Major Features of the 2000-01 Budget, Part II

Legislative Analyst's Office, July 3, 2000

	Major Features of the 2000 California Budget Part II

Transportation

The 2000 budget, as adopted by the Legislature, provides a total of $9.6 billion for transportation in 2000-01. The amount includes two main components.

$2 billion in General Fund and gasoline sales tax revenues in 2000-01 to fund the first year of a six-year Traffic Congestion Relief Program.

$7.6 billion in special funds (mainly State Highway Account [SHA]) and federal funds to implement the state's ongoing transportation program, mainly under the California Department of Transportation (Caltrans).

Traffic Congestion Relief Program. The Legislature established the Traffic Congestion Relief Program by trailer legislation (AB 2928, Torlakson and SB 406, Ortiz) in order to provide a total of about $7 billion in new funds for transportation over six years. (This amount does not include the transfer of about $270 million in existing transportation revenues from the SHA to the Public Transportation Account [PTA] which is part of the package.) Figure 1 summarizes the program's funding levels and sources as well as how funds are allocated. (At the time this report was prepared, AB 2928 and SB 406 were pending the Governor's signature.)
Specifically:

For 2000-01, a total of $2 billion will be provided for the Traffic Congestion Relief Program, including $1.5 billion from the General Fund and $500 million in state gasoline sales tax revenues. Of the total, $1.6 billion will be used to fund eligible projects specified in AB 2928 and SB 406, and $400 million will be allocated to local governments, based on a specified formula, for street and road maintenance and rehabilitation.
Annually from 2001-02 through 2005-06, the state share of gasoline sales tax revenues that were previously deposited into the General Fund will be dedicated to transportation. This amount is estimated to be about $1 billion annually. Of that amount, $678 million will be allocated each year to fund the specified eligible projects. Of the remaining funds, 40 percent will be allocated by formula for local street and road purposes; 40 percent will be allocated to augment funding of the State Transportation Improvement Program (STIP) for additional capital outlay projects; and 20 percent will be deposited into the PTA for transit operating assistance, intercity rail support, and other transit purposes.
Annually beginning in 2000-01, SHA revenues that are not subject to the restrictions of Article XIX of the State Constitution will be transferred to the PTA. These revenues include revenues from the sale of documents, charges for miscellaneous services to the public, and rental of state property. In 2000-01, these revenues are estimated to be about $45 million.

Figure 1
Traffic Congestion Relief Program Funding Levels and Uses
(In Millions)
	2000-01	Annually 2001-02 Through 2005-06	Six-Year Total

Fund Sources and Levels
General Fund	$1,500	--	$1,500
Sales tax on gasoline^a	500	$976	5,380
State Highway Account transfer to PTA	45	45	270
Totals	$2,045	$1,021	$7,150
Fund Allocations
Traffic Congestion Relief Plan	$1,600	$678	$4,990
Local streets and roads	400	119	996
STIP^b	--	119	596
Public Transportation Account	45	105	568
Totals	$2,045	$1,021	$7,150

^a State portion of sales tax on gasoline which was formerly deposited into the General Fund. Approximately $1 billion after transfers to Public Transportation Account (PTA) are netted out.
^b State Transportation Improvement Program.
Totals may not add due to rounding.

Assembly Bill 2928 and SB 406 identify the specific projects that are eligible for funding under the Traffic Congestion Relief Program and the funding available for each project.

Although eligible projects include a variety of transportation improvements, the majority of funding is directed toward transit projects. In most cases, funds provided under the program will finance only a portion of the specified project's total cost, with the remainder of the cost to be provided from other state, federal, and local sources.

Department of Transportation. To implement the state's ongoing transportation program, the 2000 budget provides about $7.6 billion (special and federal funds) for departmental support, capital outlay, and local assistance. Of this amount, $2.7 billion is for support of Caltrans from special funds. This is an increase of approximately 13.5 percent over 1999-00 estimated expenditures. The major support expenditures are as follows:

$1.2 billion for design, engineering, and environmental review of highway projects. This amount includes (1) $1 billion to continue capital outlay support work to carry out the STIP and the State Highways Operation and Protection Program (SHOPP), and (2) $120 million for staff support to work on projects included in the Traffic Congestion Relief Program discussed above.

$786 million for highway maintenance.
$286 million for administration.
$102 million to develop and oversee the STIP and SHOPP.
$145 million for transportation planning.
$96 million for support of the mass transportation program, including $64 million for intercity rail operations.
$32 million for staff support for the local assistance program, which provides technical support for local project delivery of state and federally funded projects.

