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HomeMy WebLinkAboutMINUTES - 05222007 - SD.6 _,.. 5D sE--L TO: BOARD OF SUPERVISORS - Contra FROM: JOHN CULLEN 00 .;$ Costa County Administrator 4� ` County c�sra'co6K`� �y DATE: May 22, 2007 SUBJECT: GOVERNOR'S MAY REVISION BUDGET FY 2007/2008 SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: ACCEPT report from the County Administrator on the Governor's May Revision to the 2007/2008 State Budget. BACKGROUND: On May 14, 2007 Governor Schwarzenegger released his "May Revision" budget, which updates the January release of his proposed 2007-08 budget to reflect new revenue projections, updated caseloads, and other economic factors. Legislative budget subcommittees are meeting to review the May Revision and any remaining open issues. The Legislature is required to approve a budget by June 15 so the Governor may sign it by June 30. CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD C ITTEE APPROVE OTHER SIGNATURE(S): /�/�/� ACTION OF BOARD ON / � r 0 APPROVE AS RECOMMENDED X OTHER _ VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS (ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON THE MINUTES OF THE BOARD AYES: NOES: OF SUPERVISORS ON THE DATE SHOWN. ABSENT: ABSTAIN: p�� ATTESTED I �. c)-00:7 JOHN CULZEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR Contact Person: L.DeLaney 5-1097 CC: C.Christian,via CAO's office L.Driscoll,CAO J.Enea,CAO D.Sansoe,CAO J.Crapo,CAO S.Hoffman,CAO © ( BY: EPUTY SUBJECT: May Revise FY 2007-08 The following is a brief overview of the Governor's May Revision. The overall budget projects $96.2 billion in General Fund revenues in 2006-07 and $102.3 billion in 2007-08, for a budget year growth of $6.1 billion (6.4%). The Administration's combined current and budget year estimates for major tax revenues are down$243 million since January. Stronger-than-expected 2006-07 revenue growth is more than offset by projected weakness in 2007-08. General Fund costs are higher for Proposition 98 and prisons. The Administration has also provided a more realistic estimate of gaming revenues and delayed the sale of pension obligation bonds. The table below shows the Administration's estimate of the General Fund's condition taking into consideration its May Revision proposals. It shows that the current fiscal year began with a prior-year balance of$10.5 billion. Consequently, even though current-year spending is expected to exceed revenues by $6.1 billion, the Administration projects that the state will start 2007-08 with a fund balance of $4.4 billion. In the 2007-08 budget year, expenditures would exceed revenues by $1.5 billion. The Administration estimates the state would end the budget year with a reserve of$2.2 billion. This is slightly more than the $2.1 billion reserve assumed in the January budget proposal. Note that the Legislative Analyst's Office has opined that the May Revision overstates its reserve by about $1.7 billion—leaving an estimated reserve of $529 million, which remains subject to considerable risks and pressures. Governor'si 3udW General Fund Condition, (In';Millions) +5� Q �� _� �2y006�0� ah Pre%� x Prior-year fund balance $101540 Alli4,433 Revenues and transfers a 96115T:11021276 Total resources available $106,697 $106;709 Expenditures 102,264 103,765 Ending fund balance $4,433 $2,944 Encumbrances " 745 745 Budget Stabilization Account $472 $1,495 Reserve for Economic Uncertainties 3,216 704 A 2006-07 amount includes$472 million and 2007-08 amount includes $1.023 billion in General Fund revenues transferred to the Budget Stabilization Account,which the administration excludes from.its revenue totals. 2 SUBJECT. May Revise FY 2007-08 The May Revision continues the Governor's focus on restraining growth in spending, pre-paying debt, eliminating the net operating deficit, not raising taxes and maintaining an adequate reserve. As such, the Governor's May Revision includes measures to further reduce spending, generate additional revenues from publicly-owned assets and provide a $2.2 billion reserve as follows: • selling EdFund, the state's student loan guarantee agency to generate one-time revenues of$980 million; • current and budget year reductions totaling $430 million; • transferring tobacco securitization reserve funds to the General Fund; • expanding a redirection of public transit funds for General Fund purposes; and • eliminating a scheduled increase for Supplemental Security Income/State Supplementary Program (SSI/SSP) recipients. These proposals would reduce the net operating deficit to $1.4 billion from the $4.4 billion estimated at the time the 2006-07 budget was enacted, a reduction of 92% from the projected deficit when the Governor took office. In addition to the above items considered "solutions", below are elements of the May Revision that are of interest to counties. It should be noted that unless indicated otherwise, proposals in the January Budget, such as imposing a 60-month time limit on CalWORKs child-only cases and capping state participation in IHSS wages, are still part of the Governor's package, regardless of whether or not the Legislature has already deleted them. Administration of Justice Corrections Reform The May Revision proposes significant funding changes to implement