State-Local Assistance

Both the U.S. and California economies experienced remarkable growth in 2000. Nationally, real economic growth exceeded 5 percent, the largest gain in 16 years. California’s economy significantly outpaced the robust national performance, with personal income rising more than 11 percent, also the largest gain in 16 years, and sales tax revenues growing faster than at any time since the early 1980s. Cities and counties have also shared in this prosperity. Statewide, taxable sales grew by 10 percent in 1999, and for the first three quarters in 2000, taxable sales grew between 10.3 percent and 14.6 percent. In addition, property tax assessed values grew by 7.8 percent in 2000, and are expected to grow by 8.4 percent in 2001. For 2001, however, the national economy is expected to slow, with growth returning to a more sustainable pace.

Although California’s economy also is expected to moderate, the Administration remains committed to providing assistance that benefits local governments. The Governor’s Budget continues the Administration’s efforts to support high priority programs of mutual concern to the State and local governments in the areas of public safety, health and human services, housing, transportation, and resources.

The Administration’s Director of Intergovernmental Relations and the Director of Finance welcome a continued discussion with local government leaders and leaders in the Senate and the Assembly regarding proposals for long-range reform of the State-local fiscal relationship.

The Budget provides $250 million in one-time discretionary funding for local governments. These moneys will be allocated 50 percent on a per-capita basis and 50 percent based on local governments’ contribution to their counties’ respective Educational Revenue Augmentation Fund.

In addition to this discretionary funding, the Budget includes funding in the following areas that is of direct benefit to local governments.

• Citizens’ Option for Public Safety (COPS) and Juvenile Crime Prevention Programs—The Administration proposes to provide $242.6 million for 2001-02 to extend funding for the COPS program ($121.3 million) and county juvenile crime prevention programs ($121.3 million). The COPS program supports local front-line law enforcement, sheriffs’ departments for jail construction and operations, and district attorneys for prosecution. The juvenile crime prevention programs will include elements that provide a swift, certain, and graduated response for at-risk youth and juvenile offenders.
• Technology Grants for Local Law Enforcement—The Budget includes $75 million in one-time funding for local law enforcement agencies to purchase high-technology equipment for crime prevention and suppression. Local agencies will receive a minimum of $100,000 and an additional per-capita amount. These funds will help local law enforcement agencies address crime prevention and suppression problems through the use of equipment such as mobile computers, radios, and video imaging equipment.
• Local Crime Lab Funding—The Budget includes a one-time augmentation of $30 million to be disbursed on a competitive basis to local law enforcement agencies for the construction and upgrade of local crime labs.
• Fighting High Technology Crime—The Budget contains $10.9 million to augment the High Technology Theft Apprehension and Prosecution Program, which uses specialized techniques to apprehend and prosecute high technology crimes such as electronic fraud and software piracy. Of this amount, $7.6 million is for additional local law enforcement officers and agents, expansion of high technology investigative and forensic training, and forensic equipment purchases; and $3.3 million is for combating identity theft and fraud statewide by training law enforcement on identity theft, developing protocols for handling identity theft crimes, and enhancing interagency investigation efforts.
• War on Methamphetamine—The Budget includes $40 million ($25 million one-time) for disbursement to High Intensity Drug Trafficking Areas (HIDTAs) throughout the state. This local assistance augmentation will intensify the current efforts of California’s HIDTAs by providing additional resources to purchase specialized equipment for the enhancement of suppression activities, as well as funding to hire more investigators, agents, and prosecutors specializing in methamphetamine offenses.

• Housing—The Budget provides $200 million in new funding available in 2001-02 and 2002-03, for a total of $300 million, for the Jobs-Housing Balance Incentive Program, which rewards cities and counties that increase the number of housing permits issued. The Budget proposes making the funds available for any purpose, removing the Program’s current limitation on the use of funds for capital purposes only.
• Central Valley Infrastructure—The Budget includes $20 million for grants to communities in the Central Valley for infrastructure that supports business and industrial development and creates jobs.

The Budget provides $18 million for grants to rural local transit agencies for capital projects and equipment, and $171 million from the sales tax on gasoline to cities and counties for local streets and roads.

The Budget provides $322.6 million for resource and environmental programs, including funding for local project grants to reduce beach closure days, river parkway improvements, local flood control subventions and other flood control projects, wetlands restoration and recovery projects, school site oversight and cleanup, and funding for the Urban Cleanup Initiative.

• The Administration supported several general obligation bonds on the March 2000 ballot that were approved by the electorate to provide significant assistance to local entities. The State’s General Fund pays the principal and interest on these bonds, which include the Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Bond Act of 2000; the Safe Drinking Water, Clean Water, Watershed Protection, and Flood Protection Act; and the California Reading and Literacy Improvement and Public Library Construction and Renovation Bond Act of 2000.
• The Budget includes $323.7 million in bond funds for local parks, flood protection, bay protection and restoration, and wild lands acquisition.
• For the acquisition, construction, and improvement of public libraries, $350 million in bond funds will become available to local agencies.

