For 2010-11, the Check is in the Mail
(UPDATE – 3/4/2010) The clean-up bill, ABX8 14, passed the Senate and the Assembly and will be sent to the Governor. As a reminder, this measure authorizes counties and cities to utilize Prop 1B funds during the HUTA deferrals and requires that such loans be repaid to the Prop 1B account with interest.
Governor Schwarzenegger signed ABX8 5 today, enacting a current year and budget year cash management plan for the state. To recap, counties can anticipate the following deferred state payments in the 2010-11 budget year:
- Highway Users Tax Account (HUTA) deferrals: HUTA payments will be deferred $50 million per month from July 2010-March 2011 to be fully repaid in April 2011. These funds would be deferred half from cities and half from counties.
- Social services deferrals: Social services payment deferrals would be limited to three times in the fiscal year: July 2010, October 2010, and March 2011. The July and March deferrals are limited to 60 days, while the October deferral is limited to 90 days. With a 30 day notice (that is available to be waived by the Joint Legislative Budget Committee), the deferrals may be moved 30 days (i.e. the October deferral could be used in September or November and paid in 90 days). While the 30-day notice is required for legislative notification only, we are told by the Department of Finance that affected entities will also be notified.
- Proposition 63 deferrals: The Proposition 63 July 2010 payment of $300 million will be paid in May 2011.
When considering all deferrals, ABX8 5 includes a $1 billion cap in outstanding payments to local governments (counties and cities) at any given time in 2010-11. The deferrals will be limited to the 2010-11 fiscal year and small counties (those with a 50,000 or less population) and cities within those counties will be exempted from the deferrals.
Expect a forthcoming clean-up measure to address some of the deferrals scheduled for K-12 schools and community colleges, in addition to language that requires that a city or county that borrows from its Proposition 1B account during the HUTA deferral period to repay its Proposition 1B account with interest beginning March 1, 2010.
If your county anticipates experiencing a significant financial hardship as a result of these proposed deferrals, we encourage you to consider notifying the Department of Finance soon. Please let CSAC know if you anticipate submitting a letter requesting a hardship waiver.
Drop me an email at firstname.lastname@example.org if you have questions.