In the days after the release of the Governor’s May Revise, legislative and policy analysts across the state are dissecting the plan to see how it will affect their constituency, association, district, or municipality. As we reported yesterday, the presentation yesterday was a mixed bag for California’s local governments.

Facts can be gleaned quickly, impacts are more difficult to discern. The dry facts are these:

  • The state has experienced an unexpected increase in revenue, and the May Revise reflects an extra $6.6 billion for the 2011-2012 fiscal year.
  • Some of January’s budget solutions have already been adopted, reducing spending by $11.1 billion.
  • There are pending solutions before the legislature that would cut another $2.4 billion.
  • The May Revise calls for an extra $2 billion in spending over the January plan, a result of the delay in enacting cuts and increasing public safety and education funding (some of which is mandated by Prop 98).
The remaining deficit is $9.6 billion, but after adding an extra $1.2 billion to a state reserve, the state needs $10.8 billion in budget solutions.




The California State Association of Counties looked at the May Revise with a watchful eye towards the Governor’s realignment plan. Sure enough, some changes were introduced since the original plan came out in January, while the source of funding remained the same. The Vehicle License Fees are earmarked for realignment, however because of the shift in certain programs from counties to other agencies, a smaller portion of the VLF will go to counties.

Counties will also be responsible for fewer services, as several programs will either be shifted to other agencies or remain with the state. For instance, mental health services for special needs students will now be the job of school districts instead of county programs.

CSAC’s budget analysis provides a thorough list of the cuts that Governor Brown called for from the state government structure. His May Revise calls for eliminating 43 agencies, commissions, or advisory boards, and reduces the state’s payroll by more than 5,500 positions.

The League of Cities, as well as a variety of business groups, was interested to see if the Governor’s May Revise would continue to plan on eliminating redevelopment agencies. The news there was mixed. The May Revise abandoned a call for the outright elimination of enterprise zones, but continued the January plan of abolishing redevelopment agencies.

Under the Governor’s plan, enterprise zones would have a more narrowly define scope, using tax incentives for small companies (less than 50 employees) who hired new employees. The process of retro-vouchering, which allowed companies to collect tax credits, regardless of whether the credits contributed to new hires.

Cities and Counties will continue to receive grants and funding for both COPS and POST programs, but the League of Cities analysis says that these programs are no longer included in the realignment plan, due to fluctuations in funding mechanisms. Because different cities and counties are reimbursed at varying rates, the process was simplified by allowing these funds to continue to be managed by the state.

Additionally, funding for the realignment of local fire services has been dropped entirely.

Two cuts that could impact cities are the closure of 70 state parks after the Governor cut $33 from the parks budget, and the defunding of the Brown Act. Once the Brown Act reimbursement program is defunded, some say that the program will become ineffectual and defunct.

Groups like the California Correctional Peace Officers Association also looked at the May Revision. Their analysis breaks down how funding into the correctional department will affect not only services, but construction, renovation, and other aspects of the state’s prison systems.

Some of the changes in the California Department of Corrections and Rehabilitation’s budget are reflective of how their role in the lives and supervision of parolees will be altered by redevelopment. Namely, more money will flow into the judicial system for attorneys and public defenders, as the judicial branch will become the main oversight body for violating parolees.

The CCPOA analysis also mentions an incentive program being offered by the state that is designed to help keep felony probationers out of prison. As of the May Revision, the program helped keep some 6,200 offenders out of jail.

CDCR is going to reimburse the state for more than $19 million, related to the now-scrapped plans for the San Quentin death row.

The non-partisan California Budget Project offered an analysis that summarizes additional changes to programs, including housing and health services.

In his January Budget Proposal, Governor Brown called for a freeze on all bonds related to housing project loans and grants. That freeze has been lifted and Prop 1C funding has been increased by $63 million.

State hospital and health services saw significant changes in the May Revise, namely the elimination of the Department of Mental Health. A new state agency, to oversee county health and human service programs, The Department of State Hospitals, will assume many of the responsibilities that had fallen to the Department of Mental Health.

The Department Labor and Workforce Development will have its staff reduced, and will leave the rented office space it currently occupies. More than $300 million will be borrowed from the state’s unemployment compensation disability fund to pay back the federal unemployment insurance loans the state took in recent years.

As the California Budget Project says in its introduction, these early analyses are “quick and dirty.” As time passes, policy wonks will delve deeply into the recommendations and line-items in the budget to discover additional ways that Monday’s revision will affect California’s local governments. But for now, these should help provide a high-level picture of the next year’s funding, and how local governments should prepare.