Wednesday, July 29, 2009

State Budget -Summary of Estimated Impact to LA County es (As of today, Est. $244.4M in Major Funding Reductions for FY09-10) - 7/29/09




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:

  • $301.9 million loss


Special Districts:

  • $44.0 million loss to the Fire Department - Special District Funds
  • $4.6 million loss to the Library Special District
  • $7.8 million loss to the Dept. of Public Works (DPW) Flood Control District
  • $2.7 million loss to Dept. of Public Works, various Special Districts (lighting, roads, waterworks, & garbage disposal)


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: 


Social Services:

  • $114.2 million reduction to the County’s CalWORKs Single Allocation funds ($375 million reduction statewide in Single Allocation funds)  which are used for employment and child care services;
  • New due to VETO:  $37.1 million reduction to County’s Medi-Cal Administration, of which $1.1 million impacts Children and Family Services
  • New due to VETO:  $17.7 million reduction to the County’s Title IV-E Waiver


Mental Health:

  • $ 36.0 million loss from the elimination of funds for the Mental Health Managed Care Program;
  • $ 12.4 million loss from the deferral of AB 3632 Program payments for services provided to Severely Emotionally Disturbed children;


Public Health:

  • $ 22.1 million loss from the elimination of funding for the Substance Abuse Crime Prevention Act of 2000 funds (Proposition 36);
  • $ 7.1 million loss from the reduction of Drug Medi-Cal Program Rates;


     Justice and Public Safety:

  • $8 million loss due to reduction in courtroom security services related to court room closure
  • $4.6 million loss due to elimination of the reimbursement of retiree health care for court security personnel


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:


  • $70 million from the increased FMAP rate attributed to the Safety Net Care Pool; and


  • $97 million from funds available under the existing Medi-Cal Waiver. 


  • Budget bill language is included in ABx4_1.

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:


  • $ 323.2 million reduction statewide to the Medi-Cal Program identified as an “unallocated cut.”  It is unknown how this would affect County operations and/or recipient services – Potential impact to Department of Health Services.


  • $ 153 million reduction statewide to the CalWORKs Program.  It is unknown what components of the program would be affected – Potential impact to the Department of Public Social Services.


  •  $ 18.4 million reduction statewide to private Disproportionate Share Hospitals.  This proposal would affect the Department of Health Services but the impact is unknown at this time.



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.



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