Conference Committee Budget Bodes Well for Counties
Both Houses of Legislature to Convene Sunday to Vote on this Final Package
As anticipated, the Budget Conference Committee met late Thursday and closed out the remaining issues before shutting down. The resulting budget document represents some significant wins for California counties. The spending proposals from both houses were scaled back in many cases, as compromise items were based on the Governor’s January or May budget proposals.
The Legislature is scheduled to return on Sunday, June 15 at 4:00 to vote on the budget in time to meet the June 15 deadline for adoption. CSAC will be monitoring the legislative activity on Sunday afternoon and evening when both houses take up the final budget package.
Mandate Repayment
On a unanimous vote the conferees approved the $100 million to repay local government for pre-2004 mandates. This was one of CSAC’s top priorities. Counties are owed $73 million of that $100 million with approximately $25 million owed to cities and the remaining $2 million to special districts. They also took action to direct any revenues that exceed the Governor’s projections in fiscal year 2014-15 to pay down the additional $800 million owed for pre-2004 mandates. The determination of additional revenues will be made in next year’s May Revision. However, remember approximately half of these revenues would first be required to meet the Proposition 98 guarantee, but the mandate repayment would have first call on any revenues once that obligation is met. This is a significant victory for counties.
Public Safety
The Conference Committee also approved the Governor’s public safety proposals from January and May. They took the following actions consistent with CSAC’s priorities:
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Committed an additional $500 million in bond financing to jail construction projects, with additional language to prioritize treatment and programming space
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Approved modified language creating a presumption for split sentences, including a requirement that the Judicial Council adopt a related rule of court
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Approved $1 million General Fund and revised language to establish a mechanism for counties to seek funding to cover increased trial court security costs related to the activation of new courthouse
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Adopted Recidivism Reduction Fund compromise package with multiple elements, including $18 million investment in Mentally Ill Offender Crime Reduction Grant program
Early Repayment of Transportation Loans
CSAC was successful in convincing the Legislature and Administration to adopt a budget conference committee compromise on the early repayment of the Highway User Tax Account (HUTA) loan last night that recognizes the important role that the local street and road system plays in statewide mobility. Recall that the Governor proposed to allocate only $100 million of the $337 million loan to counties and cities. After months of budget subcommittee hearings, meetings with members and staff and of course direct county supervisor and staff contact to your legislative delegation, the conferees acted to appropriate $242 million to counties and cities (from a combination of the HUTA loan repayment and excess State Highway Account funds). CSAC was also advocating for the use of the Streets and Highways Code §2103 formula, which allocates funds to counties based on 75% maintained miles and 25% registered vehicles. CSAC staff is currently trying to confirm which formula the conference compromise uses to apportion funds to counties and will share more information as soon as it’s available. Overall, counties can anticipate receiving $71 million more in FY 14-15 than proposed in January for a total of $121 million.
Highlights of the Health and Human Services
In-Home Supportive Services (IHSS) – Although not in conference, the Committee voted to eliminate the overtime restrictions proposed by the Administration, but adopted TBL that would provide guidance regarding the over sight of the overtime. Staff understands the language is still being worked on, and as a number of not in conference items, it may not be in the omnibus trailer bill for social services. The Committee left the 7 percent across-the-board reductions to IHSS approved hours in place. However, the Administration indicated that they are in ongoing discussions about a financing mechanism involving a, provider fee that would draw down sufficient federal funds to eliminate the 7 percent reduction. This would be a separate piece of legislation that the Administration stated would be forthcoming in the next week.
CalWORKs – The Conference Committee approved a 5 percent grant increase effective April 1, 2015 and a $20 million general fund ongoing appropriation for critical housing and homeless supportive services.
Medi-Cal Provider Reimbursement Rates – There were a number of rate issues before the conference committee. However, despite members of the Committee expressing tremendous concern related to access stemming from California having the lowest provider rates in the country, the Committee adopted the Governor’s May Revise proposal to not grant prospective fee-for-service rate increases. The budget includes forgiveness of certain retroactive payment reductions. However, they approved TBL to ensure DHCS monitors access and adjusts rates if necessary. The Committee did approve a rate adjustment for Programs for All-Inclusive Care for the Elderly (PACE), which has a cost of $3.6 million in total, $1.8 million General Fund and would increase the rates from 90 to 95 percent.
Medi-Cal Benefits – The Committee did not adopt language to add Applied Behavioral Analysis Services to Medi-Cal managed care for children ineligible for regional services. However they adopted TBL to require stakeholder consultation if the federal government adds ABA to Medicaid as a new benefit in the future. The Conference Committee did not restore the optional benefits eliminated in 2009 (acupuncture, audiology, chiropractic, incontinence creams and washes, optician/optical lab, podiatry and speech therapy).
Renewal Assistance – Although not in conference, the Committee reversed previous legislative action. The Conference Committee voted last night to reject a grant from the California Endowment to pay for enrollment counselors to assist with Medi-Cal renewals.
Commercial Sexual Exploitation of Children – Although not in conference, the Committee took action to reduce the appropriation. The budget will include $5 million GF, growing to $14 million GF in out years to provide statewide training, to develop local protocols, and to provide ongoing services to better support victims. They adopted BBL and TBL.
