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Historic ‘realignment’ part of budget

It’s “realignment” to some, “shift and shaft” to others and “shared responsibility” to others still.

But by whatever term, the transfer of state power and programs to local governments is the historic cornerstone of Gov. Jerry Brown’s looming budget proposals. It is likely to prove more important over time than the short-term cuts and temporary tax hikes he unveils Monday.

When Brown, on his first full day in office, moved to a knot of reporters and TV cameras near the front door of the California State Association of Counties on K Street, a veteran Capitol budget expert named Diane Cummins slipped through the side door just before Brown’s planned briefing. “Now, what’s that all about?” wondered one observer, who spotted her.

It’s about realignment.  Cummins’ specialty is – you guessed it – realignment.

The concept has dogged the Capitol off and on for years, and it has been put into effect with varying degrees of success.

It’s back this year, this time as Brown seeks to transfer power from Sacramento to local governments on a dramatic scale.

His mix likely will deal with health, welfare and other social services, correctional programs, resources, waste treatment, redevelopment, and more. The dollars involved are significant: Democrats last year proposed more than $4 billion in realignment efforts for mostly welfare and social services alone, and a Legislative Analyst’s report on corrections-linked realignment put the dollars for that shift at about $3.3 billion.

Brown’s realignment proposals on Monday are likely to go still further.

That Brown has placed realignment at the top of his budget plans is clear: One lobbyist said it was the first time in nearly four decades that an incoming governor had hastened to the counties’ headquarters to confer on budget issues. And the counties weren’t alone: Brown made a similar visit Thursday night to the League of California Cities. Brown and his top staff have been quietly meeting for days with legislative leaders to sell the program, signal the coming budget pain.

“His visit to our offices, for a meeting that lasted more than an hour, was unprecedented and delivered a strong signal that he wants to work with CSAC to craft workable solutions,”  noted Paul McIntosh on the association’s web site.  

The plan also is likely to include a shift back to the state from the locals for In Home Supportive Services, or IHSS, to meet the requirement of federal health care reform. The fast-growing program, it more than doubled during the first half of the decade.

Brown’s political calculus is this: Shift power to the locals, then go to the ballot and ask voters to approve the money to help pay for it. If the locals get behind it – they’ve been demanding money and autonomy for years – the ballot proposal ultimately could have a chance of passing. Local control in return for taxes.

Republicans in the Capitol have weighed in against taxes for years and have demanded more local control, but if in return for new revenue they saw a vast boost in local authority, votes might be found in the GOP caucuses to back the shift.

Will the gamble work?

Suspicions run deep and there are hurdles. Voters approved Proposition 22 in November to block the state from tapping local funds for other purposes, including the $5 billion generated annually by hundreds of redevelopment agencies across the state. If Brown attempts to eliminate the redevelopment agencies – as has been publicly reported — he will face a political and legal firestorm.

“There is no question that everybody agrees with it (the concept of realignment). The question is, how do you do it while still having enough revenue for the state and sufficient revenue at the local level to meet the responsibilities you’re giving them” said Lenny Goldberg of the California Tax Reform Association.

The point of realignment is to clean the state’s plate and have the programs administered by officials closest to those using the services. Ideally, it saves the state money, boosts local control and weans the locals from state subsidies.

It’s been tried before, most notably in 1991 during Gov. Pete Wilson’s first term.

Wilson, tapping an idea that emerged during George Deukmejian’s administration, and the Legislature shifted nearly $2 billion in health and social service programs to the counties, then gave them pieces of a statewide sales tax hike and vehicle license fees to pay the tab. Over two years, 1991-93, California faced a staggering $24 billion shortfall – the equivalent of about $38 billion in 2010 dollars, and fully $10 billion larger than the current shortage facing the state over the next 18 months.

By most accounts, the 1991 shift worked. “They planned it right, they got the money, they covered the locals,” said a lobbyist who worked the issue.  Others didn’t end so well, and over the years, the cost of running the program has outstripped the money to finance it. “There has been a gradual deterioration, and now look where we are.”

Four years later, Wilson tried another realignment plan, this time to boost the locals’ share of welfare costs. It was rejected. Years later, other programs were realigned, including courts and some corrections programs

Brown sees the realignment as a way of loosening the centralized system that emerged after two-thirds of the voters approved Proposition 13 in 1978, during his first term.

Proposition 13 cut property taxes 57 percent, rolled back assessments to 1975 levels and limited new increases. The initiative choked off local revenue, and cities and counties went to Sacramento for help. The state, with a $6 billion surplus, provided a continuing bailout, but the result was that the locals became increasingly more addicted to the flow of state money.

Assemblyman Jim Beall Jr., a San Jose Democrat, spent 26 years in local politics, including 14 years on the San Jose City Council.

“All are wary of the paternalistic nature of the state, which is why realignment did not work in the past,” he said. “We have to overcome that addiction.”

Ed’s Note: Corrects first name of Assemblyman Jim Beall, D-San Jose, in penultimate graf.

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