The President’s budget proposal includes $1.5 billion in supplemental aid to California, far less than the almost $7 billion Gov. Arnold Schwarzenegger requested from the federal government. The Governor made his request in January based on his view that California sends the U.S. government more than it receives. California continues to advocate for more federal funding.

The President’s budget includes a number of items of particular interest to California cities. A few of the highlights, identified by the appropriate federal agency or department, are outlined below:

Department of Transportation

• $1 billion for high speed rail projects across the nation. This appropriation is in addition to the $8 billion allocated through the American Recovery and Reinvestment Act of 2009.
• $530 million for the Partnership for Sustainable Communities initiative which is designed to help state and local governments integrate transportation, housing and other investments to foster sustainable development.

Department of Justice

• $600 million for the Community Oriented Policing Services hiring program. These funds support the hiring or retention of police officers in communities across the nation. This action is part of the President’s commitment to fund the hiring of 50,000 additional police officers. 
• $518 million in funding for Byrne Justice Assistance Grants. This amount is the same as the current fiscal year. Grants are made to state and local government to help prevent and control crime in local communities. Specific programs include: law enforcement programs, prosecution and court programs, drug treatment programs and community corrections programs.

Homeland Security

• Approximately $4.2 billion in homeland security grants for state and local governments.  This allocation funds such initiatives as the Metropolitan Medical Response Systems, Interoperable Communications, and Citizen Corps.

Department of Energy

• $2.4 billion in funding for energy efficiency and renewable energy programs. The funding is for research, development and demonstration of specific technologies. At this point, the amount of funding directed to local governments specifically is unclear. The allocations include:
  • $302 million for solar energy;
  • $220 million for biofuels and biomass research and development;
  • $325 million for advanced vehicle technologies; and
  • $231 million for energy efficient building technologies.
• The budget does not contain funding for the Energy Efficiency Block Grant Program.

Department of Housing and Urban Development 

• $3.99 billion in funding for the Community Development Block Grant Program. 
• $1.6 billion for the Home Investment Partnerships Program to provide grants to local governments to create affordable housing for low-income individuals. 

Environmental Protection Agency

• $3.3 billion for the Clean Water and Drinking Water State Revolving Fund with approximately $258 million would be available to California. The fund revenues are allocated by the state to public water systems, including cities, for infrastructure needs such as the construction of a wastewater treatment plants. 
• Increased funding for Brownfields cleanup by $37 million. These funds go directly to local governments for cleanup, assessment, job training and technical assistance.  

Water Management/U.S. Army Corps of Engineers

• $58 million for the federal government’s share of the CALFED Bay-Delta Program designed to improve California’s water supply and the ecological health of the Delta region.  

Assistance for California’s Budget Deficit

Of particular importance to California, the President’s budget includes $25 billion to provide assistance to all 50 states. The Governor’s January budget proposal includes an assumption that the federal government would contribute approximately $6.9 billion to help California address its budget deficit. The President’s plan gives California $1.5 billion in supplemental funds. 

The breakdown of this funding is as follows:

• $1.4 billion in additional Medicaid funds. These funds represent an increase in the amount the federal government reimburses the state for healthcare for low-income individuals.
• $90 million to help the state pay the costs of incarcerating illegal immigrants.   

The jobs package passed by the House of Representatives in December contained approximately $23 billion in funding for state Medicaid funding and $23 billion in support for education employment. California would likely receive a portion of these funds. However, until the jobs package is approved, the Governor and the Legislature will have to identify an additional $5.4 billion in budget solutions. 

Next Step

The President’s proposal signifies the beginning of the 2011 budget process. Over the next nine months, the President and the Congress will negotiate a final budget agreement. The expenditures proposed by the President now will likely change with final adoption necessary before the new fiscal year begins on Oct. 1. 

The League will continue to update cities during this process. More information can be found in the President’s budget proposal on the White House Office of Management and Budget Web site.