OC Lawmakers Fight Back Against Loss of $48 Million in VLF Funds; Legality Questioned
Last week the Orange County Board of Supervisors approved a balanced, $5.6 billion fiscal year 2011-12 budget. However, the spending plan, which did not involve layoffs or major cuts, might not go according to plan now that the governor has signed a state budget that will cut $48 million that Orange County receives from Vehicle License Fees. In response, officials from the local government have said that the loss of funds will threaten the county’s ability to maintain a minimum level of service and may jeopardize public health and safety. Basically, the state will be taking $48 million that the county usually receives each year to pay off the remaining debt from its 1994 bankruptcy. In order ensure that investors would buy bonds, at the time the state agreed to dedicate the county’s vehicle license money to bankruptcy debt for an arrangement that has been considered successful. While local lawmakers have said the action is illegal, the Administration is standing by the move. The OC Register reports:
“In 2005, Orange County refinanced its debt. Around the same time, the administration says, the county stopped repaying its bankruptcy debt directly with vehicle license fee money. Instead, the administration says, Orange County took the vehicle license fee money, commingled it with other county funds and then used those commingled funds to pay down the debt. The administration’s position is that the vehicle license fee money is no longer “pledged” to repay the county’s bankruptcy debt. As a result the administration believes the money is fair game to take.”
The state will use the money to fund the governor’s realignment plan and the administration has pointed out that Orange County over the years has received a larger share of VLF money due to the bankruptcy. Officials from the county are arguing that even though the debt was refinanced, California Government Code section 25350.6 explicitly states that the pledge of the funds applies to refinanced debt as well. The major disputed detail seems to be whether or not the funds are appropriately “pledged.” The Republican representatives for the county were taken by surprise by the proposal, as the Register points out that “Because the budget proposal was drafted by Democrats and was never intended to draw Republican support, the vast majority of Orange County's representatives, who are Republican, didn't learn of the $48 million provision until it was too late.”
Several Orange County lawmakers have announced they are fighting back against the trailer bill through the introduction of Assembly Bill x1 36, co-authored by State Sen. Lou Correa, D-Santa Ana, and Assembly members Diane Harkey, R-Dana Point, and Chris Norby, R-Fullerton. The legislation would reverse the approved proposal. In a statement, Sen. Correa commented, “Orange County Taxpayers should not have to bear the brunt of this budget grab. I am pleased to join with my fellow members of the Orange County delegation in a united effort to fix this injustice.”
Board of Supervisors Chairman Bill Campbell commented the following about the money grab: “The loss of revenue would force the County to make major program cuts that would affect public safety programs in the Sheriff’s Department, Probation Department and Office of the District Attorney. At its core, this will mean the County will have to close jail beds, reduce the number of prosecutors in courtrooms and close juvenile detention facilities. It would also mean significant cuts to critical public health programs including community clinics and social services. This action threatens the viability of core safety net services at a time when people need these services most of all.”