Counties: Revised Budget Proposal Contains Workable Framework; Governor, Legislature Commended for Listening to Local Government Concerns.

News Editors/Business Editors

SACRAMENTO, Calif.--(BUSINESS WIRE)--May 14, 2003

Understanding the State's monumental task of closing a $38 billion budget deficit, California county officials stated today that the Governor's Revised 2003-04 Budget Proposal includes a "workable" framework for a budget.

"When presented in the context of a $38 billion budget deficit, the framework of this proposal is workable to county government," said Tim Smith, President of the California State Association of Counties (CSAC) and a Sonoma County Supervisor. "It contains both new revenue sources and program reductions, both of which we believe are essential for the state to begin digging out of this hole."

County officials, who are in Sacramento this week to participate in the Legislative Action Days coordinated by the "Leave Our Community Assets Local" (LOCAL) Coalition, pointed to five key components of the Governor's budget:

-- The assumption that vehicle license fees will be reinstated to

original levels as required by current law, thus ensuring $4.2

billion in continuing revenue for cities and counties;

-- A narrower realignment proposal, shifting the responsibility

for $1.7 billion in child-related and welfare services to

counties and earmarking increases in personal income and

tobacco tax rates for the administration of these programs;

-- The Governor's May Revise also restores the full funding to

the Williamson Act program in the amount of $40.5 million. The

Governor's previous budget had proposed to eliminate this

critically important program;

-- The protection of public safety programs;

-- The Governor's insistence that needed structural reform must

be enacted this summer.

"We understand that cuts need to be made, and that local government has to share in the pain," said Smith. "But at the same time, a budget needs to be crafted that protects core programs at the state and local levels. We are cautiously optimistic that the Governor's proposed budget would do just that."

Smith added, "We have come far in the past four months from the January budget proposal that would have had severe impacts on our counties' ability to continue providing essential services. We commend the Governor and Legislature for listening, and more importantly, responding to the serious concerns we had about that proposal."

At the same time that county officials were expressing satisfaction with the framework of the Governor's latest proposal, questions regarding the process by which the Governor's plans for triggering the VLF and securing funding for the new realignment proposal were raised.

Concerns over the VLF proposal center on the process by which the state will pull the trigger and the possibility that state backfill payments to counties may cease before VLF revenues are earmarked for such a purpose. "We need to ensure that payments don't stop until the new revenues start coming in," said Smith.

Counties also noted that the January realignment proposal has been significantly scaled back to a much more feasible level. Although concerns remain about the adequacy of the revenues and the question of risk, counties are intent on working with the administration to negotiate these concerns.

Besides working to ensure an equitable outcome for counties in these areas, CSAC leadership will also continue pushing its goal for structural reform of the state-local fiscal relationship.

"In crisis, there is opportunity," Smith said. "The enormous budget crisis the state is facing presents a golden opportunity to develop truly effective long-term structural reform."

Steve Szalay, CSAC Executive Director, echoed Smith's comments. "We look forward to working closely with the Governor and Legislature after the budget is signed on a long-term solution to the structural and fiscal problems we face at the state and local level. The Administration has told us they want to work closely together on structural reform, and we plan to do just that."