1. California State Association of Counties January 2010 Governor’s 2010-11 Proposed Budget Unrealistic Assumptions, Significant Risks, and Cost Shifts

2. California State Association of Counties January 2010 Overview Combined $19.9 billion deficit over next 18 months $6.6 billion in 2009-10 $12.3 billion in 2010-11 Includes $1 billion reserve Significant reliance on federal “fairness” funds $6.9 billion in assumed federal revenue Severe additional program cuts if federal funds do not materialize by July 2010 Emergency session to address $8.9 billion of gap Fully funds Proposition 98

3. California State Association of Counties January 2010 2009-102010-11Total% Expenditure Reductions $ 1,034$ 7,475$ 8,50943% Federal Funds86,9056,91335 Alternative Funding 1503,7363,88620 Fund Shifts & Other Revenue 0572 3 TOTAL$ 1,192$ 18,688$ 19,880100% Proposed Budget Solutions (dollars in billions)

4. California State Association of Counties January 2010 “Trigger” cuts (partial list) Outright program eliminations (CalWORKs, IHSS, Healthy Families) Corrections reductions; shift of additional offenders to county jail Reduction of Medi-Cal eligibility to federal minimum; elimination of most optional benefits Existing mental health services to be funded by Proposition 63 Redirection of county savings associated with program eliminations UC and CSU reductions Unallocated judicial branch reductions Additional reduction in state employee salaries

5. California State Association of Counties January 2010 Health and Human Services $2.9 Billion in cuts in 2010-11 budget Cuts primarily to CalWORKs, In-Home Supportive Services, Medi-Cal and Healthy Families. Recycled ballot measures proposed for Proposition 10 (First 5) and Proposition 63 (Mental Health Services Act). If federal funds do not materialize, an additional $3.5 billion in permanent cuts, including elimination of CalWORKs, IHSS, Healthy Families, and Transitional Housing Program Plus for foster youth.

6. California State Association of Counties January 2010 Transportation Elimination of sales tax on gasoline, currently valued at $1.573B for Prop 42 and $879M for spillover. As replacement, proposes 10.8-cent excise tax increase on gasoline (Highway User Tax Account or HUTA) allocated to: $629 million for the State Transportation Improvement Program (STIP) $629 million for local streets and roads $603 million for the General Fund for transportation bond debt service Negative aspects of swap: Falls short of providing an equal investment in transportation this budget year of $1.65 billion Increases funding shortfall significantly in future years as it exchanges a growing revenue stream with a declining one; and Sacrifices constitutional protections currently afforded to Proposition 42.

7. California State Association of Counties January 2010 Corrections/Public Safety Constitutional amendment to prioritize higher education over state corrections funding Increased use of privatization for state detention facilities Jail time for certain felonies Lower age jurisdiction (from 25 to 21 years) for Division of Juvenile Justice commitments Optimistic revenue assumptions to offset obligations to trial courts Redirect RDA revenues ($350 million) Enhanced speed enforcement program ($338 million)

8. California State Association of Counties January 2010 Government Finance and Operations $68.2 million in reimbursement for county costs associated with May 2009 Special Election. Similar mandates funding proposal as 2009-10: suspensions, payments, deferral of pre-2004 mandate payment. State employee reductions: 5 percent workforce reduction, 5 percent pay reduction, and 5 percent increase in contribution to retirement costs.

9. California State Association of Counties January 2010 Agriculture and Natural Resources No funding for Williamson Act. Emergency Response Initiative: 4.8 percent surcharge on all residential and commercial property insurance statewide to fund CALFIRE.

10. California State Association of Counties January 2010 Response and Next Steps Legislature has 45 days to respond to Governor’s Special Session proposals ($8.9 billion in “solutions”) RETREAD of failed ideas … not REFORM Generally regarded as politically unrealistic Next Steps: CSAC working to develop communications and advocacy strategies Here to support local efforts to educate public and lawmakers about budget impacts