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

Indigent Adult Program

Medically Indigent Adult Program And the Vehicle License Fee (VLF)

We recommend that the Legislature approve the administration's proposal to retain the current vehicle license fee depreciation schedule and preserve revenue support for locally realigned programs.

In 1991, the Legislature approved a realignment of funding and responsibilities for various health and social services programs from the state to counties, supported in part with a transfer of increased VLF revenues. A September 2003 appellate court ruling relating to the Medically Indigent Adult Program, one of the programs transferred to counties, could trigger a loss of $1.5 billion in VLF realignment revenues. The administration has proposed a statutory change to prevent the loss of these funds for the support of realigned programs.

We discuss the so-called "poison pill" provisions of realignment that could affect VLF revenues in our discussion of "Tax Relief" (Item 9100) provisions of the budget plan in the "General Government" chapter of this Analysis.