portions of AB 900, the Public Safety and Offender Rehabilitation Services Act of 2007. The May Revision includes $350 million for programs to increase rehabilitation and reduce overcrowding and directs nearly $10 million to immediately address overcrowding through out-of-state transfers. • $284.6 million in AB 900 bond funding to construct six mental health and dental facilities at seven institutions. These funds are a portion of the $857.1 million in bond authority granted as part of Phase I of AB 900. • $45.9 million General Fund to address various court requirements related to medical, dental and mental health services. The May Revision adds $25 million to upgrade prison healthcare for a total of$175 million, and includes more than $10 million to comply with other court-driven costs in state prisons. • $18.7 million to support and increase California Department of Corrections and Rehabilitation's peace officer recruitment efforts. • $11.7 million General Fund in 2007-08 and $27.8 million in 2008-09 to fill vacant teacher positions in adult institutions. 3 SUBJECT. May Revise FY 2007-08 • $9.6 million in 2007-08 and $14.6 million in 2008-09 for out-of-state transfers, as authorized by AB 900. Adult Probation • Reduces funding for the new initiative to support County programs and services to adults aged 18 to 25. Juvenile Justice Realignment • The May Revision slightly amends the January budget proposal to transfer to counties the control and supervision of non-violent male and female offenders has been adjusted slightly to account for lower-than-expected juvenile institutional and parolee populations in 2007-08. (Note that the 18-21 year old non-violent male population would be transferred to Counties under the Governor's corrections reform proposal for juvenile justice.) Gang Initiative • $3.3 million for Corrections to create three pilot task forces (LA, Bay Area, and Inland Empire) to work with local law enforcement to disrupt gang activity. • Anti-gang programs funded by increasing the state surcharge levied on the base fine used to calculate,the state penalty assessment from 20% to 40%. The new programs include: o $4.9 million in federal funds for four new federal anti-gang grants as part of a six-city suppression effort. o $7 million General Fund for local anti-gang programs (granted through the State Office of Emergency Services.) Local Assistance Programs • $16.9 million to fully reimburse local entities for costs of prosecuting inmate crimes, housing state inmates and other services provided to state inmates at county levels. • $5.60 increase in daily jail rate from $71.57 to $77.17 • Overall commitment to supporting existing public safety assistance programs at current-year levels, including the following: • COPS--$119 million • JJCPA--$119 million • Booking Fees--$35 million • Methamphetamine Abatement Efforts--$29.5 million 4 SUBJECT. May Revise FY 2007-08 Other Justice Initiatives • A $1 million contract with a professional "headhunter" to assist the state in locating, recruiting and hiring health care delivery staff and the Departments of Mental Health, Developmental Services, Veterans Affairs, and Corrections and Rehabilitation. • The May Revision proposes $178 million in Proposition 1 B transportation funds to establish two homeland security grant programs: o $76 million for the Port Security Grant Program to be allocated to ports. o $102 million for the Transit Security Grant Program to be allocated to various mass transit systems. Health and Human Services • The state has failed to provide a "cost of doing business" to counties over the last seven years for the actual costs incurred by counties in administering the following human services programs on behalf of the state: CalWORKs Eligibility, CalWORKs Employment Services, Food Stamps Administration, Foster Care Eligibility, In-Home Supportive Services Administration, and Child Welfare Services Basic. The May Revision indicates that amount is $835.8 million ($459.7 million General Fund). The estimated unrecovered cost to Contra Costa is approximately$25 million. • The Revision proposes a new methodology for adjusting these costs. Starting in FY 2008-09 the State would give counties an increase equivalent to the salary and benefit raises provided to state employees, subject to appropriation by the Legislature. In exchange, counties take on a share of federal Child Welfare . Services penalties linked to performance on federal outcome measures. There would also be new performance and accountability measures for the IHSS program. The proposal ignores the fact that counties have not had their real costs for operating these programs reimbursed since 2001. • The Governor's budget fails to adequately address the requirements of last year's trailer bill, AB 1808, to develop a new methodology for Child Welfare that updates workload standards. This failure will continue to jeopardize our ability to meet basic safety requirements in child welfare services. • Continuation of the proposal to freeze state participation in IHSS wages and health benefits. • $214 million ($107 million General Fund) to provide rate adjustments to Medi-Cal managed health care plans. Contra Costa will receive approximately$3.6 million (included in the 2007-08 Approved Budget). 