HomeMy WebLinkAboutMINUTES - 01162007 - SD.4 TO: BOARD OF SUPERVISORS Contra
FROM: JOHN CULLEN, -� _
COUNTY ADMINISTRATOR O`, ''i " - j;4 Costa
DATE: January 16, 2007 `°srA�aU `� County
SUBJECT: GOVERNOR'S 2007-08 PROPOSED STATE BUDGET SD .
I
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
ACCEPT the oral report on Governor Arnold Schwarzenegger's 2007-08 proposed State Budget.
BACKGROUND/REASON(S) FOR RECOMMENDATION:
On January 9, 2007, Governor Schwarzenegger released his proposed State Budget for 2007-08.
The proposed budget is the first step iln the development of the final State Budget, which is a result
of negotiation between the Governo i and the Legislature. The next step is for the Legislative
Analyst to provide a detailed assessment of the Governor's spending plan and to develop possible
alternatives for consideration by the Legislature. Budget subcommittees of both houses will then
begin their item by item review and take testimony from interested parties, including counties. In
May, the Governor will release his 'IMay Revise" in which there will be updated revenue and
caseload estimates, and additional details on budgetary proposals. By June, the Legislature is
supposed to complete its deliberations and send its version of the budget back to the Governor for
his scrutiny and signature (although, typically the process takes longer).
Attached is the copy of the California State Association of Counties (CSAC) "Highlights of the State
Budget". It contains an excellent overview by issue area.
CONTIN11FD ON ATfAC'HMENT: X YI:S SIGNATURE:
RI;COMMENDA'IION OF COUNTY ADMINISTRA'I-OR I RECOMMENDATION OF BOARD COMMI TT,E
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON O APPROI E AS RECOMMENDED X OTHER
Supervisor Uilkema recommended the Board watch the proposed upcoming In-Home Supportive Services
(IHSS)Legislation that could stop future cost increases,and determine whether or not to take a position.
VOTE 01:SUPERVISORS 1 HEREBY CERTIFY TI IAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
UNANIMOUS(ABSENT ) AND 17NTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON TI IF,DATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN: I l
ATTI:STF.D D
MEDIA CONTACT:Sara Hoffman,335-1090 JOHN CULT.EN,CLERK OFT11F 130ARD 01:SUPERVISORS
AND COUNTY ADMINISTRATOR
ORIGINATING DEPARTMENT:CAO.
CC:
BY TY
I
I
California State Association of Counties
1100 K Street, Suite 101
Sacramento, CA 95814
916.327.7500 Facsimile 916.441.5507
January 10, 2007
To: Chairs of the Board
CSAC Board of Directors
County Administrative Officers
From: James Keene, CSAC Executive Director
Steve Keil, CSAC Director' of Legislative Services
Jean Kinney Hurst, CSAC Legislative Representative
Re: Highlights of the 2007-08 State Budget
This afternoon Governor Arnold SI hwarzenegger released his ambitious 2007-08 Proposed
Budget with a major focus on reducing the state's operating deficit and continuing the investment
in California's infrastructure.
The key component of the Governor's plan is the elimination of the state's ongoing structural
operating deficit projected at more than$16 billion in 2004. Counties will recall that, after the
passage of the 2006-07 budget, the estimated operating deficit was about$5 billion. The
Governor's 2007-08 plan limits growth in General Fund spending to 1 percent, the lowest rate of
growth in five years, according to the Department of Finance. It also establishes a reserve of
$2.1 billion and directs$1.6 billion in pre-payments to the Economic Recovery Bonds (ERBs).
The Department of Finance estimates that, as a result of this proposed pre-payment and the
previous pre-payments of$7.4 billion, the ERBs will essentially be repaid in full by August of
2009, 14 years ahead of schedule.
The Governor also proposed the second phase of his Strategic Growth Plan, outlined in further
detail below. The second phase focuses on the critical infrastructure needs the 2006
infrastructure bond plan left unaddressed. This component of the Strategic Growth Plan fulfills
the comprehensive ten-year infrastructure financing plan to rebuild California begun last year.
To review the Governor's plan, please visit the Department of Finance website:
www.ebud eg t.ca.gov/. Please note that printed, bound copies of the Budget Summary and
Governor's Budget are no longer available.
Budget Aggregates
The Governor's 2007-08 proposed budget provides a General Fund spending plan of$103.141
billion, representing an increase of$1.004 billion, or a 0.97 percent increase over the prior fiscal
year. Nearly 90 percent of the proposed budget is confined to only three program areas: K-12
and higher education (51.0 percerit); health and human services(29.0 percent); and corrections
and rehabilitation (9.7 percent). State General Fund expenditures have grown by a total of$32.1
billion, or a cumulative 29.4 percent, since 2000-01.
I
I
1
I
The proposed budget anticipates$101.278 billion in General Fund revenues, representing an
increase of$6.759 billion, or a 7.2 percent increase over last year. (This is a historic revenue
level; 2007-08 marks the first time projected state revenues will top$100 billion.) Three primary
revenue sources constitute nearly 95 percent of General Fund revenues: personal income tax
(54.9 percent); sales tax(29.0 percent); and bank and corporation tax(10.7 percent). State
General Fund revenues have grown by a total of$23.4 billion, or a cumulative 29.4 percent since
fiscal year 2000-01.
The budget proposes to deposit$2.046 billion into the Budget Stabilization Account, established
by Proposition 58, and use half of those revenues($1.023 billion)to pay a portion of the
Economic Recovery Bond debt. A final reserve amount of$2.085 billion is included to guard
against unforeseen expenditure inlcreases and revenue shortfalls, representing 2.1 percent of
estimated 2007-08 revenues.
Recent General Fund Revenues and Expenditures
$in billions
2000-01 1 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Revenues 76.9 77.1 79.3 77.6 81.7 87.7 94.5 101.3
Expenditures 79.7 78.4 78.8 78.0 82.3 90.3 102.1 103.1
Figures do not include one-time carryover balances in the revenue data or reserves in the expenditure data.
2007-08 General Fund Expenditure Estimates by Category
$ in millions
Expenditure Category $ %
K-12$Higher Education $52,614 51.0
Health & Humari Services 29,875 29.0
Corrections and Rehabilitation 10,043 9.7
Other 10,609 10.3
TOTAL $103,141 100.0
2007-08 General Fund Revenues Estimates by Category
$ in millions
Revenue Category $ %
Personal Income Tax $55,598 54.9
Sales Tax 1 29,347 28.9
Bank and Cor oration Tax 10,816 10.7
Other 5,517 5.5
TOTAL $101,278 100.0
2007-08 General Fund Budget Summary
$ in millions
Car Over Fund Balance $3,198
Revenues and Transfers $101,278
TOTAL REVENUES $104,476
1
TOTAL EXPENDITURES $103,141
1
Fund Balance 1 $1,335
Liquidation of Encumbrances $745
Special Fund for Economic Uncertainties $590
Budget Stabilization Account $1,495
Total Available Reserve $2,085
I
I
2
I
I
California Strategic Growth Plan
Phase two of the Governor's Strategic Growth Plan (SGP) includes additional funding for
infrastructure improvements through 2016, including $29.4 billion of new general obligation bonds
and $13.9 billion of additional lease-revenue bonds and self-liquidating revenue bonds. The SGP
proposes that the new general obligation bonds be placed on the ballot in the 2008 and 2010
elections as shown below:
Strategic Growth Plan
Election Year Proposals
General Obligation Bonds
$ in billions
2008 2010 Totals
Program
Education: K-12 $6.5 $5.1 $11.6
Education: Higher Ed 7.2 4.3 11.5
Water Supply I 4.0 4.0
Judiciary 2.0 2.0
Other Public Service 0.3 0.3
Infrastructure
Total $20.0 $9.4 $29.4
The proposed new funding sources are allocated as follows:
Strategic Growth Plan
2006-2016
$ in billions
Pro osedlNew Bonds Other Funding Sources
Program General Lease Self- Existing*** New**** Total
Obligation Revenue* Liquidating
Revenue**
Corrections 1 9.5 0.3 1.1 10.9
Education: K-12 11.6 17.4 29.0
Education: Higher 11.5 0.1 10.1 21.7
Ed
Flood 4.0 2.0 25.0 31.0
ControlMater
Supply
Transportation 87.3 17.0 104.3
Court Facilities 2.0 2.0 4.0
Other Natural 3.1 3.1
Resources
Housing 2.9 2.9
Other Public 0.3 2.3 2.2 4.8
Service
Infrastructure
Totals $29.4 $11.9 $2.0 $148.2 $20.1 $211.6
'Lease-revenue bonds are supported by rental payments that result from leasing the financed asset.
