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Home » Santa Clarita News » Officials Weigh In On May Revise Impacts

Officials Weigh In On May Revise Impacts

Governor_Jerry_BrownSeveral local legislators and the County of Los Angeles have reviewed Governor Brown’s proposed May Revise of the budget and its impacts on programming.

Assemblyman Cameron Smyth said that the announcement that the deficit is growing is the result of the majority party refusing to budget honestly or make cuts to government programs.

CamSmyth“While the Democrats made doomsday predictions of falling revenue, tax revenue actually grew by $4.9 billion last year, and is expected to grow by $5.1 billion this year, without tax increases,” said Smyth.  “Unfortunately, those revenue gains are meaningless in the face of the majority’s unwillingness to prioritize spending.”

In announcing his revised May budget plan, Smyth said that the Governor’s spending plan still assumes that General Fund spending will grow by 6.4 percent – or $5.5 billion – over last year’s adopted budget.  He pointed out that tax revenue has actually grown over the past two years, despite the fact that tax rates dropped as a result of Republicans fighting to give Californians $1,000 in annual tax relief last year.  Democrats relied on more than $4 billion in unrealistic revenue that didn’t materialize in last year’s majority vote budget.

Smyth said that protecting education and public safety funding and cutting government waste remained his top budget priorities.  He said that in contrast, Democrats have already this year grown welfare spending by more than $1 billion, while targeting education for 99 percent of proposed trigger cuts.

“It’s unfortunate that education funding continues to be used as a scare tactic to drum up support for a massive tax increase,” said Smyth.  “This really comes down to a question of priorities.  Republicans have proposed a roadmap of $4 billion in alternative solutions to prevent classroom cuts, while Democrats would allocate nearly all of the trigger cuts to education funding.”

Smyth noted that in contrast to the Governor and Democrats, he and Assembly Republicans have proposed budget solutions over the past two years that would enable the state to protect classroom dollars without raising taxes.  Earlier this spring, Smyth and GOP lawmakers proposed a “Roadmap to Protect Classrooms and Taxpayers,” which encompasses $4.4 billion in options to prevent the Governor’s education trigger cuts without new taxes.

tt-smallState Superintendent of Public Instruction Tom Torlakson

“Today’s May Revision raises the stakes for California’s public schools, which now need the help of voters to prevent more than $5 billion in cuts and a dramatically shortened school year.

“Our state’s financial difficulties cannot be resolved within the Capitol alone. As Californians, we share a common future. The 6.2 million students we serve today will soon be the doctors who treat our aches and pains, the architects and skilled workers who build our homes and factories, and the programmers and engineers who design our cars and our computers.

“The quality of their work tomorrow depends on how well we summon the collective will—now and in November—to prevent further cuts, and to begin the hard but necessary work of investing once again in California’s public schools.

“Today’s proposal also puts the difficult choices before us in stark relief, and puts in jeopardy California’s longstanding commitment to quality early learning and child care.

“I’m hopeful that the Governor and legislative leadership will ultimately craft a budget that preserves these vital programs, and puts our state back on track for long-term success.”

The Los Angeles County Chief Executive Office issued a comprehensive analysis of the local changes that would have to be made.

Overview

In January, Governor Brown estimated a budget shortfall of $9.2 billion through June 30, 2013.  Today, the Governor released his May Revision to the FY 2012-13 State Budget which estimates that the deficit has increased to $15.7 billion primarily attributable to: 1) reduced revenue projections; 2) increased K-14 Education (Proposition 98) spending; and 3) prior budget reductions blocked by the courts and the Federal government.  The key elements of the Governor’s proposed solutions include:

STATE BUDGET SOLUTIONS

 

January Proposed  Solutions

Additional

Solutions

Total May Revision Solutions

Expenditure Reductions

$  4.2 billion

$ 4.1 billion

$   8.3 billion

Revenue Solutions

$  4.7 billion

$ 1.2 billion

$   5.9 billion

Other Solutions

$  1.4 billion

$ 1.1 billion

$   2.5 billion

Total Budget Solutions

$10.3 billion

$ 6.4 billion

$  16.7 billion*

*May Budget Revision solutions include a $1.0 billion State Budget reserve.

 

The Governor notes that the May Revision builds upon the enacted FY 2011-12 State Budget to restore fiscal balance and protect education and public safety programs.  The Governor proposes far deeper cuts than those included in his January Budget.  The Governor’s budget plan also relies on additional tax revenues to mitigate the need for reductions to education and public safety.

The two major elements of the Governor’s Plan are:

Expenditure Reductions:  An estimated $8.3 billion in statewide funding reductions which include: health and human services ($2.5 billion), education and child care ($2.3 billion), transfer of redevelopment assets ($1.4 billion); repeal or suspension of State mandated programs ($828.3 million), reductions in State employee compensation ($401.7 million), and other miscellaneous program reductions.

