Executive Summary of the Estimated Impact to the County
FY 2009-10 Final State Budget
Wednesday, July 29, 2009; 9:00 a.m.
The Governor has signed the amendments to the Budget Act of 2009 approved by the State Legislature on July 24, 2009. However, the Governor used his line-item veto authority to make $489 million in additional spending reductions to close a $24 billion budget deficit. Based on our preliminary analysis of the vetoed items, we offer an executive summary of impact to the County of Los Angeles:
Suspension of Proposition 1A: The suspension would allow the State to borrow $2.0 billion in property tax revenue from local governments statewide, with repayment of this loan not due until 6/30/2013. The County impact is estimated to be $360.9 million in FY 2009-10, specifically affecting:
County General Fund:
Notes: * The Budget includes language which allows for the securitization of State borrowing and requires repayment of certain securitization costs. This provision mitigates the impact of this loan on County operations.
* Budget bill language is included in ABx4_14 and ABx4_15.
Time Extensions of Redevelopment Projects: The final budget package extends the statutory life of all redevelopment projects in the state by one-year, in exchange for a $1.7 billion transfer of property tax increment revenues in FY 2009-10, and $350 million in FY 2010-11, to relieve the State’s obligation to fund public schools. The County would begin being impacted in 2019 by the diversion of property tax revenues specifically due to the one-year extension of redevelopment.
· $313.7 million loss from a 1-year extension of County (net present value)
Notes: * Impact is based on the existing 304 redevelopment projects within the County. Based on the existing projects time limits, the County will begin realizing a loss of property tax revenues in 2019.
*Budget bill language is included in ABx4_26
Highway User Tax Account (HUTA): The final budget package included a proposal to loan $1.7 billion ($986 million in FY 2009-10 and $745 million in FY 2010-11) from the local share of gasoline tax revenues from local governments to the State. However, this proposal was not taken up on the Assembly Floor and is currently not considered part of the adopted FY 2009-10 State Budget.
Major Funding Reductions: As of Tuesday, July 28th, the final FY 2009-budget package contains an estimated $244.4 million in reductions to various County programs in FY 2009-10, including:
Justice and Public Safety:
Note: * Most major funding reductions are included in ABx4_1, ABx4_4, ABx4_5, and SBx4_13
Medi-Cal Program Reduction Proposals: The budget includes a proposal to reduce the Medi-Cal Program by $1 billion upon receipt of Federal funds.
While these are not direct losses to the County, the Department of Health Services (DHS) indicates that this proposal eliminates potential solutions to mitigate a DHS budget deficit in FY 2009-10. Specifically, DHS would not be able to access:
Other Significant Budget Items: The FY 2009-10 budget contains other proposals that may impact the County, but detailed information continues to be unavailable. These proposals include:
Other VETOED Items: Governor Schwarzenegger used his line-item veto authority to make additional reductions in state spending for FY 2009-10 that may impact the County, however detailed information continues to be unavailable.
· New due to VETO: $52.1 million reduction statewide to the Office of AIDS. It is unknown at this time how these reductions will impact the County
· New due to VETO: $50 million reduction statewide to Health Families. It is unknown at this time specifically how these reductions will impact the County.