-Self-liquidating revenue bonds are supported from a new revenue stream generated by the financed asset.
-Existing Funding Sources column includes already authorized bonds, special funds, General Fund, and
estimated federal and local matching dollars from existing shared funding programs.
I
3
I
i
I
i
****New Fund Sources column includes estimated additional funding from public-private partnerships and
new state-local shared programs.
Corrections Reform. A major component of the second phase of the SGP is a comprehensive
corrections reform package. Elements of the proposal contemplate policy shifts that would have
a significant impact on county operations. For further details on the broad scope of the
corrections reform plan, please refer to the Administration of Justice section of this document.
K-12 Education. The SGP proposes$11.6 billion of additional general obligation bonds to
provide funding for schools through 2012-13. These bonds are proposed to fund new school
construction ($2.931 billion in 2008, $2.13 billion in 2010), school modernization ($1.539 billion in
2008, $1 billion in 2010), charter schools($1 billion each in 2008 and 2010), and career technical
education facilities($1 billion each in 2008 and 2010).
Higher Education. The Governor's SGP proposal for higher education includes$2.8 billion ($2.7
billion general obligation and $70 million lease-revenue bonds)for University of California to help
deal with increased enrollment, as well as additional funding for facilities and research; $2.7
billion (general obligation bonds)for California State University to help deal with increased
enrollment; and$6 billion (general obligation bonds)for funding assistance to California
Community Colleges.
Flood Control and Water Supply.The Governor's Strategic Growth Plan proposes an additional
$5.95 billion in bonds for water storage and conveyance, including:
■ Water Storage: $4.5 billion, of which $500 million in general obligation bonds will be
dedicated for grants to augment local investment in groundwater storage projects, providing
an additional 500,000 acre-feet of annual yield.
■ Delta Sustainability: $1.0 billion.
■ Water Resources Stewardship: $250 million to implement of a court settlement on the
Klamath River and provide for elements of Salton Sea restoration, contribute to restoration
efforts on the San Joaquin River, and supplement restoration projects on the Sacramento
River and its tributaries as well as the Delta.
■ Water Conservation: $200 million to augment$1 billion in Proposition 84 funding supporting
the Integrated Regional Water Management Program. The proposed funding will provide
water conservation grants to local communities that coordinate the planning of their shared
water resources.
Transportation. The significant transportation component of the SGP's second phase is
proposed legislation that would (1)authorize public-private partnerships to bring substantial
private capital and savings to transportation projects and (2) authorize the use of design-build.
Court Facilities. The Governor's budget proposes$2 billion in general obligation bonds to fund
court facility infrastructure. Additional details regarding this proposal are included in the
Administration of Justice section.
Other Natural Resources. Investment in other natural resources programs is provided from
Proposition 84 allocations, of which $1.1 billion is allocated in 2007-08. See the Agriculture and
Natural Resources section of this document for more information.
Housing. Investments reflect the approval of Proposition 1C, which provides$2.85 billion for
housing-related programs and the final allocations from Proposition 46, estimated at$344.4
million during 2006-07 and 2007-08. Please see the Housing, Land Use and Transportation
section of this Bulletin for more information.
Other Public Service. The SGP proposes$2.3 billion (lease-revenue bonds)and $300 million
(general obligation bonds) in addition to$2.2 billion in special funds to address a number of the
state's critical facility needs:
i
4
i
I
I
I
■ Department of Forestry and Fire Protection: $600 million to replace or renovate 75
emergency response facilities l, including fire stations, air attack bases, and conservation
camps.
■ Department of Mental Health: $500 million for additional capacity to met the requirements of
Jessica's Law.
■ Department of Justice: $400 million for a new DNA laboratory.
■ Seismic Retrofit of Existing State Buildings: $300 million to complete the renovation of 29
facilities.
■ State Special Schools: $100 million to replace or renovate classrooms and dormitories at the
School for the Blind and the School for the Deaf.
Statewide Issues
Economic Recovery Bond Pre-Payment. Voters authorized the sale of$15 billion in Economic
Recovery Bonds(ERBs)when they approved Proposition 57 in March 2004, of which the state
has issued about$11 billion.At the same time, the electorate also passed Proposition 58, which
created a reserve in the General Fund called the Budget Stabilization Account(BSA). Up to$5
billion of the BSA would be used to repay the ERBs.
Prop. 57 and its implementing statutes also rejiggered the way sales and property taxes are
allocated among local governments and schools. Under the rearrangement, called the Triple Flip,
1/4 cent of the local sales tax wast replaced with an identical amount of statewide sales tax, which
is now dedicated to the repayment of the ERBs. Also, under the terms of the deal, a portion of
schools' property taxes were transferred to cities and counties to backfill the loss of sales tax and
the General Fund then backfills schools for their reallocated property taxes.
Due to early pre-payment of the ERBs in previous budget years and the fact that$3.7 billion of
the ERBs have not been issued, the originally rescheduled ERB retirement date of July 2023 was
moved up to January 2010 as of last year's state budget. This year, the Governor's budget
proposes to further accelerate the payment of the ERBs with an additional$595 million of
General Fund money. Under this plan, the ERBs would now be effectively paid off by August 1,
2009, saving the state interest money and freeing funds in future years that otherwise would have
to be used for repayment. When the bonds are repaid, the 1/4 cent sales tax will be returned to
cities and counties, and the prope�ty tax backfill will be returned to schools via ERAF.
I
Unspecified Budget Reform. Worried that the budget's structural deficit could re-emerge next
budget year, the Governor's proposal includes a notice that the state must find ways to keep
spending in check in the long run and reduce the volatility of state revenues.
Permanently Closed Tax Loophole. The Governor's budget proposal anticipates$35 million in
revenues by making permanent the use tax on boats, vehicles, and planes brought into the state
less than one year after their purchase.
State General Fund Unallocated Reductions. As in past years, the Administration plans to
achieve$100 million in unallocated General Fund reductions. These cuts will be made throughout
the year as the Department of Finance works with Agency Secretaries and other cabinet
members. Details of the reductions will be reported to the Legislature, as they have been in the
past.
Administration of Justice
Corrections Reform. As previewed in late December, the Governor's 2007-08 spending plan
contains a bold reform proposal that seeks to address overcrowding and recidivism in both the
state and local corrections systems. Given the breadth of the proposed changes and the
significance of the policy implications behind those changes, counties will need to engage quickly
5
I
I
i
and seriously in these discussions as the budget moves forward. Key provisions of the reform
package include:
■ Local Adult and Juvenile Detention Facilities: $5.5 billion ($4.4 billion in lease-revenue bonds
or state-funded local debt service payments plus$1.1 billion in local matching funds)to
expand detention facility capacity statewide. This investment is expected to yield 45,000 new
jail beds and 5,000 new beds:forjuvenile offenders.