With respect to capital outlay, the budget provides $3.4 billion from state special and federal funds for projects contained in the STIP and SHOPP. In addition, the budget provides approximately $1.5 billion in state and federal funds for local assistance in the highway, mass transportation, aeronautics, and planning programs. These funds are allocated to local transportation agencies for projects off the state highway system, including transit capital improvements and rehabilitation of local streets and roads.

Health and Social Services

General Fund support for health and social services programs in 2000-01 totals $20.3 billion, an increase of 14.7 percent over the prior year. Figure 1 describes the major General Fund changes in the 2000-01 Budget Act and related legislation.

Figure 1
2000-01 Budget Act Health and Social Services Programs Major Policy Changes--General Fund
(In Millions)
Program/Issue	Amount

Medi-Cal
Provider rates (including CCS program)	$496.2
Eliminate quarterly reporting	65.6
Disproportionate share hospitals administrative fee	55.0
Expand eligibility for elderly, blind, disabled	23.5
Dental benefits	22.5
Children's hospitals--equipment	12.0
Anti-fraud--net savings	-76.4
Public Health
Child Health and Disability Prevention--fund shift	$60.3
Breast and prostate cancer treatment	30.0
Mental Health
Integrated services for homeless	$55.6
Supportive housing	25.0
Children's System of Care	15.5
Miscellaneous new programs	11.0
Developmental Services
Rate increases	$60.7
Developmental centers--minor capital outlay	27.1
Alcohol and Drug Programs
Treatment for youths and adults	$13.4
CalWORKs
County performance incentive payments	-$1,104.0^a
Welfare-to-Work matching funds	-10.0
In-Home Supportive Services
Public Authority wage increase	$56.4
Public Authority health benefits	34.2
Nonpublic Authority wage increase	3.8
Child Welfare Services and Adoptions
Social workers	$34.0
Adoptions backlog reduction	12.7
Aging Programs
Long-term care innovation grants	$15.0

^a General Fund/federal TANF block grant funds.

Medi-Cal Program

Provider Rate Increases. As passed by the Legislature, the budget included $522.1 million from the General Fund for a variety of provider rate increases. The Governor vetoed $25.9 million of this amount. As enacted, the budget provides:

Long-Term Care--$242.1 Million. Rate increases for nursing homes and other long-term care institutions include $161.4 million for a 10.1 percent annual rate adjustment based on cost audits and projection and $67 million for an additional 7.5 percent pay increase for both direct care and support staff. The budget also provides $13.7 million for special rate adjustments for nursing facilities associated with hospitals and for intermediate care facilities for the developmentally disabled.
Physicians--$134 Million. The budget includes $84.9 million for general rate increases. This amount is equivalent to an average increase of 15.6 percent. However, the funds will be allocated by the Department of Health Services (DHS) to increase rates for individual procedures by varying percentages in order to reduce disparities in the current rate structure. In addition, higher rate increases are included for emergency services and selected children's services.
Managed Care Plans--$66.9 Million. This amount is equivalent to a 4.8 percent increase in Medi-Cal payments to managed care plans. Actual increases will be determined by annual rate calculations and contract negotiations. Medi-Cal managed care plans also will be allocated a proportionate share of the rate increases for individual providers, such as physicians.
Other Services--$28.7 Million. The budget funds a range of rate increases for various allied health professionals (such as psychologists and physical therapists), and for Pap smears and mammograms, nonemergency medical transportation, home health care, and various other services.
Dental--$17.7 Million. This amount is equivalent to an average increase of 6.8 percent.
Special Care Centers--$5 Million. The centers (located primarily at children's hospitals and teaching hospitals) provide outpatient treatment, diagnostic, and evaluation services for children with certain health conditions. Centers will receive a 20 percent increase for evaluation visits and a new $25 fee for all other visits.
Rural and Small Hospitals--$2 Million. The funding provides enhanced outpatient rates.

Elimination of Quarterly Reporting. Effective January 1, 2001, budget legislation eliminates the quarterly eligibility reporting requirement for Medi-Cal coverage of families and children. The existing requirement for an annual redetermination of eligibility will remain. The budget includes an augmentation of $65.6 million for an average monthly caseload increase of about 250,000 over the second half of 2000-01, as some individuals will stay longer on the program due to elimination of the quarterly eligibility reports.

