The Governor’s 2009-10 budget plan contains a proposal to shift some funding for some criminal justice programs from the state to the local level. We recommend that the Legislature expand upon this concept, and implement a policy-driven realignment of nearly $1.4 billion of state responsibilities to counties along with resources to pay for them. In particular, we propose that the state shift to counties programs for juvenile offenders and adults convicted of drug possession crimes. Under our realignment concept, counties would have broad authority to manage juvenile and drug–addicted adult offenders programs to achieve success. We recommend that the Legislature finance this criminal justice realignment by increasing the vehicle license fee (VLF) rate to 1 percent (which results in a revenue gain of $1.1 billion) and redirecting $359 million of existing VLF revenues. Under this financing approach, realignment would serve as a nearly $1.4 billion ongoing General Fund budget solution.