Of the new adult beds, approximately half would be dedicated to expanding local jail capacity
and, subject to changes in sentencing statutes, the other half to accommodate low-level
inmates who would serve sentences of up to three years in county facilities. The Governor's.
budget document recognizes that out-year operating costs in these facilities are not
addressed, but commits to ongoing discussion with the Legislature and local officials to
resolve this very significant issue.
On the juvenile side,the reform proposal contemplates shifting a population of juvenile
offenders to county control and supervision beginning July 1, 2007. This realignment would
allow the Department of Juvenile Justice (DJJ, formerly the California Youth Authority)to
focus its resources and services on the most serious male juvenile offenders in the state.
Under the Governor's plan, DJJ would no longer house female offenders in its institutions and
would stop intake of certain low-level, non-violent male offenders. To fund the new local
programming and housing responsibilities,the budget plans to allocate$53 million to
counties on.a block-grant basis for 2007-08. In addition,the budget proposes to eliminate of
the Juvenile Justice Community Reentry Challenge Grant, a program that was funded
primarily to serve DJJ parolees at$10 million in the 2006-07 budget.
■ Re-entry facilities: $1.6 billion in lease-revenue bonds and/or contracting authority to provide
beds for transitional programming and services for inmates nearing parole. The reentry
facilities represent a key component in addressing recidivism, with services focused on
ensuring parolees'successful reintegration into the community.
■ Expanded state prison capacity: $2.7 billion ($0.3 billion in state general funds, $2.4 billion in
lease-revenue bonds)to add over 16,000 in new prison beds and address infrastructure
issues at existing prison facilities.
Sentencing Commission. Also contemplated under the Governor's corrections reform plan is
the creation of a California Sentencing Commission. The proposed budget includes$457,000 to
fund the permanent commission, which would be composed of the Attorney General, the
Secretary of the Department of Corrections, and 15 other members appointed by the Governor.
The gubernatorial appointees would include representatives from the Legislature and various
interest groups, including law enforcement and victims'advocates.
New Resources for County Probation. In a very promising new initiative,the Governor's
budget dedicates $50 million in local assistance grants to support adult supervision services for
the 18-to-25 cohort. Funding for this initiative, which will be modeled after the successful Juvenile
Justice Crime Prevention Act, is expected to grow to$100 million in 2008-09.
The Governor's budget also includes$2 million in Child Welfare Services funding,which will be
targeted to County Probation Department System Improvement Plan activities for juvenile justice
children placed in out-of-home care. (For more details on this item, please refer to the Health and
Human Services section of this document.)
I
6
I
i
Other Public Safety Assistance Programs. Although the Governor's budget documents do not
provide this level of detail, it is ours understanding that the proposed 2007-08 spending plan
maintains current-year levels of funding for the following programs:
■ Citizens' Option for Public.Safety(COPS)
■ Juvenile Justice Crime Prevention Act (JJCPA)
■ Juvenile Probation Core Services
■ Rural and Small County Sheriffs' Program
■ Mentally III Crime Reduction Grants
■ Local Detention Facility Funding (new booking fee paradigm)
■ Methamphetamine Abatement Efforts
■ Standards for Training and Corrections
■ Vertical Prosecution Programs
Court Facilities. The Governor's spending plan recognizes the capital outlay needs of the
judicial branch and therefore proposes$2 billion of new general obligation bonds to improve
existing and construct new court facilities across the state.
The Governor's budget proposal anticipates leveraging private funding with the bond proceeds
through private-public partnerships, including such arrangements as property exchanges (i.e.,
using land assets to permit construction of new facilities in less prominent locations); co-locating
revenue-generating commercial space in court facilities; and design-build-operate projects.
Judicial Branch. The Governor's budget includes $3.7 billion ($2.3 billion of which is state
general fund)for overall judicial branch functions. Proposed court funding augmentations of note
include:
■ $27.8 million in 2007-08 and $74.3 million in 2008-09 to provide 100 new judgeships
over a two-year period beginning in April 2008. These judgeships, which would be in
addition to the 50 new judgeships approved and created in 2006, are conditioned upon
the enactment of legislation authorizing the new positions.
■ $17.4 million to support court-related workload increases associated with the
Conservatorship and Guai dianship Reform Act of 2006 (AB 1363, Jones).
Comprehensive Sex Offender Management Plan. The Governor's budget proposal contains
several elements to: (1) address placement and housing needs of sex offenders; (2)advance the
recommendations of the Governor's HRSO/SVP Task Force; and (3) implement Jessica's Law
(Proposition 83 of 2006)and other legislative measures that enacted new mandates regarding
the containment and management of sex offenders. Those elements include:
■ Significant resources to implement an overall Comprehensive Sex Offender Management
Plan ($30.4 million in 2006-07 and $122.8 million in 2007-08);
■ $6 million to be administered through the Office of Emergency Services for Sexual
Assault Felony Enforcement Teams.
It should be noted that the vast majority of the resources provided for the Comprehensive Sex
Offender Management Plan are directed to support state-level activities within the Department of
Corrections and Rehabilitation and the State Department of Mental Health.
State Criminal Alien Assistance Program. The Governor's budget assumes another year of
underfunding of the federal State Criminal Alien Assistance Program (SCAAP), which provides
reimbursement of state and local governments' costs related to detaining undocumented
criminals. The Administration reiteirates its intention to aggressively pursue maximum funding for
this program.
I
7
Department of Justice. Of interest to counties, the Governor's budget includes proposed
augmentations to allow the Department of Justice to address workload demands imposed by
Proposition 69, the DNA Fingerprint, Unsolved Crime and Innocence Protection Act. In addition,
the budget contains$2 million in funding for the DNA Identification Fund to provide automated
fingerprint verification systems to law enforcement agencies across the state. Funding also is
proposed to establish a satellite office in southern California to provide training to state and local
crime laboratory personnel. Also notable is the Governor's inclusion of funding in his Strategic
Growth Plan to expand and relocate the state's DNA lab—currently sited in Richmond—to
ensure greater capacity and functionality.
Agriculture and Natural Resources
Climate Change. The Governor reiterated his commitment to addressing the effects of climate
change and greenhouse gases by proposing a variety of appropriations within different agencies
in his 2007-08 budget. Most of his climate change proposals spring from the mandate set forth in
the California Global Warming Solutions Act(AB 32, Statutes of 2006), which requires the state to
reduce greenhouse emissions to 1990 levels. The Governor's climate change strategy
encompasses not only the California Environmental Protection Agency, but also the Department
of Forestry and Fire Protection, the Department of Water Resources, the Energy Commission,
and the Public Utilities Commission, to name a few.
To begin, he proposes spending$35.8 million from various funds and dedicating 126 positions to
implementing AB 32. Other mechanisms to address climate change in the proposed budget
include applying one-time funding of$31.5 million in incentives for alternative fuels and vehicles,
appropriating $90 million in ongoing grant funding to.reduce emissions from heavy-duty, diesel-
powered vehicles and equipment(Carl Moyer Program), and utilizing $12 million to implement the
Green Building Action Plan and crbate a market-based compliance program to reduce emissions.