Reduced State "Administrative Fee" for Disproportionate Share Hospital (DSH) Payments. The budget includes a General Fund increase of $55 million in the Medi-Cal Program to backfill for an equivalent reduction in the state administrative fee. The state deducts this fee from the intergovernmental transfers that the state receives from public hospitals to finance DSH payments. Counties and the University of California will split the benefit of the reduction with private hospitals on a roughly equal basis.

Dental Preventive Care. The budget includes a General Fund augmentation of $22.5 million to allow up to two dental examinations and cleanings as a regular Medi-Cal benefit. Under existing policy, examinations have been available only at the time of an initial visit to a dentist, and cleanings have been limited to once a year without prior authorization.

Expanded No-Cost Medi-Cal for the Elderly, Blind, and Disabled. Effective January 1, 2001, budget legislation expands eligibility for no-cost Medi-Cal to persons with incomes up to the equivalent of 133 percent of the federal poverty level. Existing law generally limits no-cost Medi-Cal coverage to individuals and couples with incomes below 89 percent and 102 percent of poverty, respectively. The budget includes a General Fund increase of $23.5 million for this eligibility expansion, which will eliminate cost-sharing requirements for an estimated 53,000 Medi-Cal beneficiaries.

Children's Hospitals. The budget includes a one-time augmentation of $12 million from the General Fund to fund special supplemental Medi-Cal payments to children's hospitals to upgrade their equipment.

Expansion of Antifraud Efforts. The budget adds 182 positions at a General Fund cost of $6.2 million to the DHS to expand efforts to reduce fraudulent practices by Medi-Cal providers. The budget also includes $82.6 million of General Fund savings attributable primarily to antifraud efforts.

Public Health

Fund Shift for Child Health and Disability Prevention (CHDP) Program. The budget shifts CHDP's primary fund source from Proposition 99 funds to the General Fund, at a cost of $60.3 million to the General Fund.

Cancer Treatment Programs. In 1999-00, the budget provided $5 million from the General Fund on a one-time basis for breast cancer treatment for uninsured, low-income women. The Legislature adopted the Governor's proposal to continue and expand this program in 2000-01, at a cost of $20 million to the General Fund. The budget also funds a new prostate cancer treatment program, at a General Fund cost of $10 million.

Clinics' Dental Equipment and Capital Outlay. As passed by the Legislature, the budget provided a one-time General Fund appropriation of $15 million to expand the dental infrastructure of community-based clinics--for the purchase of equipment and the renovation or expansion of facilities. The Governor vetoed this augmentation.

Mental Health

Integrated Services for the Homeless. The budget includes $55.6 million ($20 million one-time) from the General Fund for the continuation and expansion of demonstration projects authorized by Chapter 617, Statutes of 1999 (AB 34 [Steinberg]). These projects provide a range of services to seriously mentally ill adults who are homeless, recently released from jail or prison, or at risk of homelessness or incarceration.

Supportive Housing. The budget includes
$25 million from the General Fund to provide grants for supportive housing for low-income individuals with mental health needs.

Children's System of Care Program. The budget includes an increase of $15.5 million from the General Fund to fully fund the Children's System of Care Program in all 58 counties. The program funds a coordinated system of health and social services to children through interagency collaboration.

New Programs. The budget includes $11 million from the General Fund for various new community-based mental health services: a three-year pilot program for preschool aged children and their families ($3 million), and dual diagnosis services for under- served populations ($2 million).

Developmental Services

Rate Increases. As passed by the Legislature, the budget included $85.8 million from the General Fund for various rate increases--ranging from 3 percent to 20 percent--for community-based developmental services. These include community care facilities, shift nursing, "look-alike" day programs, supported living services, and day and respite programs. The Governor vetoed $25.1 million by reducing the amounts for day and respite programs and supported living.

Minor Capital Outlay. The budget includes $27.1 million from the General Fund for minor capital outlay projects at the five developmental centers. This includes projects to comply with the Americans with Disabilities Act.

Alcohol and Drug Programs

Substance Abuse Treatment. As passed by the Legislature, the budget included $10 million (General Fund) to expand adult treatment services and
$10 million (General Fund) for youth treatment. Of this amount, the Governor vetoed $2.3 million and
$4.3 million, respectively.

