Governor Jerry Brown unveiled his new budget proposal in Sacramento on Monday, revealing a package that features a smaller tax increase, a redesigned realignment package, and the reform – instead of elimination – of enterprise zones. 

The revised proposal was received with mixed reviews from across the state, as some called it a good framework for a stable future, and other called it weak or unconstitutional. For local governments, it is a mixed bag.

[Corrected from an earlier version that inaccurately stated that the Governor’s May Revise was open to reforming redevelopment agenices.]

Groups like the California Redevelopment Association and League of Cities have been working to save redevelopment agencies by proposing a package of reforms to the system, the Governor’s May Revise still calls for their elimination. Other groups, like some organized labor unions, are blasting the Governor’s plan for compromising on enterprise zones, instead of eliminating all forms so-called “big business” handouts.

For the 58 counties, the budget continues to promise five years of revenues to support realignment, although realignment no longer includes $52 million in subsidies for a handful of fire districts. The responsibility (and financial burden) of providing mental health services to special needs students has also been shifted off of the counties and been given to school districts.

The California State Association of Counties praised the May Revision and the adjustments it made to the proposed realignment plan.

“Governor Brown’s May Revision of his proposed 2011-12 State Budget has the best potential to help resolve the state’s persistent structural imbalance and allows counties to provide services in a more effective and efficient manner.”

However, CSAC is anxious to see the State Legislature come together to make difficult decisions, like those that counties have made in the past years. The longer lawmakers waffle on how to proceed, the more difficult the situation for counties becomes.

Counties have seen enough ‘wars’ and have been in the trenches cutting and eliminating programs and staff for the last three years,” said CSAC Vice President and Yolo County Supervisor Mike McGowan. “County supervisors represent the same constituents and have as many differing political views as State legislators. We are able to come together and build a consensus to move forward, despite the tough choices.”

The County of Los Angeles released a statement that seemed to agree with CSAC. “”We need to understand how the Governor proposes to provide the secure, long-term revenue to counties needed to fund realignment,” said Los Angeles County CEO William T Fujioka in the statement. “At this point is it unclear how he plans to proceed.”

Meanwhile, Governor Brown, citing increased state revenues, backed away from his original plan for increased or extended taxes, instead opting for four years of income tax increases instead of his original five.

“Governor Brown today took a baby step forward by eliminating one year of his proposed tax increases,” said Assemblyman Jim Neilsen, the Vice-Chair of the Assembly Budget Committee. The Republican Caucus, business groups, and taxpayers associations continue to oppose any tax increases. Republicans in the Assembly recently released their budget proposal that created an all-cuts budget, while still funding education and public

However, other groups are calling for the Legislature to adopt the tax extensions with a simple majority vote, and for counties, that would mean a stabilized five-year funding source for realigned services.

In their statement, the SEIU said, “Across California, the voters we talk to say it’s time for the legislature to do its job and pass a budget that maintains current revenues; a simple vote is all the constitution requires. What we don’t need is an unnecessary and costly election that will only continue the state’s economic uncertainty.”

Similarly, in a statement released by the California Labor Federation, they offered support and criticism of the Governor’s budget.

“While we support the governor’s balanced approach of spending cuts and extending existing revenues, it’s disappointing that the he’s altered his common-sense proposal to eliminate the costly and ineffective enterprise zone tax credits,” said Art Pulaski. He then continued to say, “While it’s a positive sign that the governor’s addressing some of the worst abuses of the program, more needs to be done. The governor and legislature must continue to push for its outright elimination.

A coalition to save redevelopment, made up of the League of Cities, California Redevelopment Association, as well as labor and business groups criticized the plan for going too far. They support a plan of reform, instead of elimination.

Chris McKenzie, executive director, League of California Cities, said: “The Governor has repeatedly claimed he wants to end the gimmicks and wants honest budgeting. But his proposal to eliminate redevelopment will result in more of the same.  It is illegal, will not provide the State any budgetary relief and, by destroying local economic growth, will actually reduce State and local revenues.”

Anyway that it is divided, Monday’s May Revision presented a new picture of the state’s budget troubles, that will affect every part of the state’s governance structure. Some will be positively impacted, others negatively.

Seek counsel from your state association, consultants, and check back with PublicCEO to see how the rest of the budget season plays out, and how it will ultimately shape the next year(s) of California’s local governance.

If you work for a county, please refer to CSAC’s Budget Action Bulletin for a highly detailed analysis of how the proposal will affect you.