Flood Control and Water Supply. The Governor's budget has several sources of funding for
levee repair and flood management, most of which are derived from Proposition 1 E and 84 bond
proceeds. In fact, the state's commitment of General Fund money to flood control efforts will
decrease in 2007-08, with the Strategic Growth Plan bond funds filling in the gaps. Some of
these general fund cuts include a decrease of$325 million for AB 142 levee repair, a$200 million
reimbursement to the state for previously expedited levee repair, and the expiration of$100
million in one-time funding for flood control subventions in the Department of Water Resources.
The Governor proposes to spend $629.9 million in combined funding from Proposition 1 E,
Proposition 84, and Proposition 13 bond funds and from AB 142, and add 75 new positions to
allow the continued identification and repair of critical levee sites, provide subventions to help
local governments protect their communities from flooding, and continue development of the
state's strategic flood management capability.Also, $37 million in funding from Propositions 1 E
and 84 will be dedicated to five flood control capital projects: Mid-Valley Area Levee
Reconstruction, South Sacramento County Streams, American River Watershed (Folsom Dam
Raise), American River Watershed (Bridge Element of Folsom Dam Raise), and American River
Flood Control (Natomas Features land additional feasibility studies).
Water Quality. The Governor has proposed using $8.5 million ($4.5 million in ongoing federal
funds and a$4 million, one-time appropriation from the Waste Discharge Permit Fund)to
enhance existing water quality efforts. These funds will be used to expand the Water Board's own
monitoring activities and integrate existing monitoring data collected by state and local agencies
into the Water Board's Surface Water Ambient Monitoring Program.
I
I
I
I
I
8
I
I
Williamson Act. The Governor's,2007-08 budget proposal includes$39.1 million for Williamson
Act contracts, a$500,000 decrease from last year.At press time, the Department of Finance
indicated to CSAC that the reduction merely reflected a reduction in the number of active
Williamson Act contracts and did not represent a cut to the program.
Sierra Nevada Conservancy. The Governor proposes the expenditure of$17.5 million in 2007-
08 for the ongoing operation and activities of the Sierra Nevada Conservancy.
Fire Protection. The Governor's proposed 2007-08 budget proposes to issue$600 million in
new bond funding for the Department of Forestry and Fire Protection to replace or renovate 75
emergency response facilities, including fire stations, air attack bases, and conservation camps.
Elections
The Governor's proposed 2007-08 budget includes$10.4 million in federal funds to continue
implementing the federal Help America Vote Act(HAVA). Of these funds, $6.5 million will be used
to implement the new federally required VoteCal voter database system, $1.1 million in new
federal funds for election assistance to disabled individuals to be allocated to counties on a
competitive basis, $500,000 for on, voter education materials, $462,000 to continue activities
to comply with changing federal voting standards, $180,000 to continue funds to counties for
interim information technology solutions, and continuation of$1.7 million for HAVA administration.
Emergencygm
Manaeent/Disaster Preparedness
The Governor's 2007-08 budget proposal includes a section on preparing for natural and
intentional disasters, and indicates that the Office of Emergency Services has begun contract
negotiations for the creation of a gap analysis to assess the strengths and vulnerabilities of
California's emergency preparedness system. This project is expected to result in budget
proposals within the 2008-09 budget.
Energy
The governor's proposed 2007-08 budget includes an appropriation of$2.46 million to the Public
Utilities Commission for the implementation of the California Solar Initiative, a program to provide
3,000 megawatts of solar energy at full build out.
The proposed budget also appropriates$5.1 million to advance the use of biomass energy
resources pursuant to the Governor's Executive Order setting targets for increased production
and use of bioenergy. The funds will provide grants through the California Department of Forestry
to biomass energy generation facilities and enhance an existing biomass removal program
operated by the California Tahoe Conservancy.
The Governor's proposed 2007-08 budget also includes recommendations to eliminate two
energy-related boards and commissions: the California Consumer Power and Conservation
Financing Authority and the Califolrnia Electricity Oversight Board.
Government Finance and Operations
State Mandates. Several changes would be made to state mandate reimbursements under the
budget proposal. Pursuant to Proposition 1A, the state must repay local agencies within 15 years
for all of the pre-2004 mandates tfj at went unreimbursed, the vast majority of which (about 70%)
is for counties. Last year's state budget made two years'worth of these payments, putting the
state ahead by one year, and this year's proposal calls for no payment on these old mandates,
putting the state back on schedule. In addition, the budget proposes to delay the funding of
I
9
I
I
I
I
• I
I
I
budget year mandates until next yl ar, when actual cost data will be available. These maneuvers
save the General Fund $402.4 million this year.
The 2006 state budget funded prior-year claims for the AB 3632 mandate, plus$52 million for
fiscal year 2006-07. The$52 million was half of the estimated costs for 2006-07 and anticipated
that additional future funding would be provided when actual claims were received. The
Governor's proposed budget for 2007 provides an additional $52 million for the remaining half of
claims for fiscal year 2006-07. Unlike last year's budget, however, no funds are proposed for
fiscal year 2007-08, presumably under the premise that the state's constitutional obligation only
requires it to fund mandates one year in arrears, when actual cost data is supposedly available.
Until now, the state has always reimbursed for estimated costs and"trued up" later.
A recent decision by the Commission on State Mandates found that portions of SB 739(2000)
constitute a reimbursable state mandate. The Governor's proposed budget calls for its repeal. SB
739 extended the authority of the Public Employee Relations Board (PERB) over agency unfair
labor practice and unit determination, but the expected cost savings to create have not
materialized, and, in fact, costs have increased. It is not clear whether the proposed repeal also
extends to provisions of the bill that also expands agency shop agreements.
Lastly, the Governor's budget proposes significant changes to the current mandate determination
process. Currently, the Commission determines whether activities are reimbursable, and at what
level, after they are performed and local governments have already incurred costs. The
Commission has not kept up and continues to fall further behind, delaying reimbursements even
more. Ideally the Commission would make determinations within a year. The Administration
proposes that local governments work directly with the Department of Finance as a way to
streamline and simplify the process. This approach mirrors statements of previous years, and
counties continue to welcome such a change.
Property Tax Administration Assistance. On a briefing call held just prior to the budget
release,Administration officials noted that the Governor's spending plan would not include
funding for counties' property tax administration programs. The state's fiscal analysis showed that
their marginal benefit from this program had been decreased due to the Triple Flip, the VLF swap,
the end of ERAF III, and other effects of Proposition 1A. Under the new structure,the state only
collects 35-37% of increased property tax revenues, so property tax administration assistance is
not in the state's economic interest.
AB 2987—The Digital Infrastructure and Video Competition Act of 2006. The bill authored
by Assembly Speaker Nunez and Assembly Member Levine named the California Public Utilities
Commission (CPUC)as the sole video franchising authority in the state in order to speed the
deployment of television services provided by telecommunications companies. The Governor's
proposed budget allocates$950,000 and 10.3 positions for the CPUC to implement the Act. The
CPUC will use this money to review applications, make annual reports to the Legislature, and to
promote service and quality standards on behalf of ratepayers.
Public Employee Post-Employment Benefits Commission. The budget proposal notes that,
while the prospects are good for local government revenues, growth in pension obligations and
other post-employment benefits such as health care"continues to be an area of concern."The
Governor's budget proposal references his recently created Public Employee Post-Employment
Benefits Commission created to examine what is owed in unfunded retirement benefits—both
pension benefits and other post-employment benefits such as health care—and to recommend
how to best meet those obligations as they become due.
