By Nick Warner, Managing Partner, Warner & Pank LLC
Danielle Higgs, Legislative Representative/Business Consultant, Warner & Pank LLC
On January 5th, Governor Brown released his January proposed 2012-13 budget. A year ago, the state faced a $26.6 billion shortfall and future estimated annual budget gap of $20 billion. Based on budget actions taken last year, the state now faces a $9.2 billion budget problem.
The Governor’s plan proposes to balance the budget through $4.2 billion in expenditure reductions and $4.4 billion in expected revenues that would result from a November 2012 ballot initiative that would temporarily increase the state sales tax by 0.5% and create new, higher personal income tax brackets beginning with individuals earning more than $250,000 ($500,000 joint) per year. The Governor will ask voters in November to approve a Constitutional Amendment to prevent deep cuts to education and guarantee funding for public safety at the local level. If the initiative is not passed, the Governor’s budget proposes additional trigger reductions to a number of programs as outlined in this memo. Similar to last year, the Budget assumes that a portion of its proposals will be adopted by the Legislature by March 1, 2012.
Governor Brown continues to fund the criminal justice realignment enacted last year and to build upon this transition of services to local governments, particularly in the area of Juvenile Justice. Realignment funding for 2012-12 is proposed to grow from $5.5 to $5.8 billion.
Below is an overview of the budget as well as some details on the various pieces related to realignment and other public safety issues of interest. To view the budget document in its entirety, please see the link below:
• As the Governor has suggested publicly for months, he continues the funding for realignment. Please note that the funding sources remain the same (i.e. VLF and Sales Tax), but the estimates have been forecasted with a slight increase. At the time of the final Budget, the estimate for 2011‑12 sales tax was $5,105.7 million. This estimate has been revised to $5,107 million. The 2011‑12 VLF estimate at the time of budget enactment was $453.4 million. This estimate has been revised upward to $462.1 million.
• In addition to the public safety realignment provisions, this also covers programs such as COPS/JJCPA, juvenile justice, court security, etc. which remain the same.
• While the budget includes the realignment funding, it does not specify the county by county allocation at this time, but tasks the CSAC working group to again draft the funding allocation between counties for the 2012-13 budget.
Community Correction Partnership Funding - The Budget proposes $8.9 million for a second year of training efforts related to the implementation of AB 109 programs. Of this amount, $1 million is for statewide training efforts. The remainder is for allocation to each Community Corrections Partnership so the Partnerships have sufficient resources to review and amend plans based on the first year of program experience.
Permanent Funding Structure for Realignment - The Administration is proposing a permanent funding structure for 2011 Realignment for both base and growth funding. This includes both Health and Human Services Realignment (Support Services Account) and Public Safety Realignment (Law Enforcement Account)
Court Security - Base funding for all counties is secure with allocated growth to be determined.
SB 678 Funding – The Budget proposes $140 million to counties for SB 678.
Juvenile Justice Realignment - The Budget proposes to stop the intake of new juvenile offenders to the Division of Juvenile Justice (DJJ) effective January 1, 2013. The DJJ’s population will gradually diminish through attrition.
• The Budget proposes $10 million General Fund in 201-12 for counties to begin planning for this population. To help with the transition and prevent the disinvestment of funds in juvenile justice at the local level, the state will delay collection of recently imposed additional fees for those wards housed in the DJJ that was included as part of 2011 trigger cuts.
Board of State Community Corrections – The Budget proposes $109.1 million ($16.9 million General Fund and $92.2 million other funds) for the state operations and local assistance programs included under this Board. Legislation associated with the 2011 Budget Act abolished the CSA and established the new Board as an independent entity, effective July 1, 2012. The Board will absorb the previous functions of the CSA as well as other public safety programs previously administered by the California Emergency Management Agency.
Delay of Program Participation Requirements for Specified Probationers — Chapter 219, Statutes of 2010, provided for enhanced sentencing of sex offenders. The Budget proposes to implement a two-year delay, from July 2012 to July 2014, of the requirement that probationers who are registered sex offenders participate in a sex offender management program. All the enhanced sentencing terms and parole lengths that were part of the bill, which basically required longer sentences for sex offenders and in some cases longer/lifetime parole, will remain in place. No sentencing changes will result from this proposed program delay.
Proposed Trigger Cuts
The Budget assumes the passage of the Governor’s proposed initiative at the November election. This measure temporarily increases the personal income tax on the state’s wealthiest taxpayers and temporarily increases the sales tax by one-half percent. The measure guarantees these new revenues to schools and constitutionally protects the 2011 Realignment funds for local public safety.
The Budget proposes a backup plan if the ballot measure is not approved. The plan specifies $5.4 billion in cuts affecting education and public safety—the areas protected by the Governor’s initiative. These ballot trigger cuts, would go into effect on January 1, 2013:
• Funding for schools and community colleges would be reduced by $4.8 billion.
• The University of California and California State University would each be reduced by $200 million.
• The courts would be reduced by $125 million, the equivalent of court closures of three days per month.
• The number of the state’s public safety officers in the departments of Parks and Recreation (park rangers) and Fish and Game (wardens) would be reduced, and the state would no longer staff its beaches with lifeguards.
• The Department of Forestry and Fire Protection’s firefighting capabilities would be reduced substantially. The emergency air response program would be reduced, and fire stations would be closed.
• Flood control programs in the Department of Water Resources would be cut, which would reduce channel and levee maintenance and floodplain mapping.
• The Department of Justice’s law enforcement programs would be reduced.
California Department of Corrections and Rehabilitation
Alternative Custody: Expansion of the alternative custody program for female inmates. The Budget provides for the expansion of Alternative Custody for Women to include women who have a prior serious or violent conviction.
Operational Changes: The conversion of the Valley State Prison for Women to a male facility by July 2013 and conversion of existing reception center capacity throughout the state to house inmates on a longer-term basis.
Prison Facilities Plans: Although the major medical facility under construction in Stockton will proceed as scheduled due to the specialized capacity that it will provide, the Administration is reevaluating the need for other infill and reentry construction projects in light of the substantial population declines. The Budget includes a reduction of $44.5 million to reflect the cancellation of the Estrella infill project. Additionally, the Budget reflects that the state is not currently proceeding with the construction and conversion of the DeWitt youth facility to an adult facility.
Trial Court Trust Fund: The Budget includes an augmentation of $50 million Trial Court Trust Fund in 2012-13 from proposed civil court fee increases in light of the General Fund budget reductions in recent years.
Judicial Trigger Cuts: The Judicial Branch would be reduced by $125 million in 2012-13 if the Governor’s tax proposal is not approved in November. While the Branch would determine how to implement this reduction, it is the equivalent of court closures equal to three days per month.
Other Priority Items
SCAAP: The state is expected to receive only $65.8 million in federal State Criminal Alien Assistance Program funding for 2011-12 and 2012-13. At this level of funding, the state will be reimbursed for only 7 percent of the costs associated with the incarceration and related debt service associated with the undocumented felon population, with $870.6 million in costs in excess of the level of federal reimbursements.
State Mandate Repeal - Proposes to repeal, make permissive, or suspend many state mandates on local governments that are unnecessary and burdensome. Many of these fall into the public safety sector. The Department of Finance will finalize and release the full list in the coming days (Savings of $828 million).