Court rules Against State First Five Money Grab




In 1998 California voters approved Proposition 10 that imposed a tax on tobacco products, with the proceeds to be used for school readiness and other child development programs for children age 5 and younger. The Proposition required that each of California’s 58 counties establish a Commission to govern the county’s share of this tobacco tax revenue, with the State to establish its own Commssion to oversee the 20% the State would keep.

Actor/Producer Rob Reiner, who championed the enactment of the Proposition, was appointed Chairman of that State Commission. Eventually the program became known as First Five (Orange County’s Commission has resisted adopting that name however, sticking with its original name – the Orange County Children and Families Commission.)

Since the Proposition has been enacted there have been some scandals about various county commissions. Charges of favoritism with regard to the award of funds to various programs have abounded. In some counties, the staff Director has been fired. Here in Orange County, there has been criticism over the award of funds for what appears to be political purposes as well as the very generous high compensation package of the Director.  In 2006 Rob Reiner resigned from the State Commission amidst adverse publicity regarding the awarding of funds by that Commission.

One thing many of the County Commissions did right was to forecast a 10 year revenue stream and try to make sure that as revenues likely declined with a predicted decline in tobacco consumption, programs funded with First Five Dollars would continue. This was to avoid or at least minimize the all too common crisis of public sector program defunding as the money ran out. This strategy required under-spending annual revenues, and building up a reserve for tough times.

Enter California’s tough times. The Governor and Legislature, desperately looking around for money to fill the States’ budget hole, saw nearly $ 1 billion sitting in the various county First Five accounts and decided to launch a program to raid those funds, citing the failure of the county commissions to spend the money. Ever wonder why the bureaucrats often adopt a use it or lose it philosophy? Well the attempted raid on these funds by the State is a classic example – save for a rainy day and you lose your savings!

The 11-12 State budget included language that would raid these county funds. That language was contained in Assembly Bill 99, a bill that cited a fiscal emergency for the State as one reason to seize these county funds. Several county commissions, including Orange County’s, sued. That brings us to today. The news today is that a Superior Court Judge in Fresno County ruled in the favor of the counties, stating that such a funding shift could only be approved by the voters. Whether the State appeals this decision or lives with an even bigger hole in the current State budget remains to be seen.

When a court rules that when the voters approve a tax and specify its use then only the voters can change that is to some of us a no-brainer. None the less, it seems that the Court has let the state politicians know that the will of the voters is not to be tampered with.

About Over But Not Out

A retired Orange County employee, and moderate Republican. The editor seriously does not know OBNO's identity as did not the former editor, but his point of view is obviously interesting and valued.