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American Society for Public Administration

Explore the dire financial situations faced by counties in the United States, particularly in California, as they navigate revenue shortfalls, significant budget cuts, and strained social infrastructure due to the economic recession.

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American Society for Public Administration

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  1. American Society forPublic Administration State and Local Fiscal Challenges April 12, 2010 Santa Clara County, California

  2. Nationwide - Counties Have SufferedFrom the Recession • 2009 NACo Survey – 138 counties in 34 states • 56% starting FY with at least a $10 million shortfall • Revenues the problem • Property Taxes – 52% • Reductions in state/federal funding – 50% • Sales taxes – 46% • Counties respond by cutting • Delay purchases/repairs – 60% • Salary/pay freeze for employees – 59% • Delay capital investments – 54% • Hiring freeze – 49% • Use of reserves – 44% • 82% anticipate shortfalls in the next year

  3. National Impacts Significant • National Center for the Study of Counties • Balancing the budget in 2009 was more difficult – 59% • Montgomery County, MD • Mecklenburg County, NC • States continue to erode local revenues • Maryland • Montana • New Mexico • Florida • Nevada

  4. California – the REAL Horror StoryProperty Tax Revenue Slump Percent Growth in Property Tax Revenues Source: Beacon Economics

  5. California – the REAL Horror Story • 58 Counties • Alpine (1,201) – Los Angeles (10 million) • 38 million people served • $55.6 billion in expenditures • Los Angeles County > 36 states • San Diego County > 12 states • Orange County > 11 states • Riverside County > 7 states • Kern County > 3 states • Severe cuts • 5,500 lay offs • 29% furlough employees • 29% reduce new employee benefits • 5% reduce existing employee benefits

  6. Sacramento County, CA • Population nearly 1.5 million • Total budget $2.5 billion • County employees – about 9,000 • 2009-10 • Property taxes down 6% • Sales Taxes down 14% • Cut $256 million from General Fund • laid off 835 employees • 2010-11 • Facing $118 million shortfall ($2b Gen Fund) • Looking at 630 layoffs and cutting 170 vacant positions • Reduction of Public Health nurses nearly 60% since 2007 • Reduction in Probation 43% since 2008

  7. California – the REAL Horror Story • State-Local Relationship Dysfunctional • 1910 Separation of Sources Act • Counties would tax property • Govt that imposed tax determined use • 1930s – Counties take over safety net programs • 1978 – Proposition 13 • Billons in property tax reductions, state back fills • State Legislature responsible for allocating property taxes • 1980s – fiscal roller coaster, counties get indigent health programs • 1991 – Program Realignment • $2 billion in health, mental health & social service programs • 1992/93 – ERAF – $1 billion, 1993/94 – ERAF $3 billion • Prop 1A (2004) stopped the hemorrhaging but did not solve the problem • Fiscal Reforms needed – Constitutional Convention?

  8. California – the REAL Horror Story • State Government Dysfunction • 2008-09 budget adopted on Sept 23, 2008 • Budget stalemate lasted 44 days • On Nov 6, 2008, Gov declares fiscal emergency – budget $10 billion in red • Legislature failed to act, expired on Nov 30 • New Legislature formed Dec 1, Gov calls another emergency session • Combined 2008-09 and 2009-10 deficit totaled $45.3 billion • Special Session combines cuts ($14.9 billion) and new revenues ($12.6 billion) – adopts 2009-10 budget • Relies upon special election ballot measures to balance budget • Ballot measures all FAIL miserably • July 2009 – Legislature makes series of cuts, borrows $2 billion in local property tax dollars – Proposition 1A (2004)

  9. California – the REAL Horror Story • 2010-11 Budget Proposed Jan 2010 • $20.6 billion deficit • $6.6 billion in current year • $14 billion in budget year • Gov proposes to shift significant burden to counties • Social services program cuts • Prison inmate reductions • Relies on $7 billion of new funds from feds • Calls another Special Session (#8) • Special Session #8 • Legislature send Gov $4 billion in cuts; signs almost $2 billion • Guts gas tax and replaces it with excise tax (short cuts constitutional protection) • Hoping on revenue improvement before new fiscal year

  10. California – the REAL Horror Story • Physical Infrastructure failing • Water system • Freeways • Streets and Highways • County facilities • Social Infrastructure failing as well • Overcrowded jails/prisons • Education failing • Social services stretched beyond capacity • University system in disarray

  11. Cuts & Revenue Decline Come at a Time of Increasing Demand

  12. California – the REAL Horror Story • No light at the end of the tunnel • Unemployment statewide 12.5% • Colusa and Imperial County 27.4% • Trinity County 25.8% • Central Valley – 50% • Los Angeles County – 636,000 unemployed • Only 4 cities in CA with higher population • Foreclosures still high • San Joaquin, Riverside, San Bernardino, Contra Costa

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