The scope of the Commission includes both state and local governments. It will be comprised of
12 members, six appointed by the.Governor, including the chair, and three each appointed by the
Speaker of the Assembly and the Senate President Pro Tempore. The task of the Commission is,
by the end of 2007, to provide guidance to state and local governments regarding development of
10
I
I
i
individual strategies to deal with these costs. Staff and resources have to be provided by the
Department of Finance; no Commission appointments have been announced yet.
Health and Human Service)
The following is a description of the spending proposals—both reductions and augmentations—
for health and human services programs.
Please note that the Governor's �ealth Care Reform proposal is not reflected in the 2007-08
budget projections and assumptions. The Health Care Reform package is not proposed to be
implemented as part of the 2007-08 state budget. CSAC is still working to obtain additional details
about the fiscal impacts to counties of the proposal. Please recall that there is a $2 billion
"redirection"of county funds.As more information becomes available, CSAC will be providing an
analysis. In the meantime, please refer to the January 9 memo(attached)to the CSAC Health
and Human Services Policy Committee, which contains the key policy highlights of the proposal.
HUMAN SERVICES
CaIWORKs.The Governor's Budget includes a number of changes to the CalWORKs program,
including:
■ Full family sanctions for noncompliance;
■ The elimination of safety net grants for timed-out families not currently meeting federal
participation; I
■ The elimination of safety net grants for child-only cases whose parents disqualified due to
immigration status or fleeing felon or drug felon status (please note that children residing with
non-needy caretakers or relatives are NOT impacted by the proposal);
■ A proposed suspension of the July 1, 2007 CalWORKs Maximum Aid Payment COLA which
reflects$140.3 million in savings.
The Administration estimates a General Fund saving of nearly$450 million from the proposals
listed above. The budget maintains funding for services and administration at current levels.The
budget assumes an average monthly caseload of 412,574 and projects an 11.7 percent decrease
due primarily to the changes outlined above.
Additionally the budget proposes ;ome funding shifts:
■ $16 million reduction to counties' single allocation funding, potentially to be backfilled by fraud
recovery incentive funds previously earned and allocated but not spent;
■ The use of Proposition 98 funds to replace federal TANF funds for Stage 2 child care for
CalWORKs families,with an estimated savings of$268.9 million annually. By utilizing
available Proposition 98 resources in lieu of federal TANF funds, a like amount of TANF
funding can be redirected to offset non-Proposition 98(General Fund)costs. This proposal
does not require a reduction to the CalWORKS program, nor does it reduce child care
benefits.
In the area of CalWORKs Child Care, the budget proposes total funding of$501.2 million, an
$88.3 million increase over the current year, for Stage 1. This amount primarily reflects an
assumed increase in caseload based on the proposed policy changes. Absent the policy
changes, there is an estimated$2.2 million reduction to services and a$3.4 million increase to
administration. The child care reserve for 2007-08 totals$50.1 million.
The proposed funding source changes for Child Care are intended to reduce the probability of
TANF related penalties associatedlwith failure to meet federal work participation requirements.
i 11
i
Foster Care. Total funding for foster care payments in 2007-08 is expected to be$1.5 billion,
which is $44 million less than the 2006-07 appropriation. Caseload is projected to grow slightly to
74,965, an increase of less than one percent.
Child Welfare Services. Total funding for child welfare services is$2.4 billion ($714 million
General Fund) in 2007-08, a decrease of$53 million total funds ($52 million General Fund)over
the 2006-07 appropriation.
The 2006-07 budget requires DSS to develop a new methodology for budgeting the child welfare
services basic program. However,lthe January budget does not reflect the new methodology;
funds will be reflected in the May Revise.
The budget includes$16.1 million total funds ($12.7 million General Fund)to continue funding for
CWS Outcome Improvement Project County System Improvement activities. It also includes
additional funds($2 million)for County Probation Department System Improvement Plan
activities for children in the juvenile justice system placed in out-of-home care that are tied to the
federal requirements.
The budget also includes an additional$12 million General Fund for the Transitional Housing
Program to increase the number of counties providing transitional housing services for current
and former foster youth.
In-Home Supportive Services. The budget proposes to limit the state share in wages and
benefits to the level in effect on January 10, 2007.According to the Administration, the proposal
is effective immediately. The Administration believes that they have the authority under current
law to proceed without statutory changes. This is proposed to be a permanent change in the
state's wage participation policy. To the extent that counties have contracts in place with wage or
benefit increases beyond this date, counties would be responsible for the full costs of that wage
and/or benefit increase. The state believes this proposal will save$14.1 million in 2007-08. Note
that absent this proposed policy change,the statutory"trigger"would have been met to increase
state participation in wages and benefits to$12.10.
The budget includes$4.4 billion ($1.4 billion General Fund)for IHSS services and assumes that
IHSS caseload will grow to 395,100 —an increase of 5.4 percent. The budget also assumes $87
million in General Fund savings from the IHSS Plus Waiver from allowing the state to claim
additional Medi-Cal funds for IHSS Residual cases.
Supplemental Security Income/State Supplementary Payment. The budget does include the
January 2008 federal and state coi t of living adjustments (COLA), for$216.7 million General
Fund.
Child Support. The Governor's Budget proposes$194.9 million General Fund to fund local
agency administrative costs. The Budget also continues to provide$20 million in federal funds to
be matched by$10 million in voluntary county funding for the support of local child support
agency staff and program services.
The Governor's budget proposes to backfill the loss of federal matching incentives to the Child
Support program to avert a$67.6 million reduction to the program. The Administration is
proposing to spend $23 million General Fund in order to draw an additional$44.6 million of
Federal Financial Participation (FFP)to keep the program whole. Included in the Department of
Child Support Services(DCSS) budget documentation is a statement that in budget year plus one
(2008-09)the department will request$31 million General Fund to backfill the loss of
performance incentive revenue. .
I
12
I
I
The Governor's budget reflects California's request for federal certification of the statewide child
support automated system. Please recall that since 1998 the State has paid $220 million each
year in federal penalties for failurelto have a single statewide child support automation system. It
is assumed that there will be NO PENALTY owed to the federal government for fiscal year 2007-
08. If the federal government approves the certification, they will hold future penalties in
abeyance. Once the system is certified, California is eligible to receive a refund of 90% of the
Federal Fiscal Year(FFY)2006 penalty of approximately$198 million. Please note that the final
certification is likely several years off.
Adult Protective Services. State,funding for the Adult Protective Services program remains
virtually the same.The budget provides$35 million ($10.9 million General Fund) in County
Services Block Grant funds and $88.3 million ($50.1 million General Fund)for adult protective
services. Note that some counties use CSBG funds for APS.
HEALTH
Effective July 1, 2007,the budget provides for the creation of two new state departments—the
Department of Public Health and Department of Health Care Services—from the current
Department of Health Services. This endeavor is budget neutral.
Medi-Cal.The Governor's Budget includes$37.4 billion ($14.6 billion General Fund), a net
increase of$2.3 billion from the Budget Act of 2006. The General Fund increase reflects growth
in caseload and cost per eligible person. Average monthly caseload is forecast to be 6.7 million
persons in 2007-08, an increase of approximately 107,400 people compared to 2006-07.
According to data collected for theI2005-06 federal fiscal year(most recent information available),
California served approximately 17.7 percent of state residents. However, California has one of
the lowest average cost-per-recipient rates in the nation: $5,626 per beneficiary, versus a national
average of$7,220 per beneficiary.
■ Enrollment. The budget includes$35.9 million ($16.9 million state GF)for implementation of
SB 437 Medi-Cal/Healthy Families enrollment streamlining activities and subsequent
enrollment increases.