California Work Opportunity and Responsibility to Kids (CalWORKs)

County Performance Incentives. The budget makes the following changes in county incentives, resulting in savings of $1.1 billion (combined federal Temporary Assistance for Needy Families [TANF] funds and General Fund). (In the context of the CalWORKs budget as passed by the Legislature, these savings are almost entirely General Fund because available funds from the TANF reserve total only $56 million.) Specifically, the budget:

Requires counties to forego 25 percent of incentives previously earned in order to be eligible for future incentive payments. (Savings of $411 million.) A remaining unpaid obligation of $320 million will be paid to counties over two years, beginning with $250 million in 2000-01.

Prohibits counties from earning incentives during the budget year. (Savings of $693 million.)

The budget legislation allows counties to expend up to 25 percent of their incentive funds on services for working poor families whose incomes exceed the eligibility limit for CalWORKs. In addition, beginning in 2001-02, the incentive payment formula is modified to reduce the amount of payments counties can earn from savings attributable to recipients' earnings.

Welfare-to-Work Matching Funds. The federal government provides funds to the states to serve hard-to-employ persons under the Welfare-to-Work block grant program. For every $2 in federal Welfare-to-Work funds expended, California must expend $1 in matching funds. Based on an assumption that $20 million of the $190 million in federal funds will not be expended by the end of 2000-01, the budget reduces the appropriation of state matching funds by $10 million.

In-Home Supportive Services (IHSS)

Public Authorities. Counties are permitted to establish Public Authorities to negotiate wage increases on behalf of IHSS providers. The budget includes $56.4 million from the General Fund for the state's share of cost for an hourly wage of $7.50 ($1.75 above the minimum wage) for Public Authority workers. The budget also includes $34.2 million from the General Fund for the state's share of cost, up to 60 cents per hour, for health benefits for these workers.

Nonpublic Authorities. Under prior law, workers not associated with a Public Authority received the minimum wage. The budget includes $3.8 million from the General Fund for a 3 percent wage increase for these workers.

Child Welfare Services (CWS) And Adoptions

Workload Relief As passed by the Legislature, the budget included $39.7 million from the General Fund for workload relief in the CWS program, generally to fund additional social workers. The Governor vetoed $5.7 million of the amount.

Adoptions Backlog Reduction. The budget includes one-time funding of $12.7 million from the General Fund to county adoption agencies to reduce the current backlog of foster care children awaiting adoptive placement.

Child Support Enforcement

Legislative reforms enacted in 1999--Chapter 478 (AB 196, Kuehl) and Chapter 480 (SB 542, Burton and Schiff)--overhauled the organization, administration, and funding of the child support program. Pursuant to this legislation, the 2000-01 budget transfers the funding of the child support program from the Department of Social Services to the newly formed Department of Child Support Services. The budget includes $370 million from the General Fund, of which $340 million is for local assistance to county child support departments. The local assistance amount represents an increase of $33 million from the General Fund (about 11 percent over 1999-00). These costs are generally offset by projected savings from increased child support collections.

Aging Programs

Long-Term Care Innovation Grants

The budget includes $15 million from the General Fund to provide grants to community-based organizations to expand alternatives to nursing homes and address the unmet needs of special populations.

Judiciary & Criminal Justice

The 2000 budget signed by the Governor for judicial and criminal justice programs totals
$7.8 billion, including $7.2 billion from the General Fund and $648 million from various special funds. This is an increase of $776 million, or 11 percent, over 1999-00 expenditures. The increase results primarily from (1) new and expanded programs to assist local law enforcement and juvenile justice agencies and
(2) additional costs associated with the state's increased financial responsibility for support of trial courts.

The budget that the Legislature approved and sent to the Governor was $131 million above the Governor's proposal. This amount reflected the net effect of several augmentations, reductions, and modifications made to the Governor's budget by the Legislature, the most significant of which was an augmentation of $121 million for county juvenile crime and delinquency prevention programs. The Governor subsequently vetoed the $121 million augmentation as well as several other augmentations, resulting in total funding for judiciary and criminal justice programs that is very close to the total proposed by the Governor.

Trial Court Funding

The budget includes $2.1 billion for support of trial courts. This amount includes $1.1 billion from the General Fund, $459 million transferred from counties to the state, and $424 million in fine, penalty, and court fee revenues. The General Fund amount is $177 million, or 18 percent, greater than the current-year amount.

The increase includes a number of new one-time expenditures, such as $77.4 million for trial court information technology projects, and ongoing workload-related costs, such as $57.5 million to fully fund local trial court salary increases granted in 1999-00 and expected in 2000-01.

