Description: The 1994-95 Governor's Budget proposes a major restructuring of the fiscal relationship between the state and California's 58 county governments. This proposal would increase county governments' responsibilities for funding a variety of health and welfare programs, and transfer a corresponding amount of state resources to the counties. The Governor's proposal is similar in many respects to a restructuring proposal offered by this office last year. To assist the Legislature in pursuing its restructuring agenda, we outline the elements of the Governor's proposal, and evaluate its fiscal implications. We offer modifications to the proposal to correct the weaknesses we identify. Finally, we suggest that the Legislature needs to consider the state's restructuring needs within a long-term context.