• Medicaid Citizenship Requirements.The budget includes$600,000 and 4.7 positions at
DHS to focus on implementing the new requirements. No funding is provided for county
workload increases due to the new citizenship requirements;the budget notes that"due to
pending federal guidance, the Governor's Budget does not include costs for county level
activities nor for any Medi-Cal caseload changes."We anticipate that there will be discussion
of the citizenship requirements during budget hearings and would expect to see a funding
estimate in the May Revision, if not before.
Healthy Families Program. Healthy Families Program expenditures are projected to grow to
$1.1 billion ($392 million General Fund).in 2007-08, an 8.9 percent increase. The increase is
primarily the result of enrollment that is projected to grow to 915,600 in 2007-08 for a total
increase of 73,9000 children.
PUBLIC HEALTH
The Governor's proposed budget includes$2 million General Fund to provide additional local
assistance funding to increase surveillance staff for HIV reports pursuant to Chapter 20, Statues
of 2006 (SB 699). Please recall that CSAC supported SB 699. The Budget also includes funding
to enhance the state's response capabilities to food borne illnesses, Hospital Infectious Disease
Control Program, Genetic Disease Testing, licensing and certification.
ALCOHOL AND DRUG PROGRAMS
Substance Abuse and Crime Prevention Act of 2000(Proposition 36).As the budget relates
to Proposition 36,the Budget Act of 2006 included$25 million for the Substance Abuse Offender
Treatment Program (OTP), which 'sought to enhance treatment services for Proposition 36
I
13
I
i
offenders. The Budget Act of 2006 also reauthorized funding for Proposition 36 on the condition
that the program reforms advanced by the Administration were included. These reforms—in SB
1137, Statues of 2006—included flash incarceration, improved judicial oversight, and expanded
options for offender managementf However, a suit challenging the constitutionality of these
reform was filed immediately after,;enactment of the bill, and the court has suspended these
reforms by injunction. Resolution of the legal challenge remains unclear.
The Governor's Budget reduces 2007-08 Proposition 36 funding by$60 million and utilizes this
funding to provide an increase of$35 million to the OTP. This action would yield a savings of$25
million on a one-time basis. The additional funding provided to the OTP will be contingent
upon the court decision that is pending. If the reforms to the initiative agreed to by the
Legislature are not implemented, the Administration will revise its budget proposal in the May
Revision to remove all remaining Proposition 36 funding and transfer it to the OTP.
MENTAL HEALTH
Mental Health Services to Special Education Students(AB 3632). The 2006 state budget
funded prior-year claims for the AB 3632 mandate, plus $52 million for fiscal year 2006-07. The
$52 million was half of the estimated costs for 2006-07 and anticipated that additional future
funding would be provided when actual claims were received. The Governor's proposed budget
for 2007 provides an additional$52 million for the remaining half of claims for fiscal year 2006-07.
Unlike last year's budget, however, no funds are proposed for fiscal year 2007-08, presumably
under the premise that the state's iconstitutional obligation only requires it to fund mandates one
year in arrears, when actual cost data is supposedly available. Until now,the state has always
reimbursed for estimated costs and revised later.
i
Early and Periodic Screening, Diagnosis,and Treatment(ESDPT). Recall the 2006-07 budget
made a permanent General Fund transfer for the Early and Periodic Screening, Diagnosis, and
Treatment(ESDPT) Program from the Department of Health Services Budget to the Department
of Mental Health. In 2006-07,there is a General Fund increase of$302.7 million that includes a
deficiency request of$243 million ifor unpaid county claims from prior years.
In 2007-08, there is an increase of$92.7 million (General Fund) and$95.7 million (federal)for
increases in the cost and volume of claims, including the effect of the Mental Health Services Act
(Proposition 63) on EPSDT service' s provided.
The Department of Finance is reviewing EPSDT estimating methodology and will have a proposal
to improve the methodology in the spring.
Integrated Services for Homeless Adults with Serious Mental Illness.The Governor's Budget
proposes eliminating the Integrated Services for Homeless Adults with Serious Mental Illness
Program, resulting in a$54.9 million (General Fund) savings, because similar services are
available through Proposition 63. The program provides funding to local mental health agencies
and provides comprehensive services to individuals who are homeless or at risk of homelessness
or incarceration and have serious mental illness. Increases in the EPSDT program in both current
and budget year allow for the elimination of the program while still meeting the Proposition 63
maintenance-of-effort requirements.
It is unclear whether the use of Proposition 63 funds for this purpose is legal given the Act's
language regarding supplantation of funds.
Mental Health Services Act(Proposition 63). It is projected that Mental Health Services Fund
revenues will increase by$312.1 million in 2006-07 and $495.7 million in 2007-08, for a total
estimate of$1.6 billion in 2006-07 land$1.8 billion in 2007-08. Funds are continuously
appropriated to the Department of!Mental Health for county implementation.
I
14
No changes in state implementation expenditures are proposed.Additional staff and contract
funding will be addressed in the Miay revision of the budget.
Proposition 46. Proposition 46 is the Housing and Emergency Shelter Trust Fund Act passed by
voters in November 2002. As part of the Initiative on Homelessness, the state Department of
Housing and Community Development(HCD) had directed funds that together with California
Housing Finance Agency funds and Proposition 63, would provide homes with supportive
services for seriously mentally ill homeless individuals and families. The funds can be used for
foster youth and veterans.Allocations are expected to decline in 2007-08 because HCD has
accelerated the award of funds and most categories of funding are fully allocated.
REALIGNMENT
Realignment revenues in 2006-07lare estimated to total $4.58 billion ($2.8 billion in sales tax
revenues and $1.78 billion in Vehicle License Fees). Realignment revenues in 2007-08 are
estimated to be$4.8 billion ($2.9 billion in sales tax revenues and $1.9 billion in VLF).
Indian Gaming
In order to obtain a balanced budget, pre-pay debt, and maintain an ample rainy day reserve, the
2007-08 budget assumes revenues of$506 million from pending Indian gaming compacts. The
administration intends to seek legislative approval of the four Tribal-State Gaming Compacts
ratified by the Governor in August 2006.
Housing, Land Use and Transportation
Transportation Funding: Proposition 42. The Governor supports fully funding Proposition 42
in the proposed budget for fiscal year 2007-08. These resources are projected to provide an
annual total of$1.558 billion allocated as follows: $684 million to the Traffic Congestion Relief
Projects(TCRP), $699 million to the State Transportation Improvement Program (STIP), and
$175 million to the Public Transportation Account(PTA). Pursuant to current law, cities and
counties do not receive any local streets and roads funds from Proposition 42 next fiscal year due
to an obligation to pay back the STIP for funds received in earlier years. Cities and counties will
begin receiving their Proposition 42 allocations again in 2008-09.
Transportation Funding: Proposition 1 B. A major new fund source for transportation is
Proposition 1 B, the$19.9 billion bond approved by the voters in November 2006. The Governor's
budget proposes to appropriate$81.2 billion over the next three years beginning in 2007-08 to
begin implementation of the transportation rtation bond. In addition, $523 million is proposed for
appropriation in 2006-07. The chart below outlines this multi-year plan.
More specifically, the budget proposes urgent action to appropriate$523 million in 2006-07 for
the following purposes: $100 million for Corridor Mobility Projects, $262 million for the STIP, $15
million for Trade Infrastructure, $141 million for the State Highway Operation and Protection
Program(SHOPP), and$5 million for the Local Bridge Seismic Account.