The budget also includes additional money to increase fees paid to jurors. In January, the Governor proposed $12.7 million to increase fees paid to jurors from the current $5 per day to $12 per day. The Legislature ultimately appropriated $19.1 million to increase fees to $15 per day. Authorization for the higher fees is included in a budget trailer bill (AB 2866, Migden).

The budget also includes $11.6 million to provide an 8.5 percent increase in the base salaries for trial court judges and appellate court justices. This increase would be in addition to cost-of-living increases previously authorized for judges--2.5 percent effective June 30, 1999, 4 percent effective July 1, 1999, and 4 percent effective September 1, 2000. The salary increases were authorized in a budget trailer bill (AB 2884, Kuehl).

Department of Corrections

The budget proposes a total of $4.3 billion from the General Fund for support of the California Department of Corrections (CDC). This represents an increase of $140 million, or 3.4 percent, above the 1999-00 level. The primary reasons for this growth are increases in employee compensation and expansion of parole, substance abuse treatment, and medical services programs.

The budget provides full funding for the projected inmate and parole caseloads in the budget year. The caseload funding level is actually $41 million less than estimated current-year expenditures, due to projected declines in the number of inmates and increases in the parole population. Specifically, the budget assumes that the inmate population will be about 160,100 at the end of the budget year, a decrease of 1,100 inmates from the end of 1999-00. The projected budget-year population is about 6,500 inmates fewer than was initially assumed in the Governor's January budget. The parole population is projected to reach about 120,300 parolees at the end of the budget year, an increase of 1,100 parolees from the end of 1999-00.

In addition, the Legislature approved $26.9 million to provide additional supervision and services, such as substance abuse and mental health treatment, for inmates and parolees. This amount is $14 million higher than proposed by the Governor. The Governor, however, reduced the augmentation by $8 million.

Department of the Youth Authority

The budget provides $331 million from the General Fund for support of the Youth Authority. The department's budget reflects a decrease of 2.4 percent below the 1999-00 level, due primarily to a projected small decline in the number of wards and parolees in the budget year. The budget assumes that the ward population will be 7,300 at the end of the budget year, a drop of 75 wards.

In addition, the Legislature augmented the budget by $6.3 million to provide preliminary funding necessary for the Youth Authority to increase the substance abuse, mental health, and sex offender treatment services for wards and parolees in order to meet identified treatment needs, and to enhance staff oversight, institutional management, and ward safety However, the Governor vetoed these augmentations.

Assistance to Local Law Enforcement

The budget and trailer bills include $400 million in funding to assist local law enforcement agencies, a substantial increase from the current year.

Citizens' Option for Public Safety (COPS) Program. A budget trailer bill--AB 2885 (Cardenas)--includes $121.3 million to continue the current COPS program, which provides discretionary funding, distributed on a per-capita basis, for local police departments and sheriffs for front-line law enforcement, sheriffs for jail services, and district attorneys for prosecution. The amount is $21.3 million greater than the amount provided in 1999-00. These additional monies will be used to supplement the allocations to front-line law enforcement agencies to ensure that each agency receives at least $100,000.

One-Time Allocations. The budget also includes several one-time allocations for local law enforcement, including:

$96 million for construction of a local forensic crime laboratory in Los Angeles that is designed to service the Los Angeles City Police and Los Angeles County Sheriff's Departments, as well as other southern California local law enforcement agencies.
$75 million to local law enforcement agencies for the purchase of equipment and technology, distributed on a per-capita basis with a minimum grant of $100,000 per agency.
$50 million to pay for DNA testing of evidence in unsolved sex crimes.
$50 million for counties for additional grants under the existing Mentally Ill Offender Crime Reduction Program.

Assistance for Local Juvenile Justice Programs

The Legislature's spending plan also included significant new ongoing and one-time funding to support local efforts to reduce crime and delinquency among juveniles. Specifically, AB 2885 provides $121 million--the same amount as the COPS program discussed above--for county juvenile justice coordinating councils to use to support locally identified needs. The Governor vetoed these funds, however.

The budget also includes $75 million (General Fund) and $37.5 million (federal funds) for competitive grants to counties for construction and renovation of local juvenile detention facilities. In addition, the budget includes $35 million to extend two current juvenile justice programs in the Board of Corrections--the Juvenile Challenge Grant Programs ($25 million) and the Repeat Offender Prevention Program ($10 million).

Other Major Provisions

Capital Outlay

The Legislature approved $4 billion for capital outlay (excluding highways and transit), as shown in Figure 1. This includes $1.6 billion for local capital outlay projects. About 74 percent of total funding is from general obligation bonds--primarily for resources and higher education. The majority of General Fund spending is in three areas--resources, corrections, and higher education.

