Transcript REALIGNMENT
REALIGNMENT 101
The Road to Realignment
1978 Proposition 13
1% property tax rate (average was 2.5%)
Loss of $6.8 billion
State assumes allocation of property tax
1-year bailout: shift of property tax
State assumption of certain health and
welfare shares of cost
Limits local ability to raise revenue
1979 AB 8
Long Term Fiscal Relief
Same formula as the 1978 1-year bailout
State created AB 8 health program – block
grant
State assumed county shares of Medi-Cal and
SSI/SSP
Other shares of cost changed
Included a Deflator – activated if state
General Fund revenues insufficient to
maintain funding
What Happened Next?
1982-83 Deflator would have been
activated but VLF reductions instead
1983-84 Governor Deukmejian called
special session. Deflator would have
activated but VLF reductions instead
Local governments complained loudly
Governor called for New Partnership
Task Force
Task Force Recommendations
Constitutional protection of VLF
Repeal AB 8 Deflator
Shift a portion of existing state sales tax
to locals to replace subventions
Realign programs shared by state and
counties
Capitated health and welfare programs
Shift a portion of state sales tax to fund
Entitlement programs stay as they are
The 80’s. What ? No
Realignment?
If at first you don’t succeed ……..
Realignment
Restructuring
Disengagement
Attempt to swap AFDC and Trial Courts but
little interest and hard to accomplish
1991 – The Stars Are Aligned
1989 and 1990 significant budget reductions
to county programs including AB 8 Health and
Mental Health
Governor Wilson elected
January $7 billion budget gap
Discretionary programs: AB 8 Health, Indigent
Health and Mental Health proposed for
elimination
Willing to tax? Could “realign” programs
1991 January Budget Proposal
Transfer responsibility for AB 8, Indigent
Health, Community Mental Health and Local
Health Services to counties ($942 million)
Increase the alcoholic beverage tax to
national average; change the VLF
depreciation schedule and allocate revenues
to counties for programs ($942 million)
Provide local agencies authority to increase
sales tax ½% for drug enforcement and crime
prevention
Reactions
LAO Report: The County-State Partnership
plus principles
Legislature: Realignment Task Force – 7
Members plus principles reporting to
the Budget Conference Committee
CSAC: Work groups plus principles
How Did Realignment
Change?
Grew to $2.2 billion
Swapped taxes to VLF depreciation
increase and ½ cent sales tax
Added changing shares of cost in
primarily social services programs
Got much more complicated
Chapters 87, 89 and 91, Statutes of 1991
Complications
Other calls on the money?
How many accounts are needed?
Shares of cost = mandate?
VLF constitutionally protected – specify
use?
Potential loss of federal funds
Allocation and structure of the funds
Flexibility
What Was Realigned (in millions)
Community Mental Health
$452
State Hospitals/County Clients
210
IMDs
88
AB 8 Health Care
503
Local Health Services
3
Indigent Health
435
Local Block Grants
52
Stabilization
15
Juvenile Justice Grants
37
TOTAL
$1,795
State/County Shares of Cost ($s in m)
CCS
75/25
50/50
$30
Foster Care
95/5
40/60
363
CWS
76/24
70/30
42
IHSS
97/3
65/35
235
CSBG
84/16
70/30
13
Adoptions
100/0
75/25
12
GAIN
100/0
70/30
26
AFDC
89/11
95/5
-155
County Adm
50/50
70/30
-95
$549
Structure of Realignment
A State “Local Revenue Fund” with 3 accounts
Needed a Social Services Account - mandates
Programs wanted their own accounts
Each County establish a Local Health and
Welfare Trust Account with 3 accounts
The allocation of funds and how the number
of “pots” grew
What is equity?
Lawsuits/Challenges/
Poison Pills
Medically Indigent Adult transfer of
1982 – if mandate, Poison Pill to repeal
VLF increase
Proposition 98 – share in the sales tax?
Poison Pill to repeal new ½ cent sales tax
If any provision determined to be a
reimbursable state mandate, Poison Pill
to render Realignment inoperative
Other Issues
First year estimates short – had to redefine
the base
MOEs
What happens when a formula changes –
IHSS to PCSP with federal funds
MIA mandate case decision
Policy changes imposed by the State
Does Realignment affect Net County Costs
Transfers between accounts
Issues For Consideration
Lessons Learned
What program level being realigned
What authority over the program
What might the State require in the future
Are there new “equity” issues
Data and reviews
What Does the Future Hold
Governor’s May Revision Proposal –
move money from “discretionary”
mental health to shares of cost in Social
Services Account
Federal Health Care Reform
The Unknown