Analysis of the 2005-06 Budget Bill Legislative Analyst's Office February 2005

Local Government Financing (9210)

This budget item contains funding for four 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 the Juvenile Justice Crime Prevention Act. The 2004-05 budget provides $100 million for each component. The Governor's budget proposes $100 million for COPS, the same level of support as the current year. Funding for juvenile programs is reduced by $75 million and $25 million is shifted to the Board of Corrections for distribution to local governments.
• 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 through 2006-07. The budget provides $54.3 million for grants in 2005-06, a reduction of $5.7 million from 2004-05 levels.
• State-Mandated Local Programs. Funding for nine state mandates is appropriated under this item. The administration proposes to suspend local governments' obligations to carry out six mandates and provides $2.4 million for the other three. We discuss these proposals below. (We review the administration's overall mandate proposal and discuss the impact of Proposition 1A—approved by the voters in November 2004—in "Part IV" of The 2005-06 Budget: Perspectives and Issues.)
• Special Supplemental Subventions. This program provides funds ($650,000) to redevelopment agencies that had bond debt tied to a previously provided personal property tax subvention. Redevelopment agencies use the funds in this item to offset their losses due to repeal of this subvention in 1984.

Mandates

Figure 1 summarizes the budget's proposal for the nine mandates under this item. For 2005-06, the administration proposes to (1) fund three of the mandates ($2.4 million) and (2) "suspend" the six other mandates. (When the state suspends a mandate for a fiscal year, it incurs no reimbursement liability for that year, and local governments are not required to provide the mandated services.)

Open Meeting Act

We withhold recommendation regarding this mandate pending release of the administration's proposal.

Background. In 1953, the Legislature enacted the Brown Act, declaring, "all meetings of the legislative body of a local agency shall be open and public, and all persons shall be permitted to attend any meeting of the legislative body." Because the Brown Act preceded the 1975 operative date of mandate law, its requirements are not a state-reimbursable mandate. Instead, the Open Meeting Act "mandate" pertains to certain post-1975 procedural amendments to the Brown Act, most notably the requirement that local agencies prepare and post agendas 72 hours before a hearing (Chapter 641, Statutes of 1986 [AB 2674, Connelly]). As Figure 1 indicates, based on prior-year claiming practices, we estimate that local agencies will claim $15.9 million for this mandate in 2005-06. (K-14 districts file separate claims.) Most of this amount reflects costs for agenda preparation and review. Many local agencies claim reimbursement for more than $1,000 per agenda prepared.

Budget Proposal. For 2005-06, the administration proposes to restructure the Open Meeting Act mandate and provide $2 million. At the time this analysis was prepared, no information regarding the administration's proposal was available. We estimate that, in its current form, the mandate would cost $15.9 million in 2005-06. In addition, it is our understanding of Proposition 1A that when the Legislature funds local agencies for 2005-06 costs, it must also fully reimburse local agencies for their 2004-05 costs. We estimate the 2004-05 state liability for this mandate is $15 million. The budget provides no funding for this purpose.

Recommendation. Pending release of the administration's proposal, we withhold recommendation regarding this mandate. We note, however, that California residents have shown longstanding interest in open hearings, and the state's voters recently enacted Proposition 59, amending the State Constitution to specify that meetings of public bodies and writings of public officials must be open to public scrutiny. Accordingly, legislative action to eliminate (or make optional) the procedural elements of the Open Meeting Act mandate would not likely reduce people's ability to monitor local agency actions. Accordingly, when considering the administration's Open Meeting Act mandate proposal, we recommend the Legislature consider as an alternative making the Open Meeting Act mandate optional (the Brown Act would still be in force). This alternative would eliminate all future state reimbursable costs for this mandate, as well as the requirement that the Legislature include funding for the mandate's 2004-05 costs in the 2005-06 budget.

Health Benefits for Survivors of Peace Officers and Firefighters

Given the requirements of Proposition 1A and past local agency claims, we estimate the cost of continuing this mandate in 2005-06 is $703,000, or $482,000 more than proposed. We recommend the Legislature augment the budget to fully fund the mandate, but enact legislation to eliminate the mandate on a prospective basis.

This mandate reimburses local agencies for the cost of providing health benefits to the survivors of firefighters and peace officers killed in the line of duty. Chapter 1120, Statutes of 1996 (AB 3478, Aguiar), and Chapter 193, Statutes of 1997 (SB 563, Brulte), require local governments to provide these benefits.

Two years ago, the Commission on State Mandates (CSM) estimated this mandate's annual costs would be about $150,000. Based on recent claims submitted to the State Controller's Office, however, the mandate's costs appear to be twice this amount because (1) health benefit costs are increasing and (2) local agencies request reimbursement for administrative costs as well as health benefit costs. For example, one-third of the City of Fullerton's most recent claim was for administrative costs.

Recommendation. In our view, the state should honor its commitment to current survivors of firefighters and peace officers. Accordingly, we recommend the Legislature increase the $221,000 proposed for this mandate by $482,000 to fully fund its 2005-06 and 2004-05 costs, as required by Proposition 1A. (The state would also incur out-year costs to continue these benefits for those survivors now receiving benefits.) In terms of future beneficiaries, however, we view payment of survivors' health benefits as an issue related to the terms of employment and working conditions. As such, the benefit is a matter for local collective bargaining. Accordingly, we recommend the Legislature enact legislation to eliminate, on a prospective basis, the state requirement to provide health benefits to survivors of local public safety personnel.

Rape Victim Counseling

We recommend the Legislature delete $187,000 for this mandate and enact legislation to specify that the mandate's provisions are expressions of legislative intent. To ensure that local agencies provide these services, the Legislature could adopt budget language making Citizens' Option for Public Safety funding contingent upon local law enforcement agency certification that it will carry out these responsibilities.