Figure 1
2000-01 Capital Outlay Programs As Approved by the Legislature
(In Millions)
	General Fund	Special Funds	Bonds	Federal Funds	Totals

Legislative/Executive/Judicial	$72	--	--	--	$72
State and Consumer Services	20	$6	$25	--	51
Transportation	--	35	--	--	35
Resources	452	129	2,293	$11	2,885
Health and Social Services	15	--	--	4	19
Corrections	124	--	--	--	124
State Special Schools	8	--	--	--	8
Higher Education	163	--	673	--	836
General Government	10	1	1	--	12
Totals	$864	$171	$2,992	$15	$4,042

State Capital Outlay. Some of the major state capital outlay projects and programs funded by the Legislature include:

Wildlife Conservation Board--$128 million from the General Fund and $375 million from the March 2000 bond measures for habitat conservation, $165 million for 35 specific projects and $358 million for unspecified acquisition and conservation projects.
Coastal Conservancy--$53 million from the General Fund and $239 million from the March 2000 bond measures for coastal conservation, $181 million for 66 specific projects and $111 million for unspecified acquisition and conservation projects.
Department of Parks and Recreation--$12 million General Fund and $319 million from the March 2000 bond measure for 88 park and recreation projects.
California Community Colleges--$307 million from bond funds for capital outlay for 83 projects at 64 campuses.
California State University--$27 million General Fund and $153 million from bond funds for 25 projects at 17 campuses.
University of California--$134 million General Fund and $213 million from bond funds for
40 projects at ten campuses and the Kearney Agricultural Center.

Local Assistance Capital Outlay. The Legislature also funded many local assistance capital outlay projects including 481 parks, natural resources, and community facilities projects, financed from both the General Fund ($220 million) and Propositions 12 and 14 bonds from the March 2000 ballot ($923 million). The budget also includes $588 million in bond funds under Proposition 12 for grants to local governments based on population formulas cited in Proposition 12.

Governor's Vetoes. The Governor vetoed a total of $743 million including $305 million from the state capital outlay program and $438 million from local assistance capital outlay. Of the total amount vetoed $45 million is from the General Fund and $698 million from bonds.

Department of Managed Care

The Legislature approved a budget of $37.8 million from special funds (assessments levied on health maintenance organizations [HMOs]) for the new Department of Managed Care, which will regulate HMOs and medical provider groups. This includes $6.5 million for the following legislative augmentations:

$5 million for consumer education and outreach.

$650,000 for an HMO report card.
$560,000 for temporary help for an anticipated increase in call volume and consultants to help with establishing the Office of Patient Advocate (OPA).
$300,000 for additional staff to reduce an existing backlog of enforcement cases.

The Legislature also created a separate line item for OPA to reflect its independence from the department and to facilitate legislative oversight. The OPA will focus on health care consumer trends and issues.

The Governor vetoed $3.8 million by deleting the $560,000 for temporary help and consultants for DPA and by reducing consumer education and outreach by $3 million and the HMO report card by $250,000.

Trade and Commerce Agency

The budget provides additional General Fund support for several new and existing programs within the Trade and Commerce Agency. Among them are
(1) $15.3 million for a new program to subsidize the film industry for local, state, and federal permit charges; (2) $10 million to subsidize biomass facilities that convert agricultural waste into electricity; and (3) $8 million in reserve funds for the Small Business Loan Guarantee Program to increase the number of financial development corporations that provide loan guarantees.

Department of Insurance

The budget includes $16.5 million from special funds and 114 positions to implement Chapter 884, Statutes of 1999 (SB 940, Speier), and Chapter 885, Statutes of 1999 (AB 1050, Wright). These measures authorized an increase in the auto insurance policy fee of up to 80 cents to combat organized crime rings involved in fraudulent auto accident claims, eliminate a backlog of consumer complaints regarding auto insurance, and improve consumer service activities. This funding includes $4.8 million in local assistance for auto fraud activities performed by district attorneys in conjunction with the department.

Housing

The Legislature approved $575 million in the Department of Housing and Community Development's (HCD) budget for spending on various new and expanded housing programs. As shown in Figure 2 (see page 21), this funding is $75 million more than the Governor proposed in the May Revision. New programs include the Jobs-Housing Balance Improvement Program, the CalHome Program, the Homebuyer's Downpayment Assistance Program (administered by the California Housing Finance Agency [CHFA]), Downtown Rebound, Code Enforcement Incentive Program, and the Interregional Partnership Pilot Program. The Governor vetoed $75 million from the multifamily housing program, bringing total HCD augmentations to $500 million.

