Analysis of the 2004-05 Budget Bill Legislative Analyst's Office February 2004

Local Government Financing (9210)

This budget item contains funding for six purposes:

• Citizens' Option for Public Safety (COPS). The COPS program was created in 1996 to provide local governments with funds for law enforcement. The program was expanded in 2000-01 to include funding for local juvenile justice programs. The budget proposes to continue the program's funding at $200 million. We discuss the program in more detail in our discussion of the property tax shift in "Part V" of the Perspectives and Issues and in the "Crosscutting Issues" section of the "Judiciary and Criminal Justice" chapter of this Analysis.
• Property Tax Administration Grant Program. This program was created in 1995 to provide forgivable loans to counties for additional spending on property tax administration. Chapter 521, Statutes of 2001 (AB 589, Wesson), converted the program into a grant program and extended its sunset date through 2006-07. The program is expected to fund $60 million in grants for 2004-05.
• Special Supplemental Subventions. In the current year, this item provides funds to specified local governments as follows: (1) local agencies that paid county jail booking fees in 1997-98 ($38.2 million, continuously appropriated) and (2) counties with no incorporated cities on the basis that they are not eligible to receive the city portions of the gas tax and vehicle license fee distributions ($147,000). For 2004-05, the budget proposes to eliminate both these special supplemental subventions, as well as county authority to impose booking fees. We discuss booking fees in more detail below.
• State-Mandated Local Programs. Funding for ten state mandates is appropriated under this item. The administration proposes to repeal five mandates and defer payments on five mandates. We discuss these and other state mandates in more detail in "Part V" of the Perspectives and Issues.

Booking Fees

Background

Faced with a $3.6 billion shortfall in the 1990-91 state budget, the Legislature and Governor enacted measures that significantly reduced state support for county and joint state-county programs. To mitigate a portion of the impact of these budget cuts, the Legislature enacted Chapter 466, Statutes of 1990 (SB 2556, Maddy), authorizing counties to raise revenues locally from three sources:

• Booking fees—charges imposed on cities, special districts, school districts, colleges, and universities to recover the costs associated with booking persons into the county jail.
• Property tax administration fee—charges imposed on cities and other noneducational local government agencies to offset their share of property tax administration costs.
• County taxes—authority to impose utility user and business license tax in their unincorporated areas. (In 1996, Proposition 218 made this county taxing authority subject to approval by local voters.)

Legislative materials regarding Chapter 446 suggest the Legislature intended booking fees to serve purposes beyond simple county fiscal relief. Specifically, booking fees would provide a disincentive to local agencies booking low-level offenders into county jail. This, in turn, would reduce the pressure on severely overcrowded county detention facilities and preserve county jail space for more serious offenders. Booking fees also would give cities an incentive to develop alternatives for nonviolent, less serious offenders.

Currently, most counties impose booking fees. The fee rate is determined locally, based on a county's annual costs for jail booking services and the number of bookings. In most cases, the fee is in the range of $100 to $200 per arrestee. The total amount of fees imposed statewide is unknown, but may be in the range of $40 million annually.

Booking Fee Relief. Seeking to offset local government costs associated with booking fees, but not alter the fiscal disincentives local agencies face regarding booking arrestees into county jails, the Legislature enacted a booking fee relief program with a fixed allocation formula. Under Chapter 79, Statutes of 1999 (AB 1662, Leonard)—as amended by Chapter 1075, Statutes of 2000 (SB 225, Rainey), and Chapter 1076, Statutes of 2000 (AB 2219, Battin)—the state provides a $38.2 million continuous appropriation to annually reimburse local agencies for booking fees paid in 1997. That is, every year the state reimburses local agencies for booking fees paid in 1997; the reimbursement amount does not vary to reflect changes in the booking fee rate or the number of people booked into county jail.

Proposal

The administration proposes to eliminate the $38.2 million continuous appropriation for booking fee relief provided under Chapter 79, as well as county authority to impose booking fees under Chapter 466. The administration indicates that it will support passage of AB 1749, Committee on Budget (legislation considered, but not enacted, as part of the 2003-04 budget package), as the means to accomplish its proposal.

Analysis

The administration's proposal would reduce state costs by $38.2 million. The direct fiscal effects on local governments, in turn, would vary by agency. Local agencies that pay booking fees (principally cities) would realize net savings to the extent that their future booking fee liabilities would have exceeded their booking fee relief payment. Counties, in contrast, would experience direct revenue losses equal to the amount of booking fees that they would have charged local agencies, probably about $40 million annually.

Of greater concern than the direct fiscal effects of this proposal, however, is the effect it would have on local agency fiscal incentives to minimize unnecessary bookings at county jails. Since creation of the booking fee, cities and other local agencies have taken steps to minimize their booking fee costs, including (1) creating programs such as "sobering centers" to treat people detained for public drunkenness and (2) expanding city jails. Because city jails typically house nonviolent detainees for short periods of time, they cost much less to operate than county jails. Since creation of the booking fee, the California Board of Corrections indicates that city jail space capacity has increased considerably and bookings at city jails now exceeds 400,000 arrestees annually. By eliminating the fiscal incentive to operate these city jails and alternative programs, local agencies may discontinue them and book their arrestees into county jail. County detention costs would increase accordingly.

Recommendation

Because booking fees encourage local agencies to use county booking and detention services efficiently, we recommend the Legislature reject the administration's proposal to eliminate county authority to impose booking fees, but approve the administration's proposal to end the booking fee relief program.

County authority to impose booking fees gives local agencies incentives to use county booking and detention services wisely and efficiently. Eliminating this incentive likely would result in significant increases to county costs, without any identifiable gain to public safety. Accordingly, we recommend the Legislature maintain county authority to impose booking fees.

In terms of cities, special districts, and other local agencies, we think it is appropriate that they pay for the jail booking-related costs their activities impose on counties. Such a payment requirement is analogous to many other financial arrangements among local governments, including the sharing of costs for property tax administration. In addition, we note that the $38.2 million booking fee relief program, as currently structured, allocates funding in a manner devoid of any policy rationale. We note, for example, that cities in Orange County continue to be reimbursed for their 1997 booking fee costs despite their county's decision several years ago to repeal its booking fee.