A Shift of Programs and Perils for Counties

California has seen it before: Faced with a financial crisis, a governor proposes to transfer sweeping social-service responsibilities from a cash-strapped state to local governments.

The carrots in the latest version, the budget plan presented Friday by Gov. Gray Davis, appeal deliciously to any county bureaucrat who has made the annual tin-cup lobbying trip to Sacramento: billions of dollars for otherwise vulnerable programs, guaranteed every year, and, potentially, more flexibility to match services to local needs.

But Davis’ proposal to hand counties oversight of services ranging from foster care to nursing homes also comes with a potent risk.

If demand for services outpaces revenue growth, county officials -- even those who support the governor’s program realignment philosophically -- fear they will get stuck with the bill.

That’s because there is no relationship between the revenue sources and the services and therefore no guarantee that the two will keep pace over time.

“There’s a real opportunity for structural changes for the way state and local governments operate,” Orange County Supervisor Chris Norby said.

What the state must do, he said, is, “if they delegate more power to us, they have to assure we have money to carry out these powers.”

Davis said Friday he had done just that.

His budget tickets more than $8 billion a year to cover local governments’ expanded menu of services, via a one-cent increase in the sales tax, a $1.10-a-pack tax on cigarettes, and income tax increases for high-earning couples and individuals.

“We gave them enough money to continue these programs at the current level,” Davis said. “We are not shortchanging the counties.”

Most state and county analysts agree that a similar realignment spurred by the state’s budget crunch in the early 1990s, which gave counties primary responsibility for programs for the mentally ill and indigent health care, had mostly positive results.

“It gave mental health a relatively stable funding source so that everything wasn’t determined in the lottery of the state budget process every year,” said Marvin Southard, director of Los Angeles County’s Department of Mental Health.

Still, over time, a $150-million gap developed between mental health costs and tax revenue, said Pat Leary, director of the California State Assn. of Counties.

Davis’ proposed new realignment, which encompasses a far different set of programs, introduces even more variables.

The cost of long-term care programs, for example, is projected to burgeon at 14% a year as baby boomers reach retirement age, far exceeding increases in tax revenue.

Needs will grow faster in some communities than in others, opening up the possibility of uneven levels of service from county to county.

“The state will still say you must provide a certain service and then they don’t put sufficient funding into it,” Ventura County Executive Officer Johnny Johnston said.

“We already are in the hole for $4.5 million for children’s psychological services that the state hasn’t paid for.”

Not all the challenges posed by Davis’ realignment proposal are financial.

Though counties already play a central role in administering foster care, adoption and other child-welfare programs, Davis’ plan also gives them responsibility for programs such as rural health services and nursing home care, in which they have played virtually no part.

“Are we going to set the rate for what nursing homes get? Are we going to do inspections? There’s a big blank when it comes to what this means,” Leary said.

Health-care advocates fear the conflicts that could arise if, as Davis proposes, counties absorb 15% of the cost of Medi-Cal services.

With state and federal guidelines dictating who is eligible for Medi-Cal, counties could be tempted to slow or complicate the application procedure to control costs, said Anthony Wright, organizing director for the reform group Health Access.

That uncertainty prompted some county officials to offer somewhat conditional support for the Davis version of realignment.

“We don’t necessarily agree with all of the programs they’re talking about including, but the principles are good principles,” said David Janssen, Los Angeles County’s top administrator.

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Times staff writers Seema Mehta, Daren Briscoe, Catherine Saillant and Patrick McGreevy contributed to this report.