Under this mandate, local law enforcement agencies refer rape victims to local rape victim-counseling centers and provide victims with an information card regarding domestic violence. In their mandate claims, local agencies typically request reimbursement for (1) ten minutes of officer time, four minutes of clerical time, and two minutes of dispatch time per rape; (2) printing costs; and (3) administrative costs. While the budget proposes $187,000 for this mandate, we estimate the mandate's 2005-06 costs will be about $289,000 and its 2004-05 costs are about $281,000.

Recommendation. It should be standard practice for law enforcement agencies to refer rape victims to local victim-counseling centers and provide information regarding domestic violence. Given the mandate requirements of the California Constitution, however, placing this simple requirement into law shifts to the state all costs to carry out this local responsibility. State mandate costs, in turn, reduce resources available for state responsibilities. In our view, when an activity is a basic local government responsibility, the Legislature should modify the mandate to make it optional and consider alternative ways of encouraging specific local government actions. Accordingly, we recommend the Legislature modify this mandate in trailer bill language to specify that its provisions are expressions of legislative intent. Should the Legislature wish to ensure that local law enforcement agencies carry out these responsibilities, the Legislature could adopt budget bill language under this item, making receipt of COPS funding contingent upon agency certification that it will carry out these responsibilities. This alternative would eliminate state costs for the mandate in 2005-06 ($289,000), as well as the obligation to fund the mandate's 2004-05 costs in the budget year ($281,000).

Photographic Record of Evidence

We recommend that the Legislature enact trailer bill language to repeal this mandate and, if necessary, clarify or expand court authority to require substitutes for evidence that poses a health, safety, security, or storage problem.

As we describe more fully in New Mandates: Analysis of Measures Requiring Reimbursement (December 2003), this mandate requires local law enforcement agencies to provide photographs, chemical analyses, and other substitutes for evidence that a court determines poses a health, safety, secu rity, or storage problem. In their mandate claims, local agencies typically request reimbursement for purchases of high-tech digital imaging and printing equipment. The administration proposes to suspend this mandate in the budget.

In our view, the responsibility for managing evidence used in the courts should rest with law enforcement agencies. The administration's proposal to suspend this mandate in the budget bill, however, raises two concerns. It could:

• Add Ambiguity to the Laws of Evidence. As we discuss in An Assessment: Governor's Local Government Proposal (May 2004), when a mandate is suspended, the suspension applies only to the sections of law (or laws) found to be a mandate by the CSM. All other provisions in the statute continue to have the force of law, but interpreting these remaining provisions (which may refer to the suspended provisions) can become very difficult. Because the Photographic Record of Evidence mandate pertains to an area of law where ambiguity could have serious consequences, we recommend the Legislature carefully craft permanent changes to the mandate's underlying statute, rather than using the suspension process.
• Increase in Court Costs. In 1985, court concerns regarding evidence storage and handling costs prompted passage of the subject legislation. At the time this analysis was prepared, we were not able to determine whether courts currently have sufficient authority—independent of this mandate legislation—to require local agencies to submit substitute evidence. If this mandate's suspension were to result in local agencies submitting some evidence that they currently do not submit, courts could experience increased storage and handling costs.

In light of these concerns, we recommend the Legislature reject the administration's proposal to suspend the mandate. Instead, we recommend that the Legislature enact trailer bill language to repeal this mandate and, if necessary, enact provisions clarifying or expanding the court's authority to require substitute evidence.

Mandate Reimbursement Process

We withhold recommendation on this mandate, pending development of a proposal to replace the existing mandate reimbursement process with a simpler one.

This mandate reimburses local agencies for their administrative costs to file mandate test claims and reimbursement claims. Typically, local agencies request reimbursement for their costs to (1) contract with mandate consulting firms and (2) oversee their consultants' contracts. The administration proposes to suspend this mandate in 2005-06. As a result, local agency actions to file test claims or reimbursement claims would be "optional." That is, local agencies would not be required to follow the mandate reimbursement process. However, by not following the process, local agencies would not receive state reimbursements of mandated local costs (as promised under the State Constitution).

There are problems with this reimbursement process mandate. First, it is expensive. Many local agencies' claims for their administrative filing costs equal or exceed 15 percent of their total claims. In large part, local agencies face little incentive to minimize mandate claim preparation or test claim filing costs. Instead, local agencies hire firms that specialize in the arcane mandate process and advertise that they can "maximize" local revenues from state reimbursements. Second, the existence of this reimbursable mandate reduces local agency (and their consultants') incentives to work with the state to develop an alternative, simpler mandate claiming system.

Despite these shortcomings, we cannot concur with the administration's proposal to suspend this mandate. Simply put, the mandate process is a product of state laws and regulations. If the administration finds the existing process objectionable, it is incumbent on it to suggest an alternative method of addressing these costs. The Legislature could assist in this by directing the administration, local agencies, and legislative staff to work together this spring to develop a new and simpler system for reviewing test claims and providing mandate reimbursements. This system should address the fundamental problems inherent in the existing system, which we outline in The 2004-05 Budget: Perspectives and Issues(please see page 197). Pending development of the new system, we withhold recommendation regarding this mandate.

Four Mandates Suspended Annually Since Early 1990s

The Legislature should recast as statements of legislative intent these long-suspended mandates.

The budget proposes to suspend the last four mandates shown in Figure 1. These four mandates impose minor local government requirements, such as a duty to report on the number of Filipino employees. Over the last decade, no funding has been proposed for these mandates by an administration or a legislative budget committee. Instead, these mandates have been routinely suspended. To clarify the requirements of state law, we recommend the Legislature enact trailer bill language recasting these provisions as statements of legislative intent.