Figure 2
Housing Package
(In Millions)
	Governor	Adopted by Legislature

Local Government Incentives
Community Amenities and Development	$200.0	--
Jobs-Housing Balance Improvement	--	$110.0
Home Ownership
CalHome	50.0	40.0
Mobilehome ownership	--	10.0
CHFA Homebuyer's Downpayment Assistance	100.0	50.0
Farmworker Housing
Base program	5.0	32.0
Manufactured housing	1.0	3.0
Unhealthy and unsafe units	2.0	3.0
Health services demonstration	2.0	5.0
Multifamily Housing
Base program	76.0	233.0
Preservation	--	19.0
Downtown Rebound
Project loans	19.0	22.6
Planning grants to local governments	2.4	2.4
Supportive Housing	20.0	--^b
Homeless
Emergency Housing Assistance Program
Operating grants	8.0	10.0
Capital grants	9.0	25.0
Other
Code Enforcement Incentives	--	5.0
Interregional Partnership Pilot	5.0	5.0
Totals	$499.4	$575.0^a

^a The Governor vetoed $75 million from this amount.
^b Budget includes $25 million for supportive housing in the Department of Mental Health.

Local Government

The budget sets aside $200 million in one-time funds for use by the Conference Committee on AB 1396 (Villaraigosa) for implementing a local government finance reform proposal. In addition, the budget includes substantial funding for local governments in a number of program areas, including transportation and criminal justice.

Resources

The 2000 budget, as adopted by the Legislature, provides a total of $6.2 billion for resources programs, of which $1.5 billion is from the General Fund and $2.5 billion is from bond funds. The remaining
$2.2 billion are special funds, federal funds, and reimbursements. This total amount is an increase of about $2.6 billion over estimated current-year expenditures. This increase largely results from the appropriation of Propositions 12 and 13 (park and water) bond funds approved by voters in March 2000. Significant features include:

$1.9 billion of Proposition 12 (parks bond) for various state and local park acquisitions and projects. The Governor subsequently reduced this amount to $1.2 billion.

$490 million from Proposition 13 bond funds for various water projects, including water supply, flood control, river protection, habitat restoration, and water conservation. (An additional $260 million in Proposition 13 bond funds are appropriated in various Environmental Protection Agency departments.)
$135 million from the General Fund for CALFED projects and programs, contingent on the enactment of a statute certifying that the expenditures are consistent with the CALFED environmental document yet to be certified by the state. In addition, the budget includes about $136 million (various funds) of other CALFED-related expenditures. These expenditures include $20 million for water storage studies, and funds for program administration and various ecosystem restoration projects.
$113.7 million for habitat acquisition, restoration, and enhancement.
$112 million from the General Fund to pay local governments for the state share of costs of local flood control projects that have been authorized by the state. (In addition,
$43 million from Proposition 13 bond funds is provided for this purpose.) The Governor reduced this amount by $27.7 million.
$94 million from the General Fund for support of the Department of Fish and Game. This amount is an increase of $60 million over the 1999-00 funding level, and includes $35 million to enhance various existing programs. The Governor reduced this amount by $23.6 million.
$55 million for the Department of Forestry and Fire Protection for emergency fire suppression activities and $4.6 million to reactivate 17 inmate conservation crews.
$46.6 million for the Department of Parks and Recreation to backfill a reduction in state park fees and provide for anticipated increased park usage, and $18 million for ongoing state park maintenance. The Governor reduced the staffing for anticipated increased visitation by $10 million and the amount for ongoing maintenance by $15 million.
$43.8 million for environmental review and acquisition of conservation easements in connection with the development of a UC Merced campus.
$10 million for the Department of Boating and Waterways for beach restoration.
$8 million for the Resources Secretary for the Auburn Dam tunnel closure. The Governor reduced this amount by $4 million.
$6.9 million for various departments to conduct assessments of watersheds on the North Coast.

The budget package also includes legislation
(SB 1647, O'Connell) creating a Natural Heritage Preservation Tax Credit. This program will provide tax credits of 55 percent of fair market value to persons who donate qualifying property to state, local, or nonprofit organizations. The measure provides total of $100 million in tax credits, anticipated to be made available over three years.