November 2012 Ballot Initiative:  The May Revision continues to rely on approximately $8.5 billion in revenue in the budget year ($2.9 billion for schools and community colleges and $5.6 billion to the State General Fund) through a temporary 0.25 cent increase in the State Sales and Use Tax and a temporary increase in the income tax rates for persons earning over $250,000, subject to voter approval in the November 2012 General Election. The Governor’s measure also includes constitutional protections for the 2011 Public Safety Realignment funding for counties.

2011 Public Safety Realignment:  The Governor’s May Revision proposes trailer bill language to establish a permanent funding structure for the 2011 Public Safety Realignment to provide counties with a stable and consistent funding source for all programs realigned to counties in 2011.  The funding structure will be designed to provide counties with flexibility within subaccounts to meet priorities and to draw down the maximum amount of Federal funding available.  The Administration estimates that the State Sales Tax and Vehicle License Fee revenue available to fund the 2011 Public Safety Realignment for FY 2012-13 will be $5.4 billion and $455.1 million respectively.  Attached is a chart of the estimated 2011 Realignment funding by program through FY 2014-15.  The Chief Executive Office (CEO) continues to work with affected departments to analyze the proposed funding structure.  In addition, it is anticipated that Los Angeles County will receive the same percentage (31.7%) share of the statewide AB 109 allocation.

Major Proposals Affecting the County:  Similar to the Governor’s January Budget, the May Revision contains a number of proposals that would significantly affect various County programs.  The CEO is working with affected departments to determine the full impact of the proposals including:

Public Social Services:

·         $879.9 million statewide reduction to the CalWORKs Program which includes the restructuring of the program and several new policy changes, such as:  1) allowing work participation requirements to be met through any combination of State and federally allowable work activities instead of only paid employment; 2) eliminating the retroactive counting of previously exempt and sanctioned months towards the adult recipient’s 48-month time limit; and
3) beginning October 2012, implementing a phased-in approach to re-engage cases previously exempted under short-term reforms.  In January, the Governor proposed a $1.4 billion reduction to the CalWORKs Program.  The Department of Public Social Services (DPSS) estimates that the May Revision would impact the vast majority of 177,730 families, including 342,631 children, in the County who would experience a loss of CalWORKs benefits.  The CEO is working with DPSS to further determine the County impact of the revised proposal.

·         $125.3 million statewide reduction to the In-Home Supportive Services (IHSS) Program by eliminating domestic and related services to persons living in shared living arrangements and minors living with an able and available parent.  DPSS estimates this reduction would impact over 114,859 IHSS consumers in the County.  The CEO is working with DPSS to further determine the County impact of this proposal.

·         $99.2 million statewide reduction from a 7 percent across-the-board reduction to IHSS service hours effective August 1, 2012.  The May Revision assumes the expiration of the existing 3.6 percent across-the-board reduction in IHSS service hours on July 1, 2012.  DPSS estimates that this reduction would impact approximately 180,876 IHSS consumers in the County.  The CEO is working with DPSS to further determine the County impact of this proposal.

·         $36.5 million increase for a total of $75.5 million, to fund the Los Angeles Eligibility, Automated Determination, Evaluation and Reporting (LEADER) Replacement System (LRS) for a full-year.  This project will replace the current system for eligibility and benefit determination for CalWORKs, CalFresh, Medi-Cal and other social services programs.  DPSS indicates that this proposal to fully fund LRS will allow the project to proceed as planned and begin the design and development of the LRS in the early part of FY 2012-13 following Federal and Board approval

Foster Care and Child Welfare Services:

·         $53.9 million statewide increase to the Foster Care and Child Welfare Services allocation under the 2011 Public Safety Realignment for FY 2012-13 through FY 2014-15 to reflect the implementation of AB 12 (Chapter 559, Statutes of 2010), which expanded foster care benefits eligibility up to age 21.  These funds will be included in the 2011 Realignment funding structure and will be phased in over a three-year period beginning in FY 2012-13.  The CEO is working with the Department of Children and Family Services to determine the County impact of this proposal.

Medi-Cal:

·         $150.0 million in State savings from a reduction in various payments and grants to private and public hospitals.  The CEO is working with the Department of Health Services (DHS) to determine the County impact of this proposal.

·         $100.0 million in State savings by splitting unexpended Federal Medicaid Waiver funds between the State and designated public hospitals rather than allocating these funds exclusively to the hospitals.  The CEO is working with the DHS to determine the County impact of this proposal.

·         $663.3 million in State savings by expanding the Dual Eligible Pilot from four to eight counties and delay implementation of the pilot until March 1, 2013.  The pilot will integrate care for persons who are eligible for both Medi-Cal and Medicare including IHSS recipients.  As previously reported in April 2012, Los Angeles is one of the four counties initially selected to participate in the pilot.  The May Revision will:  1) allow the County to continue to perform IHSS assessments and authorize hours; 2) allow IHSS consumers to select providers; and 3) retain the current structure of the Public Authority, but allow the State to work with stakeholders to seek other alternatives.

