in accordance with Proposition .13 and a specified formula (probably AB 8) and prohibits them from doing anything else (such as complying with ,a bill passed• by the Legislature and Governor to CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER THIS ITEM WAS APPROVED AS PART OF DETERMINATION ITEM NO. 2 . 1 . TE OF SUPERVISORS UNANIMOU ENT ) 1 HEREBY CERTIFY THAT THIS IS A T AYES: NO AND CORRECT COPY OF AN N TAKEN ABSENT: ABSTAIN: 'AND ENTERED ON T NOTES OF THE BOARD F SUPERV S ON THE DATE SHOWN. CC: ATTESTED Phll Batchelor, Clerk o ftvilunLof Contact : Karen Mitc' supervivsMWCounty Admin istrator RY __...._---.........._....----------�� DEPUTY wPage Two take our property taxes) unless also voted upon by the . electorate. If we can get all 58 counties to place this measure on the ballot and successfully secure a vote of the public to instruct their elected Treasurer-Tax Collectors and Auditors to disburse local property taxes in a specified manner,.' I think we can legally block the Governor and Legislature from doing otherwise. It also would relieve local taxpayers from having to pay increased property tax assessments to sustain basic fire or police services. DATE: cls ` _93 REguEST To SPEAK FoRM (THREE (3) MINUTE LIMIT Complete this form and place it in the box near the speakers' rostrum before addressin the ar . NAME: V, l211�W �� PHONE: G)' U ADDRESS: CTIY: - I am speaking formyself OR organization: t �. Check one: (NAME OF ORGANIZNTION) a 1 I wish to speak on Agenda Item # ~ - My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments or the Board to consider. SPEAKERS 1. Deposit the "Request to Speak" form (on the reverse side) in. the box next to the speakers' microphone before your item is to be considered. 2. You will be called to make your presentation. Please speak into the microphone. 3. Begin by stating your name and address; whether you are speaking for yourself or as a representative of an organization. 4. Give the Clerk a copy of your presentation or support documentation, if available. 5. Please limit your presentation to three minutes. Avoid repeating Comments made by previous speakers. (The Chair may limit'length of presentations so all persons may be heard.). DATE: 1,j QUEST TO SPEAK FORM (THREE (3) MINUTE umrr) Complete this form and place it in the box near the speakers' rostrum before addressing the Board. NAME: PHONE. ADDRESS: Cr1Y: I am speaking formyself OR organization: ;rr. Check one: (NAME OF ORGANIZATION) I wish to speak on Agenda Item # _. My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to consider. SPEAKERS 1. Deposit the "Request to Speak" form (on the reverse side) in the box next to the speakers' microphone before your item is to be considered. 2. You will be called to make your presentation. Please speak into the microphone. 3. Begin by stating your name and address: whether you are speaking .for yourself or as a representative of an organization. 4. Give the Clerk a copy of your presentation or support documentation, if available. 5. Please limit your presentation to three minutes. Avoid repeating comments made by previous speakers. (The Chair may limit,length of presentations so.all persons may be heard.) DATE: REgIJEST TO SPEAK FORM (THREE (3) MINUTE LIMIT) Complete this form and place it in the box near the speakers' rostrum before addressin NAME: //% i GS ��?S��`T Gov PHONE: ADDRESS: Com: I am speaking formyself OR organization: &AME OF ORGAN17.a1'(ON) Check one: I wish to speak on Agenda Item # My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to consider. SPEAKERS 1. Deposit the "Request to Speak" form (on the reverse side) in the box next to the speakers' microphone before your item is to be considered. 2. You will be called to make your presentation. Please speak into the microphone. 3. Begin by stating your name and address; whether you are speaking for yourself or as a representative of an organization: 4. Give the Clerk a copy of your presentation or support documentation, if available. 5. Please limit your presentation to three minutes. Avoid repeating comments made by previous speakers. (The Chair may,limit*length of presentations so all persons may be heard.) DATE: REQUEST TO SPEAK .FORM (THREE (3) MINUTE LIMIT) Complete this fd place a box near the speakers' rostrum before addressing a Bo7/1"A NAME: r PHONE: ADDRESS: C I am speaking formyself OR organization: - Che one: (NAME OF ORGANIZ-VION) I wish to speak on Agenda Item #� My comments will be: general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to consider. SPEAKERS 1. Deposit the "Request to Speak" form (on the reverse side) in the box next to the speakers' microphone before your item is to be considered. 2. You will be called to make your.presentation. Please speak into the microphone. 3. Begin by stating your name. and address; whether you are speaking for yourself or as a representative of an organization. 4. Give the Clerk a copy of your presentation or support documentation, if available. 5. Please limit your presentation to three minutes. Avoid repeating comments made by previous speakers. (The Chair may limit'length of presentations so all persons niay be heard.)