The suit, which County Counsel Anita Grant expects to be filed by week's end in Sacramento County Superior Court, may end up being a moot point, if the report from the state capital that a budget deal is imminent holds true.
Following a board discussion in closed session on Tuesday, Supervisor Rob Brown moved the proposal to enter the litigation, which the board unanimously approved.
That action by the board joins the county to a lawsuit led off by Sacramento County, Grant said.
Other counties joining the suit include El Dorado, Lassen, Imperial, Mendocino, Los Angeles, Napa, Orange, Riverside, San Bernardino, San Diego, San Francisco, San Luis Obispo, San Joaquin, Shasta, Solano, Tulare and Ventura, Grant said. Still others are taking the matter to their board meetings, she added.
Lake County's board's action was in response to State Controller John Chiang's Jan. 16 announcement that he would withhold certain payments to counties.
Chiang spokesperson Hallye Jordan told Lake County News on Wednesday that Chiang began delaying the payments – which aren't required by federal law, the state constitution or court order – as of Feb. 1.
On Tuesday, Chiang reported on the state's cash balance, receipts and disbursements for January, noting that the state's major revenue sources “are simply unable to support the programs and services provided in California’s budget.”
January’s totals were $2.18 billion below the same month of last year, with personal income tax alone dropping by $1.62 billion, or 19.5 percent. However, January’s totals were actually $223 million stronger than those estimated in the governor’s 2009-10 budget projections.
By the end of January, the state had only $2.7 billion remaining in special funds available for internal borrowing, according to Chiang's office. Without delaying payments, the state would deplete those borrowable funds and drop $346 million into the red by the end of February.
Jordan said Chiang understands the frustrations felt by counties. But, until the governor and Legislature addresses the $42 billion budget gap, Chiang has no choice but to withhold the payment, said Jordan.
“He's got $10 worth of bills and $6 in the bank,” she said.
The state's budget problems – which Jordan said have been going on for years – coupled with the severe economic downturn and increased deterioration of revenues have led to the current situation. Jordan said the state's budget was 85 days late and was out of balance “before the ink was dry.”
The state can't get credit because Wall Street knows that they have a deficit with no plans to fix it, said Jordan.
But Grant said Chiang doesn't have the statutory or constitutional authority to withhold funds that already have been appropriated.
Cox said the county is particularly concerned about the withholding of money for CalWorks and other benefits program payments.
He explained that the federal government gives the state funds for those programs, which the state in turn is meant to pass down to the counties, along with additional state funding.
“At this point they're holding the federal share,” he said of the state.
Cox added, “We all think it's important we register our objection to this. It's not acceptable.”
Many people rely on the affected welfare programs for the basic necessities, including food and rent, said Cox.
“We have to stick up for them, too,” he said of the program's benefit recipients.
Added Grant, “You're talking about some of our most disadvantaged citizens.”
She said she doesn't know of a situation in recent history in which the county has sued the state.
“I don't honestly think we've been in a position like this before,” Grant said.
North Coast Sen. Patricia Wiggins (D-Santa Rosa) said she understands the pressure counties are under right now.
“They're trying to provide important services to people, including people who are in dire need, yet they don't have the money to meet those needs,” she said. “It's frustrating for everyone.”
However, Wiggins said Chiang is trying to do what's in the best interest of California as a whole.
“Unfortunately, he's in a no-win situation,” she said. “If he doesn't defer the money from these programs, he'll just have to cut from other programs. Either way, the people lose. At the end of the day, it's not about the state's budget, county budgets or city budgets. It's about serving the public.”
Cox said the lawsuit may not even get to the point where it needs to move forward. “It just can't go on much longer,” he said.
And it may not.
David Miller, Wiggins' spokesman, told Lake County News on Wednesday night that they've been told to expect a vote on a state budget deal on Friday.
“We understand that there is a framework for a budget agreement that will include some $15 billion-plus in cuts, $14 billion-plus in revenues and around $12 billion in borrowing,” said Miller. “It's time to put this matter behind us, but we won't know how individual members are likely to vote until a formal agreement is in place and they all have a chance to pour over the details.”
In a related item, on Tuesday Board of Supervisors Chair Denise Rushing brought an extra agenda item to the board – a proposed letter to the county's legislators regarding local leaders' alarm over the budget stalemate – which was approved.
The letter also would address another state plan to defer payments to counties for state-mandated programs such as mental health, public health and welfare assistance for seven months, a plan Lake County News reported on earlier this month.
“We understand that the choices before you are difficult and there are no easy answers for putting the state's finances back in order,” the letter from the board to Wiggins and Assemblyman Wes Chesbro says. “However, any further deferral of payments to counties will only compound the hardships being created by the current economic crisis.”
The letter goes on to ask them to demand from their legislative colleagues that the issues with the proposed deferments and the budget be immediately resolved – “in a fair and equitable manner that will enable our county to continue providing essential services to the members of the public whom we all have made a commitment to serve.”
E-mail Elizabeth Larson at
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