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Friends of the Fourth
District:
There have been many headlines the last few weeks about the budget
crunch the State of California finds itself in for the next fiscal
year. As you may know Governor Arnold Schwarzenegger recently
released his proposed 2008-2009 budget and it projects that the
State’s budget will likely have a $14.5 billion shortfall in the
coming fiscal year.
This budget crunch won’t just be difficult for the State to deal
with because it will also trickle down to the local level and impact
budgets for cities and counties. With that in mind, this month I
wanted to share with you some of the details on where the State
budget shortfalls are likely going to hit the Los Angeles County
budget.
At this point, the estimated financial impact the County is facing
is a loss of $219.8 million in State funds. Where will those cuts
specifically hit the County? We are anticipating a $113 million
reduction in CalWorks reforms and additional $11.4 million reduction
in health programs. There would be a $6.6 million reduction in
alcohol and other drug diversion programs and also tens of millions
of dollars in other cuts for mental health programs, and juvenile
probation funding, adult protective services, family health
programs, and library funding.
There is one positive aspect of the proposed State budget – The
Governor did not exercise the State’s option to borrow local
government’s property tax revenues that they are allowed to do under
Proposition 1A. It was not too long ago when the California
Legislature looked to our local revenues to help solve State budget
shortfalls. Then in November 2004, the landscape changed as far as
the Legislature’s authority to take major local revenues when voters
approved Proposition 1A with 84% approval.
With Proposition 1A, our property and sales tax revenues could no
longer be raided by the State Legislature, as had happened far too
often in the past. To give you some idea of how much money I am
talking about, in the last year before Proposition 1A passed, $103.2
million dollars from local Los Angeles County property tax revenue
was taken by the State. That same year, another $10 million was
taken from our special districts, like Flood Control. All told, in
the 10 years just before Proposition 1A passed, just over $1 billion
dollars in local revenue was taken by Sacramento. That was $1
billion that meant fewer deputies, fewer library hours, few after
school programs.
The problem is there is a little known loophole in Proposition 1A.
Beginning in this upcoming fiscal year, the Legislature may
temporarily suspend the property tax revenue protection provisions
of Proposition 1A under certain conditions. The Legislature may
“borrow” up to 8% of local tax revenue if the Governor issues a
proclamation of “severe fiscal hardship;” or the Legislature enacts
an urgency statute suspending Proposition 1A property tax protection
with two-thirds vote of each house.
About 20 percent of Los Angeles County’s $21.77 billion budget or
$4.5 billion comes from property taxes – that means that if the
Governor or Legislature suspends Proposition 1A, it could mean a
loss to us of approximately $350 million in a worst case scenario.
So what programs would be impacted if we were to lose these hundreds
of millions of dollars? By law, we can’t cut dollars to Federal or
State mandated programs like healthcare to the poor, welfare, jail
costs, etc., so it unfortunately would result in cuts to the small,
non-mandated portion of our County budget that we actually have
discretionary control over.
What we have discretionary control over are things like capital
projects to improve our parks and community centers, funds for
library hours and library improvements, and investments in our
museums – these are the things that would be impacted by Proposition
1A being suspended and revenues being taken from us.
While the threat to take our local Proposition 1A dollars has not
happened yet, you can be assured that I will be keeping a close eye
on Sacramento to make sure that as this proposed State budget
progresses, the threat of a Proposition 1A revenue loss remains only
a possibility and not a devastating reality.
DON KNABE
Supervisor, Fourth District
County of Los Angeles
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