In 2007-08, $2.789 billion is proposed for appropriation, including$600 million for cities and
counties for local streets and roads. The budget proposes$300 million for cities and $300 million
for counties in the last"gap year"from Proposition 42 revenues, as explained under the
Proposition 42 section of this article. There are a number of other appropriations for accounts
slated for appropriation shown in the chart, including $317 million for Corridor Mobility Projects,
$340 million for the STIP, $170 million for the State/Local Partnership, and $9 million for
seismically retrofitting local bridged
In 2008-09, $2.385 billion is proposed for appropriation, including $300 million for cities and
counties for local streets and roads,which would mean$150 million for cities and $150 million for
I
15
I
I
i
• I
counties. Again, there are a number of other accounts slated for appropriation of interest to
counties found in the chart.
In 2009-10, $2.614 billion is proposed for appropriation, including $150 million for cities and
counties for local streets and roads, which would again be shared equally. It is our understanding
that the Administration intends to appropriate$150 million annually each year thereafter to reach
the total of$2 billion slated for cities and counties from Proposition 1 B.
The Governor's support for local streets and roads is evident in this proposal and throughout the
narrative of the budget presented.i The proposed 2007-08 budget accelerates funds for the$2
billion for cities and counties for local streets and roads, appropriating nearly half($900 million) in
the first two years. This proposal is very consistent with CSAC's request to provide a significant
portion of funds in the next fiscal year when we will not receive Proposition 42 funds. The$900
million in funds ensure that cities and counties do not have a lost year of construction and will
assist to equalize funds available for budgeting purposes as Proposition 42 funds begin to flow
again in 2008-09.
SB 1266 (Perata, Chapter 25, Statutes of 2006), which placed Proposition 1 B on the ballot,
includes the formula for allocating the local streets and roads funding to cities and counties and.
outlines categories for eligible projects. However, from numerous meetings with Administration
officials and key legislative staff involved in implementation of Proposition 1 B,we understand that
further implementation legislation may be required. It has been made very clear that
accountability and transparency in the use of these bond funds remain critical. We are currently
responding to requests to define types of projects that it would be appropriate to fund with bond
proceeds. In addition, we have been requested to work on a process for triggering release of the
funds, as well as tasked with identifying potential performance measures to justify the benefits
from the projects funded.
Tribal Gaming Funds. While tribal gaming bonds earmarked to fund various transportation
purposes have not materialized due to continued litigation, $100 million in Tribal Gaming Funds
paid on a cash basis will be transf i rred to the State Highway Account in 2007-08.
Planned Proposition 1 B Implementation
($ in millions)
Allocation Appropriation
2006-07* 2007-08 2008-09 2009-10 2007-08
Corridor Mobility $100 $317 $712 $1,090 $2,119
Transit j -- 600 350 350 1,300
STIP 1262 340 287 408 1,035
Local Streets & Roads --1 600 300 150 1,050
Trade Infrastructure 151 170 255 255 680
SHOPP 11411 403 102 13 518
StatelLocal Partnership I -- 170 166 166 502
Grade Separations -- 55 60. 59 174
Highway 99 -- 28 44 99 171
School Bus Retrofit** 97 96 7 97
Local Seismic j 5 9 13 17 39
TOTAL $,523 $2,7891 $2,3851 $2,614 $7,685
Please note that the data in this chart comes directly from the Governor's Budget Summary 2007-08. There is a
discrepancy in the School Bus Retrofit numbers, which cannot be reconciled at this time. 2006-07 expenditures to
be proposed in separate legislation.
16
I
i
I
Proposition 1 B 2007-08 Local Streets & Roads Proposed Allocation
Registered Maintained
County I Vehicles Mileage Projected Revenue
(1/06) (1/06)
Alameda 1,148,565 476.23 $ 9,375,117
Alpine 2,142 134.96 169,253.00
Amador 51,565 410.84 861,775.00
Butte I 213,457 1,355.93 3,177,089.00
Calaveras 68,056 689.03 1,303,561.00
Colusa 26,148 716.75 1,012,540.00
Contra Costa 860,855 661.16 7,371,083.00
Del Norte 26,392 300.29 542,971.00
EI Dorado 210,235 1,069.06 2,827,562.00
Fresno
661,952 3,599.51 9,167,193.00
Glenn 33,361 863.19 1,233,800.00
Humboldt 138,185 1,205.10 2,427,275.00
Imperial 136,742 2,555.13 3,944,438.00
Ino 1 26,480 1,133.10 1,486,411.00
Kern 610,970 3,299.78 8,435,682.00
Kings 96,339 955.83 1,823,166.00
Lake 81,237 612.95 1,318,839.00
Lassen 36,428 905.25 1,305,012.00
Los Angeles 7,124,506 3,103.55 58,322,759.00
Madera 118,554 1,548.50 2,664,986.00
Marin 226,069 419.91 2,214,518.00
Mariposa 26,698 560.41 839,786.00
Mendocino 105,324 1,018.95 1,962,741.00
Merced 192,141 1,726.96 3,433,122.00
Modoc 13,164 987.40 1,219,031.00
Mono 16,909 684.42 904,863.00
Monterey 329,233 1,239.26 3,935,690.00
Napa 129,323 445.73 1,499,473.00
Nevada 123,614 564.53 1,590,039.00
Orange 2,359,332 306.98 18,498,061.00
Placer 339,201 1,044.20 3,791,565:00
Plumas 34,068 687.96 1,040,876.00
Riverside 1,532,067 2,686.14 14,827,105.00
Sacramento 1,175,643 2,188.47 11,521,730.00
San Benito 53,060 384.84 843,847.00
San Bernardino 1,554,213 2,822.13 15,151,425.00
San Diego 2,456,726 1,907.10 21,058,699.00
i
17
I
i
Registered Maintained
County Vehicles Mileage Projected Revenue
(1106) (1/06)
San Francisco 446,319 850.90 4,396,810.00
San Joaquin 541,429 1,653.70 6,037,289.00
San Luis Obispo 268,119 1,313.14 3,549,170.00
San Mateo 673,858 316.08 5,541,864.00
Santa Barbara 351,810 895.33 3,720,042.00
Santa Clara 1,382,980 684.63 11,414,406.00
Santa Cruz 229,301 599.64 2,442,839.00
Shasta 208,135 1,191.19 2,949,656.00
Sierra 5,460 390.25 483,778.00
Siski ou 63,100 1,360.85 2,025,948.00
Solano 356,003 595.41 3,412,781.00
Sonoma i 455,825 1,386.88 5,076,686.00
Stanislaus 429,197 1,545.37 5,051,248.00
Sutter 86,851 790.08 1,562,545.00
Tehama 64,549 1,089.38 1,729,786.00
Trinity 19,563 699.16 941,966.00
Tulare 317,801 3,057.28 5,905,789.00
Tuolumne 73,841 604.09 1,251,910.00
Ventura 705,761 544.81 6,046,224.00
Yolo 166,557 804.15 2,191,657.00
Yuba 1 61,615 609.09 1,163,512.00
TOTAL 29,247,028 66252.94 $300,000,000.00
Housing: Proposition 1C. Also passed by the voters in November 2006, Proposition 1C
provides $2.85 billion for housing and emergency shelter projects. The budget authorizes the
Housing and Community Development Department(HCD)to award funds totaling$373 million to
the following programs in 2007-08:1$88 million for affordable homeownership programs (this
figure includes$30 million for California Housing Finance Agency (CaIHFA) programs and $15
million each to the California Down'payment Assistance Program and the Residential
Development Loan Program); $140 million for affordable rental housing construction programs;
$40 million for farmworker housing; $95 million for homeless permanent housing construction;
and finally$10 million for homeless shelter housing construction. These are accounts reflecting
continuous appropriations, thus do not require further implementing legislation.