Environmental Protection

The 2000 budget, as adopted by the Legislature, provides about $1.5 billion for environmental protection programs, including about $1 billion for the support of various environmental protection agencies and $504 million for local assistance. This amount is an increase of about $540 million, or 54 percent, over estimated 1999-00 expenditures. Significant features include:

Proposition 13 Water Bond. The budget includes $260 million from Proposition 13 bond funds for local water quality, water recycling, and watershed protection projects.
Diesel Emission Reduction. To reduce diesel emissions, the budget includes (1) $50 million to replace or retrofit older diesel school buses and (2) $45 million for an incentives program to reduce emissions from heavy-duty diesel engines.
Urban Cleanup Initiative. The budget includes $85 million to assess and clean up urban contaminated sites ("brownfields") for redevelopment.
Water Pollution Control. In addition to expenditures for local water quality projects, the budget includes a number of increases related to water pollution control and water quality monitoring. Specifically, the budget provides a total of

-- $26 million to develop and implement plans ("total maximum daily loads") to address water pollution in seriously impaired water bodies--an increase of about $18 million over estimated current-year expenditures. The Governor reduced this amount by $10.5 million.
-- $14 million to control stormwater runoff--an increase of about $7 million over estimated current-year expenditures. The Governor reduced this amounty by $2.5 million.
-- $12 million to monitor ambient water quality--an increase of about $9 million over estimated current-year expenditures. the Governor reduced the amount by $2.5 million.

Enforcement. The budget includes (1) an increase of about $6 million for enforcement activities to be carried out by various environmental protection departments and (2) an increase of about $8 million for enforcement and compliance activities carried out by local air districts. In addition, the budget provides about $4 million to continue water board inspections in the budget year at an increased level.
Children's Health. The budget provides an increase of about $7 million for a number of departments to address children's health issues. These expenditures are in addition to the $50 million for the older school bus replacement/retrofit program that also addresses children's health issues.

Department of Food and Agriculture

The Legislature provided the following major General Fund increases for pest exclusion activities at both the state and local levels.

Pierce's Disease--$6.9 million to combat the glassy winged sharpshooter, which carries the Pierce's Disease bacteria and threatens California's grape industry. This money will fund pest control procedures and community outreach efforts.
County High Risk Pest Exclusion Program--$8.5 million for county agriculture commissions to inspect agricultural materials at terminal entry points (airports, express carriers, post offices, and wholesale and retail marketing terminals) for exotic or invasive pests.

The Governor vetoed the $8.5 million for the county program.

Smog Check Program

The budget includes $114 million from special funds to continue the Smog Check Program in the Department of Consumer Affairs, Bureau of Automotive Repair. In an attempt to increase participation in the High Polluter Repair and Removal Program, $47 million of this amount will go towards reducing vehicle owners' copayments for vehicle repair and increasing state payments for vehicle repairs and vehicle buyback. Figure 3 summarizes these changes.

Figure 3
Changes in Smog Check Consumer Assistance Programs
Program	1999-00	2000-01

Vehicle owner copayments:
Income-Eligible Repair Assistance^a	$75	$20
Test-Only Repair Assistance^b	250	100
Maximum state payments:
Income-Eligible and Test-Only Repair Assistance	$450	$500
Vehicle Retirement (Buyback)	450	1,000

^a Income at or below 185 percent of federal poverty level.
^b Vehicle must be directed to test-only station. No income qualifications.

Employee Compensation

The budget includes $80.4 million ($50.4 million General Fund) to fund additional compensation for state civil service employees. This amount includes:

$11.1 million ($3.9 million General Fund) for salary increases for state employees in information technology job classifications in an attempt to improve recruitment and retention of these employees.

$48.9 million ($26.1 million General Fund) for additional benefits for excluded employees, including a contribution ($100 per month for managers and $50 per month for supervisors) to a 401(k) plan and a leave buyback program.
$20.4 million (General Fund) for the rural health subsidy program authorized by Chapter 743, Statutes of 1999 (SB 514, Chesbro). This program subsidizes health care costs for state employees and retirees who live in rural areas where an HMO is not available.

In addition, under current memoranda of understanding (which expire June 30, 2001), state employees will receive a 4 percent salary increase effective September 1, 2000. The cost of this increase--around $300 million
($150 million General Fund)--is included in each state department's budget. Negotiations for new memoranda will begin during 2000-01.

The Legislative Analyst’s Office (LAO) is a nonpartisan office which provides fiscal and policy information and advice to the Legislature.

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