5 SUBJECT: May Revise FY 2007-08 $9 million in salary increases to Department of Mental Health and Department of Developmental Services to employees in job classifications affected by the Coleman and Perez court cases. • Various adjustments to the Early Periodic Screening Diagnosis and Treatment Program (EPSDT): o A decrease of $24.3 million due to a lower estimate of claims than January. o An increase of$33.9 million to pay for the settlement of audits from 2004- 05 fiscal year. o An increase of $61.6 million to eliminate the cost settlement adjustment currently used to discount claims and essentially to minimize future deficiency request for prior year obligations similar to those funded for 2006-07. • An increase of$17.2 million to the Department of Alcohol and Drug Programs for caseload and provider rate increases. A net current year decrease of$85.8 million ($20 million General Fund) from January in the Medi-Cal program (derived from various adjustments). • A total net funds increase of $330 million ($39 million General Fund) in the budget year from January in the Medi-Cal program (derived from various adjustments.) An additional $4.5 million for food banks and FoodLink: bolstering the State's commitment and response to disasters, such as last winter's freeze. Housing, Land Use, and Transportation • The Governor's January budget proposed appropriations of $7.7 billion in Prop 1 B funds over the next three years from the $19.9 billion in transportation bonds approved in November 2006. The May Revision increases the proposed appropriations to $11.5 billion over three rears. Major changes since January include: o Acceleration in funding for Corridor Mobility and Highway 99 programs o $187 million for Caltrans rail cars and locomotives (pending conclusion of an ongoing audit) • Appropriation of $600 million for the local streets and roads component of Prop 1 B. Recall that SB 286 (Lowenthal & Dutton) is the vehicle for implementing the program. 6 I SUBJECT. May Revise FY 2007-08 • Appropriation levels were unchanged for the $2 billion for Local Streets and Roads: $600 million for 2007-08, $300 million for 2008-09, and $150 million thereafter until the $2 billion is appropriated (50% to cities, 50% to counties). • The May Revision estimates an increase in $210 million in gasoline sales tax "spillover" revenues and continues to divert these from transit to other programs including: Home-to-School Transportation, Developmental Services—Regional Center Transportation, and Transportation General Obligation Bond debt service. Agriculture and Natural Resources Decrease of $39.1 million associated with the elimination of Williamson Act subsidies. The administration encourages local governments to continue their Williamson Act contracts, but due to the state's fiscal condition cannot continue to fund the program. Contra Costa received$69,717 in 2005. Elections ® $11.7 million for the Secretary of State to conduct the new February presidential primary election. Reimbursement of County costs would be part of the FY 2008-09 budget. Government Finance and Operations A downward revision –from $500 million to $313.5 million – of revenue expected to come out of renegotiated and new tribal gaming compacts. In his presentation of the May Revision, the Governor stated he would await recommendations of the Other Post Employment Benefit (OPEB) Commission prior to making any additional funding proposals regarding the state unfunded liabilities for OPEB. The May Revision does, however, provide $654,000 for Commission support. Revenue Raising Opportunities • The May Revision proposes selling EdFund, California's student loan guarantee agency. May Revise assumes net one-time revenue of $980 million from the sale. • The much-reported proposal to "privatize" the lottery is, essentially, the sale of a long-term license for operation of the state lottery. The proposal calls for proceeds to pay off $8 billion in past Economic Recovery Bonds, but does not book any revenue in FY 2007-08. 7 i ADDENDUM TO SD.6 i MAY 22, 2007 On this day the Board accepted a report from the County Administrator on the Governor's May Reviison to the 2007/08 State Budget. County Administrator, Sarah Hoffman presented key revisions from Governor Schwarznegger's "May Revision"budget. Supervisor Piepho suggested that staff document a copy of this Board Order's recommendations with the Governor's office and local legislative delegation of the issues and impacts so they could quantify the impacts to Contra Costa County. The Board asked for public comment and the following person spoke: Ralph Hoffinan, resident of Danville,said while he supports nearly everything Ms. Hoffinan had to say, he disagrees with her last statement the Governor will sign the budget by June 30. By an unanimous vote with all Supervisors present, the Board of Supervisors ACCEPTED the report from the County Administrator on the Governor's May Revision to the 2007/2008 state budget. REQUEST TO SPEAK FORMinute Limit) I wish to speak on Agenda Item #: �. '�► M(3 Complete this form and lace it in the upright box near the - p PDate; speaker's podium, and wait to be called by the Chair. I My comments will be: Gene(l ! personal information is optional. 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