In addition, the budget also proposes to provide$40 million to the Building Equity and Growth in
Neighborhoods (BEGIN) program and$95 million to the Transit-Oriented Development program.
These two programs require annual appropriation by the Legislature.
The budget also includes$145 million for three Proposition 1 C programs, all of which require
further legislative implementation a;nd all of which are competitive grant programs. The budget
contains$100 million for the Regional Planning, Housing and Infill Incentive Account from the
$850 million total included in Proposition 1 C. The proposal explains that this is a competitive
performance-based grant program for critical infrastructure projects that will (1) measurably
increase the supply of infill housing produced as a direct result of the state's investment, (2)
I
18
I
i
encourage efficient land use and development patterns, and (3) ensure a reasonable geographic
distribution of infrastructure resources throughout the state.
There is also a new grant program, which is slated to receive a $15 million award for Affordable
Housing Innovation Grants to be administered by HCD. This program will require a trailer bill for
implementation as well.
Lastly,there is$30 million for Housing and Urban-Suburban and Rural Parks. The proposal
indicates that, "This new program would create incentives to increase housing production by
rewarding local governments with grant funds to create or improve well-designed parks." This
program would be administered by HCD in conjunction with the Department of Parks and
Recreation. The Administration plans to introduce the appropriate trailer bills to implement this
program.
I
In total, the budget would authorize or appropriate$653 million of the$2.85 billion bond for
housing and housing related purposes.
i
i
I
I
i
I
19
I
i
i
FOR IMMEDIATE RELEASE January 10, 2007
i
Contact: Steve Keil, CSAC Director of Legislative Services, 916/327-7500 ext. 521
California Counties React to Proposed State Budget
Local Government Leaders Pledge to Work with the Governor and
Legislators
to Provide the Best Services for Californians
SACRAMENTO—With the release of the Governor's proposed 2007-08 budget today,
and the health care reform proposal Monday, California's counties conveyed
appreciation for Governor Schwarcenegger's ongoing commitment to local government,
but also expressed some conc i rns about cuts and cost shifts to counties that may result.
"We are pleased to see such an ambitious budget proposal from the Governor, which
includes a comprehensive plan for strategic growth," said CSAC Executive Director
James Keene. "This year's budget proposal affects a number of county programs in a
positive way, though details may prove problematic for others, and we look forward to
working closely with the Administration on those issues."
Counties strongly supported the 2006 infrastructure bonds that voters approved in
November, and are eager to start building. The Governor's proposal makes significant
steps to ensure investment in California's infrastructure begins immediately targeting
resources to transportation, housing and critical flood protection.
In addition, California's counties are pleased to see that the Governor and the
Legislature have made health care reform a priority. We look forward to discussions
about expanding access and moving toward universal health care. Counties are the
principal providers for California's health care safety net and are anxious to ensure
continuation of critical health services to the state's most vulnerable populations, while
avoiding a disproportionate shift of costs.
Areas of concern for counties include the identification of funding sources for some key
health and human services programs, including mental health. Additionally, counties will
be active in discussions on the corrections reform package, which contemplates a
number of significant policy changes in both the adult and juvenile corrections systems.
California counties look forward to being active participants in budget discussions with
the Legislature and Administration in the coming months, and will continue to advocate
for adequate funding for the se i ices provided by the state's 58 counties.
"Counties understand that the Governor faces some difficult decisions as he works to
ensure our state's fiscal future," stated CSAC President Frank Bigelow, a Madera
County supervisor. "We are eager to work with the Administration and the Legislature to
ensure that we create viable solutions for all California residents who depend on the
essential services provided by counties."
20
I
I
I
January 9, 2007
i
I
TO: Helen Thomson, Chair, CSAC Health and Human Services Policy Committee
Members, CSAC i Health and Human Services Policy Committee
FROM: Kelly Brooks, CSAC Legislative Representative
Qiana Charles, CSAC Legislative Analyst
Fran Burton, Legislative Consultant
Re: Governor's He 311th Care Reform Proposal
On Monday, the Governor released his health care reform proposal. The proposal outlined three
"building blocks"for the Governor's vision of an accessible, efficient, and affordable health care
system. The plan calls for the elimination of the hidden tax that every insured Californian pays to
subsidize the uninsured. The plan also calls for individuals, government(including counties),
doctors and hospitals, insurers and employers to equally share in the responsibility for health care
reform.
Please note that a number of elements of the proposal remain unclear. Staff is trying to get
additional detail.As more information becomes available, we will share with counties
immediately.
The following is a summary of the major elements in the Governor's plan.
PREVENTION, HEALTH PROMOTION,AND WELLNESS
The Governor proposes to implement a"Healthy Action Incentives/Rewards" programs to
encourage and promote healthy behaviors. The action plan would reward Californians for
participating in healthy behaviors and lifestyles that are shown to both reduce the burden of
disease and are cost-effective. All health plans and insurers will be required to offer a health
benefit package(s)that includes incentives/rewards programs including premium reduction, gym
memberships or weight management programs. The Governor's plan also addresses the need to
reduce medical errors and health care acquired infections, smoking cessation, and diabetes and
obesity prevention.
COVERAGE FOR ALL CALIFORNIANS
The Governor's proposal requires that every Californian secure health coverage for themselves
and their dependents and contribute to paying for their coverage(known as an individual
mandate). In turn, the proposal will expand Health Families and Medi-Cal for all children in
families earning under$60,000 and adults. Subsidies to families will be provided through a new
purchasing pool managed by the Managed Risk Medical Insurance Board. The proposal
assumes that counties will be responsible for providing health care for undocumented persons
since the proposal will not extend coverage for the state's undocumented population. Finally,
employers with more than 10 employees that are not providing health care to their employees
would be required to contribute 4%�of payroll. Employee and employer contributions will be
deposited into the new purchasing,pool.
AFFORDABILITY AND COST CONTAINMENT
The proposal also identified short and long term cost containment measures. The Governor's
plan would enhance insurer and hospital efficiency and enhance tax breaks for individuals and
employers for purchasing insurance. The plan also calls for the state to leverage the its
purchasing power through Medi-Cal. The plan proposes to reduce regulatory barriers. By 2010
the Governor plans to improve patient safety through universal e-prescribing.
FISCAL IMPACTS j
The proposal includes a$4 billion increase in Medi-Cal reimbursement rates for providers.
I
21
i
I
I
i
i
i
i
I
The Administration is proposing that providers contribute 2%of their gross revenues to the state
to assist with paying for the proposal. Hospitals would contribute 4% of their gross revenue for the
same purpose. Please note that to the extent counties are providers or operate hospitals, they
would be impacted by these contributions. This new contribution is based on all revenue—not
just Medicaid revenue.
The Governor's documents indicate that counties would be required to"redirect" $2 billion for the
health care expansion. It is not clear what funds are being redirected and what they would be
used for under this proposal.At this point we have been unable to get a clear answer from the
Governor's staff. It sounds like it may be realignment funds; however this has not been confirmed.
Obviously, any redirection of realignment funds would dismantle the entire realignment scheme—
affecting indigent care, public health, public hospitals, social services, and mental health.
Please also note that yesterday the Governor released his CalWORKs package, which calls for a
number of changes to the program. The proposal eliminates post-60 month safety net grants for
child-only cases(children of undocumented parents, children of barred felons and children who
are cared for by grandparents andlother family members). This proposal impacts health care for
this group of children. When children are taken off of CalWORKS they can lose their Medi-Cal
eligibility unless they are found eligible for another Medi-Cal aid category. As such, some
children will lose their health care overage.
I
I
I
I
22
I
I