Public Health:

·         $10.7 million statewide reduction from increasing the client share of cost for the AIDS Drug Assistance Program (ADAP) reduced from $14.5 million in January.  This proposal would not have a direct impact to the County, but would impact persons receiving ADAP benefits.

State Mandates:

·         $828.3 million statewide reduction from the suspension, repeal, or making permissive State mandates to local governments including:  suspension of various mandates except those related to law enforcement or property taxes ($728.8 million), and the deferral of the FY 2012-13 State mandates payment for costs incurred prior to FY 2004-05 ($99.5 million).   As previously reported, this would result in an estimated County General Fund loss of $16.5 million from the suspension of State mandates, and $13.0 million from the deferral of the
pre-2004 mandate payment in FY 2012-13.

Child Support Services:

·         $31.9 million statewide reduction from suspending the county share of child support collections.  Due to a decreased projection of child support collections, the proposal was revised from
the $34.5 million amount in the Governor’s January Budget.  The CEO is working with Child Support Services Department (CSSD) to determine the County impact of the revised proposal.

·         $14.7 million statewide reduction to Local Child Support Agencies (LCSAs).  Under this new proposal in the May Revision, LCSAs would no longer be required to prepare cases for State hearings.  However, LCSAs would still have to continue their required complaint resolution process and to refer cases to the State for administrative review.  The CEO is working with CSSD to determine the County impact of this proposal.

Child Care:

·         $452.5 million in State savings due to aligning child care eligibility to Federal work requirements.  The CEO is working with DPSS and the Office of Child Care to determine the County impact of this proposal.

·         Shifts the administration of child care services from alternative payment programs and Title 5 centers to county welfare departments and establishes a County Child Care Block Grant.  The CEO is working with DPSS and the Office of Child Care to determine the County impact of this proposal.

Public Safety:

·         $500.0 million in lease revenue bond financing authority for design and construction of local jail facilities to help counties manage their offender population.  This is in addition to the $1.2 billion lease revenue bond financing authorized under AB 900.  The CEO will work with the Sheriff’s Department to determine potential County impact when more information is released by the Administration.

·         $20.0 million in statewide grants for city police departments to address recent budget reductions.  The CEO is working with the Sheriff’s Department to determine potential eligibility for this funding.

Redevelopment:  The May Revision proposes legislation to establish the framework for successor agencies to transfer cash assets not obligated or reserved for legally authorized purposes to cities, counties, special districts and K-14 schools in FY 2012-13.  ABX1 26 of 2011 requires successor agencies to make payments for enforceable obligations and to principally wind up the affairs of the dissolved RDAs.  Former RDA assets not otherwise encumbered or reserved are to be distributed to the affected local taxing entities in the same manner as property tax revenues, after debt obligations and pass-through agreements are paid.  According to the Administration, these funds will be transferred to fund core public services and allocated consistent with the State Constitution.

The Administration estimates that K-14 schools will receive $1.4 billion in FY 2012-13 and $600.0 million in FY 2013-14.  Remaining revenues from the dissolution of RDAs will be distributed to other taxing entities including the County General Fund, Fire, Public Library, Flood Control and other Special Districts.  As previously reported, based on the initial estimates of the unencumbered Low and Moderate Income Housing funds available statewide, the County General Fund may be entitled to $70.0 million to $93.0 million.  Affected taxing entities, such as the County, will also be entitled to other unreserved or undesignated cash assets of the former RDAs.  The CEO is working with affected departments to determine the impact of this proposal as further details are released by the Administration.

Juvenile Justice Realignment:  The May Revision eliminates the proposal to permanently shift responsibility for housing youthful offenders from the State to counties and cease in-take at the Division of Juvenile Justice (DJJ).  In addition, it eliminates the $125,000 per youth per year charge to counties enacted as part of the triggered budget reductions in the FY 2011-12 State Budget Act but delayed as part of the Proposed FY 2012-13 January Budget.  The May Revision does, however, propose tocharge counties $24,000 per year per youth committed to DJJ from counties beginning July, 1, 2012.  The impact to Los Angeles County would be approximately $7.2 million per year for an average of 300 youth.

Ballot Trigger Cuts:  The May Revision continues to include triggered budget reductions that would be enacted effective January 1, 2013, if the November 2012 Ballot Initiative fails to pass.  However, the May Revision increases the amount to $6.1 billion in cuts.  The triggered reductions would primarily impact education, developmental services, and State public safety programs.

Specifically, the trigger cuts include:

·         $5.5 billion reduction to K-12 schools and community colleges;

·         $500.0 million reduction to University of California and California State University;

·         $50.0 million reduction to Developmental Services;

·         $10.6 million reduction as a result of the elimination of grants to local law enforcement for water safety patrol;

·         $10.0 million reduction to the Department of Forestry and Fire Protection impacting firefighting capabilities;

·         $6.6 million reduction in flood control programs reducing channel and levee maintenance; and

·         Reductions to the California Departments of Parks and Recreation and Fish and Game, and elimination of State lifeguards.

 

 

 

 

Officials Weigh In On May Revise Impacts

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