The Budget includes a one-time augmentation of $40 million to establish a touch screen voting pilot project in three California counties—one large, one medium, and one small. The counties will be selected to ensure appropriate geographic representation, and local matching funds will be required on a dollar-for-dollar basis.

Chapter 850, Statutes of 1997, created the Lockyer-Isenberg Trial Court Funding Act of 1997 to provide a stable and consistent funding source for the trial courts. Beginning with the 1997-98 fiscal year, consolidation of the costs of trial court operations was implemented at the State level. This implementation capped the counties’ contributions to trial court costs at a revised 1994-95 level and allowed counties to retain local fine and penalty revenue previously used to support trial court operations.

Since 1997-98, the State’s share of trial court funding costs has increased from 42 percent to well over 78 percent. This shift in funding responsibility for trial court operations has resulted in the availability of significant general purpose revenues to counties. For 2001-02, the State will be assuming 78 percent of trial court funding costs, making $414 million available in general purpose revenues to counties.

It is also important to note the significant level of funding that is provided to local governments on an ongoing basis. Although the following list is not all inclusive, it illustrates the general order of magnitude of this existing local government assistance.

• $1.2 billion in local assistance

• $452.2 million from the State Highway Account for projects delivered and selected by local agencies, bridge repair and replacement, railroad grade crossing improvements, and matching funds.
• $430 million for the Traffic Congestion Relief Program to fund projects where a local agency is the project manager and the project was selected with input from local agencies.
• $189.2 million for special transportation programs to provide operating funds to local transit agencies. These funds can be used for road purposes in small counties.
• $130 million for the Proposition 116 Bond Program for projects designated in the bond act.
• $29.8 million for grants and loans for bicycle transportation, pedestrian safety, airports, and Bay Area ferry planning.
• $4 million in planning grants.

• $501 million in capital outlay

• $251 million (estimated) for capital outlay spending on projects selected by local agencies.
• $250 million for the Traffic Congestion Relief Program to fund projects for urban congestion relief.

Housing, Community Development, and Infrastructure: $307.2 million

• $201 million for loans to local government agencies from the California Infrastructure and Economic Development Bank within the Technology, Trade, and Commerce Agency for a variety of economic development projects.
• $104.8 million for the Jobs/Housing Balance Program for incentive grants to increase housing permits, for competitive interregional planning grants, and economic development grants.
• $1.4 million for Downtown Rebound Program grants for planning in-fill housing development and conversion of commercial/industrial buildings to housing.

• $2.3 billion in local assistance

• $1.3 billion for Department of Mental Health local assistance.
• $349 million for Department of Alcohol and Drug Programs local assistance.
• $221.9 million for caseload programs, including Child Health and Disability Prevention, California Children’s Services Program, and Genetically Handicapped Persons Program.
• $190.1 million for health programs including California Health Care for Indigents, Aids Drug Assistance Program, Childhood Lead Prevention, and other programs.
• $163.7 million for Department of Social Services programs including Adult Protective Services, Statewide Automated Welfare System, County Services Block Grants, and other programs.
• $43 million for breast cancer and prostate cancer treatment and public health subventions.

• $3.7 billion for Realignment—State-Local Realignment restructured the State-county partnership in 1991-92 by giving counties increased responsibilities and funding for a number of health, mental health, and social services programs. Realignment also provided an ongoing revenue source for counties by establishing a new 0.5 percent sales tax and an increase in the motor vehicle license fee (VLF). In 2001-02, the Local Revenue Fund will provide an estimated $2.4 billion to local governments, and the local portion of the VLF will provide an estimated $1.3 billion.

• $128.4 million in local assistance

• $28.3 million for local peace officer training assistance.
• $27.3 million for the Mentally Ill Offender Crime Reduction Program.
• $27.2 million for narcotics, sexual assault, and elder abuse prosecution programs and gang violence suppression and rural crime prevention programs.
• $15 million for the Juvenile Crime Enforcement and Accountability Challenge Grant Program.
• $11.6 million for domestic violence prevention and prosecution programs and witness protection programs.
• $9.5 million for the Repeat Offender Prevention Act.
• $8.5 million for alcohol-related enforcement grants and racial profiling data grants.
• $1 million for the Young Men as Fathers program to teach parenting skills to youthful offenders who are parents.

• $2.4 billion from the Local Public Safety Fund—In 1993, Proposition 172 was established in the Constitution to provide a 0.5 percent local sales tax for public safety services. In 2001-02, local governments will receive an estimated $2.4 billion from the Local Public Safety Fund.

• $150 million for the Water Resources Control Board Service Revolving Fund.
• $15 million for assistance to local air pollution control boards, including enforcement and compliance activities to improve air quality.
• $2.3 million for on-site sewage treatment, hazardous waste, and local prosecutors programs.

• $59 million for local public libraries to provide basic library services.
• $12.1 million to reimburse handling costs for public library lending purposes.
• $10.7 million for programs that promote resource sharing among public libraries throughout California and through regional library networks.
• $6 million for programs that provide literacy and pre-literacy services for adults and children and for the recruitment and training of tutors.