LAKE COUNTY – As the state Legislature prepares to begin hearings on the governor's updated budget, there are concerns about what the proposed budget changes will do to counties, especially rural areas such as Lake County.
Gov. Arnold Schwarzenegger released his May budget revision on May 14. The $145.9 billion budget calls for $103.9 billion from the state's General Fund alone.
A report from the state Senate's Committee on Budget & Fiscal Review identified “significant changes” from the budget originally proposed in January.
In her overview of the May revision, Elizabeth G. Hill, the state's legislative analyst, estimates that under Schwarzenegger's budget, state expenditures will exceed revenues by $3 billion in the 2007-08 budget year.
Among the changes, the General Fund reserve was estimated at $2.1 billion in January, a number which since has declined to $500 million.
The shortfall comes from a variety of sources including a decline in major tax sources such as personal and corporate taxes which are expected to be down by $806 million this coming year, with sales and use taxes revised down by $500 million due to a weaker economy, Hill reported.
In addition, proposed tribal gaming revenues of $314 million in the next budget year, which are $192 million lower than anticipated.
To make up some of the shortfalls, the governor made several controversial proposals, including selling the state's EdFund, which administers federal student loan programs for both in-state and out-of-state students in higher education, eliminating a cost of living increase for Social Security and eliminating the Williamson Act subvention for counties.
Hill wrote that she believes Schwarzenegger is overestimating his budget reserves, which will result in a “significant challenge” for the Legislature as it develops a budget “that realistically reflects revenues and spending while maintaining a prudent reserve.”
At the same time, some General Fund expenditures are expected to go up significantly. Hill's report notes that Schwarzenegger has added $624 million in budget expenditures in the May revision, including money to pay Proposition 98 obligations for education.
Modest economic growth is predicted in the budget, though Hill notes there are uncertainties due to the housing market – lighter sales, dramatically increased foreclosure rates along with lowered selling prices – and gasoline prices.
North Coast legislators Assembly member Patty Berg (D-Eureka) and Sen. Patricia Wiggins (D-Santa Rosa) both criticized Schwarzenegger's May budget revision.
“California deserves a government that puts people first, a government that protects the environment, plans for the future and takes care of our families and our children,” said Berg, chair of the Budget Subcommittee on Health and Human Services. “The budget the governor gave us falls short of that goal.”
Wiggins cited several concerns, among them social programs.
“What I heard was a message that it would be OK for us to again cut services and assistance to seniors, the disabled, the homeless and the mentally ill – not something I had hoped to hear during a time of ‘bipartisan cooperation,’” she said.
Social programs could be hit hard
Schwarzenegger proposes to help offset that, Hill reported, with the $185 million in savings from suspending the cost of living increase for the elderly and disabled Social Security Income and State Supplementary Program recipients.
That proposal could affect the more than 10,000 people in Lake County over the age of 65, according to US Census numbers.
David Miller, Wiggins' spokesman, said Schwarzenegger “prefers that we repay $3.1 billion to Wall Street, about double what we have to, instead of ensuring that we are able to provide for the needs of poor kids, the disabled or the elderly. Or for that matter, instead of ensuring that that cities, counties and school districts have the resources they need to serve the people in their communities.”
Kelly Cox, the county's administrative officer, is a veteran of dealing with county budgets and how they're affected by the overall state budget. He said it's still too early to know the full impact of Schwarzenegger's proposals on Lake County's fiscal picture for 2007-08, especially the actual dollar impact.
However, he did say Social Services, Child Support Services, health and mental health services, and other county services could stand to be affected by Schwarzenegger's proposals.
Williamson Act proposed for cuts
The governor also expects to save $40 million by cutting the Williamson Act program, another area that could immediately affect the county.
The Williamson Act was created by the state Legislature in 1965 to help preserve agricultural and open space by discouraging “premature and unnecessary conversion to urban uses,” according to the state Department of Conservation.
The act helps protect nearly 16.9 million of the state's 29 million acres of farm and ranch land through 10-year contracts, which result in landowners saving an estimated 20 to 75 percent in property tax each year. In order to enter into a Williamson Act contract, a landowner must have an “agricultural preserve” of 100 acres or more – which can be a number of smaller parcels combined, the Department of Conservation reported.
Cox said the Williamson Act would be one of the first areas of impact.
“We would immediately lose approximately $70,000 per year in general fund revenue from discontinuance of the Williamson Act/Open Space subvention and future Williamson Act contracts would certainly be at jeopardy,” said Cox. “In fact we could be forced to initiate proceedings to cancel some of the existing contracts.”
According to the state's Division of Land Resource Protection, Lake County has 49,504 acres enrolled in the California Conservation (Williamson) Act. Of that number, 5,866 acres are listed as prime agricultural land.
Wiggins, who was been working to redefine and expand the Williamson Act through her bill, SB 562, was also critical of this part of the governor's budget.
“The governor has received a lot of press for his efforts on behalf of the environment, but his budget shows that when it comes to spending a small amount of money to preserve our agricultural land from being converted to golf courses or Super Wal-Marts, he doesn’t put his money where his mouth is,” she said.
She added that Schwarzenegger's plan shows “he clearly wants local governments to pay the tab for the entire {Williamson Act] program.”
Presidential primary a costly addition
One area where Cox expressed concern was the proposal to delay state reimbursement of the cost of the early presidential primary election to fiscal year 08/09. That proposal, while farther out, could have ramifications on the 2007-08 budget, he said.
“This will be a costly additional election the county will be required to conduct which is entirely due to action recently taken by the governor and state legislature,” he said. “It is being proposed that the county cover the entire cost of that election and not receive any state reimbursement until the following fiscal year.”
He added, “That certainly won't help balance our 07/08 budget – we need to be reimbursed in the same year the expense is incurred. In fact, they should be providing us with the necessary funding prior to the election.”
Cox said he's not sure when the budget picture for the county will become more clear, although be believes more information and clarifications will be coming “on a piecemeal basis” in the coming weeks.
He added that what the governor proposes isn't what the legislature ends up approving, so there's no telling at this point what the final budget will look like.
E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..
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