Foster Care Payments for Relative Caregivers – The Committee approved the Assembly’s version, which provided $30 million to raise foster care grant payments for non-federally eligible foster youth who reside with relative caregivers. The proposal will be phased in over time.
Title IV-E California Well-Being Waiver Project – The Conference Committee and the Administration compromised and reduced the state positions from 15.5 to 7, with BBL and TBL to allow for an increase in positions based on county participation.
Youth Permanency Outcomes Pilot – Although, not in conference, the Committee took action to eliminate the pilot from the budget.
Drought Emergency and State Emergency Food Assistance Programs – The Conference Committee adopted the Governor’s May Revision proposal to authorize up to $20 million GF to provide emergency food relief to drought impacted communities.
Adult Protective Services (APS) – The Conference Committee scaled back the Assembly’s action to provide funding for training and a state leadership position for APS. The Committee approved $150,000 GF for 1 position at DSS to provide leadership on statewide APS policy, support county APS programs and serve as a liaison with the federal government.
Public Health Restorations – The Conference Committee approved $4 million GF for the Black Infant Health program and $3 million GF for HIV demonstration projects.
Incompetent to Stand Trial (IST) – The Conference Committee approved an increase of 100 IST beds in state hospitals and up to 55 restoration of competency beds in county jails.
Federal Mental Health Parity – The Committee adopted the funding from Senate’s version, which was $4.2 million to fund 10 positions to enforce the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. , The Committee did not adopt trailer bill language.
SSI COLA – The Committee approved the Senate’s version, which did not reinstate the COLA.
Cap and Trade
The Budget Conference Committee also reached an agreement with the Administration on a short- and long-term investment plan for cap and trade auction revenues. From the county perspective, there are a number of wins in the overall package though much work remains to ensure the investment of cap and trade auction revenues provide for the maximum cost-effective greenhouse gas emissions reductions. The compromise will make an investment of $872 million in FY 2014-15, as outlined in the chart below.
Program |
14-15 comp |
|
High Speed Rail |
$ 250.0 |
|
Transit and Intercity Rail Capital Program |
$ 25.0 |
|
Low Carbon Transit Operations (STA) |
$ 25.0 |
|
Affordable Housing and Sustainable Communities |
$ 130.0 |
|
Low Carbon Transportation |
$ 200.0 |
|
Weatherization |
$ 75.0 |
|
Agricultural Energy and Operational Efficiency |
$ 15.0 |
|
Energy Conservation Assistance Act for public buildings |
$ 20.0 |
|
Water Action Plan – Water-Energy Efficiency (SB 103- has been appropriated) |
$ 40.0 |
|
Water Action Plan – Wetlands and Watershed Restoration |
$ 25.0 |
|
Sustainable Forests |
$ 25.0 |
|
Sustainable Forests/Urban Forestry |
$ 17.0 |
|
Waste Diversion |
$ 25.0 |
|
Total |
$ 872.0 |
The deal also proposes to allocate future auction revenues, beginning in FY 2015-16, as follows:
- 35% continuously appropriated for transportation, affordable
housing and sustainable communities
- 15% for transit including intercity rail and low carbon transit operations
- 20% for affordable housing and sustainable communities
- 25% continuously appropriated for High Speed Rail
- 40% annually appropriated in the budget or through legislation for low carbon transportation, natural resources programs, energy programs, and other GHG reducing programs
While the FY 14-15 allocation does not include the local government program for non-transportation projects that CSAC has been advocating for, it is our understanding that local governments are eligible under several of the programs listed above, particularly within the waste diversion, water efficiency and energy efficiency programs. Additional details will be available when the trailer bill language is made public. In addition, for the on-going funding plan, the 40% dedicated to natural resources funding will be annually appropriated in the budget and through legislation. CSAC will continue to work to secure a portion of this funding for programs that fund local projects within the energy and natural resources sector.
In terms of investment in Sustainable Communities, recall that CSAC was advocating for three main modifications to the Governor’s January Budget, including more funding for sustainable communities infrastructure, local street and road maintenance and rehabilitation as an eligible use within any sustainable communities program, and a regional governance structure that would require regional transportation agencies to develop competitive grant programs for counties, cities, and transit agencies. The $140 million in FY 2014-15 and the 10% of total auction revenues in FY 2015-16 and beyond, include local street and roads as an eligible use. Also, at full implementation, the cap and trade auctions could generate up to $5 billion annually meaning counties could compete for a share of up to $500 million in sustainable communities funds each year. Further, while we don’t believe the compromise requires a regional governance structure, it does not rule it out either. Again, we will report more information as trailer bill language becomes available.
Extension of the Property Tax Exemption for Solar Projects
As part of the budget deal, the Legislature last night approved the extension of a property tax exemption for commercial and residential solar energy systems. The current exemption is not set to expire until January 1, 2017.
While the state should feel free to provide tax incentives for renewable energy goals, counties think they ought to do so with state revenue, not local revenue, unless the state provides a reimbursement. Counties support the state’s renewable energy goals, but property taxes are the primary source of funding for local programs and for many state programs that counties are required to provide.
A proposal to extend this tax break, which, when voters approved it, was only intended to provide a tax benefit to homeowners and not for-profit, utility-scale energy projects, should be considered through the legislative process, allowing stakeholders to debate the policy. Since the exemption does not expire for two years, there is no need to include it in this year’s budget.
Look for a final report on these issues and others of importance to counties once the final budget is adopted.