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GaliforniaGilyFinance.com April 13,2011 State Budget Issues of Concern to City Budgeters Since coming into office in January 2011, Governor Jerry Brown has been almost singularly focused on resolving the massive California state budget deficit. He has fallen short in his efforts to achieve a budget for 2011 -12, together with a ballot measure seeking approval of the voters for the extension of certain tax increases that are scheduled to end in June 2011. But the Legislature has enacted $12.2 billion in state budget cuts. More action, either cuts or revenue increases, is needed to close the state budget gap in the coming months. • • In the midst of this fluid situation, local agencies must prepare and decide on their budget plans for FY2011 -12. This memo provides an update on the current status of the state budget as it affects city finances, and offers guidance as to how local budgets should be approached given current law. Summary of State Budget Issues That May Affect Your Budget • 1. COPS / SLESF. Under current law, the COPS /SLESF program will terminate after June 2011. Local budgets should currently anticipate zero funding for these programs after FY2010 -11. 2. Booking Fees. Under current law, Jail Detention Facility Grants to county sheriffs will end after June 2011. In the absence of these grants, the law provides that counties may charge fees to arresting agencies to recover costs for booking persons into county detention facilities. The law provides specific limits and procedures for the adoption of the booking fees. There are no state funds • provided to arresting agencies as compensation for these fees. Local budgets for FY2011 - 12 should reflect the return of booking fees. 3. Williamson Act. State funding for Williamson Act contracts has been eliminated for FY2011 -12. 4. State Mandate Reimbursement. Funding of state mandated costs owed to local agencies by the state for pre -2004 mandates has again been deferred. 5. State Mandate Suspension. Many state mandates have again been suspended such that no state funding for these activities will be provided. • 6. Public Library Fund, Library Literacy Grants, California Library Services Act. Funding for these • programs has already been reduced from a combined $30.4 million to $15.2 million for FY2011.12. More information as to the specific local effects of these reductions is pending. 7. Prop42 and HUTA. There will again be no Prop 42 funds in FY2011 -12. Instead,-cities and counties will continue to receive a new category of Motor Vehicle Fuel Tax (also known as Highway Users Tax HUTA or Gas Tax) funds under Streets and Highways Code Section 2103. The annual amount of these funds will be similar to the funds that would have been provided under Proposition 42 but • a. will be distributed monthly rather than quarterly, b. may be used under Streets and Highways Code Section 2101 rules, and c. are NOT subject to the Maintenance of Effort requirements for Proposition 42 funds. 2217 Isle Royale Lane • Davis, CA • 95616 - 6616 phone /fax: 530.758.3952 • coleman @munil.com • www.CaliforniaCityFinance.com