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State can't take $1B from First 5, judge rules

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California's attempt to divert $1 billion from First 5 commissions to state health services is illegal, a Fresno County judge ruled last week.

Lawmakers and Gov. Jerry Brown had sought First 5 funds in March to help close what was then a $26 billion budget shortfall. After several commissions sued, the governor removed First 5 from his May budget solution but continued to defend the move in court.

In an opinion issued Nov. 21, Superior Court Judge Debra J. Kazanjian said the funding shift could be enacted only by voters, who established First 5 when they approved Proposition 10 in 1998.

Prop. 10 placed a 50-cent tax on tobacco products and has generated about $7.3 billion to date. The revenue is divided among one state and 58 county commissions, which support early childhood development programs.

The state argued that the diversion of funds was legal because it was consistent with Prop. 10's goals of supporting children up to age 5. Without the money, it said, health and human services for children would go unfunded.

Kazanjian called the state's argument "disingenuous."

"It was the legislature that 'chose' to cut funding to existing services instead of taking what might be the unpopular step of raising revenue," she wrote. "To claim that transferring decision-making from local communities to the state legislature is 'consistent with' Prop. 10 is like asking the court to find that black means white."

First 5 commissions said yesterday that the ruling was great news but remained cautious – the state still could appeal the decision.

H.D. Palmer, spokesman for the Department of Finance, said the state received the ruling yesterday morning and was still reviewing it. It has not yet decided whether it will appeal, he said. 

"If the state decides to appeal, we'll vigorously battle this out," said Michael Ruane, executive director of the Children and Families Commission of Orange County. "It's unfortunate, given the scarcity of state resources."

The ruling does not add $1 billion to the state's budget gap – the Legislative Analyst's Office recently pegged the deficit at nearly $13 billion – because it was not included in Brown's budget revision in May, Palmer said.

The 10 commissions that sued – Fresno, Madera, Merced, Solano, Los Angeles, Orange, Riverside, Marin, Sonoma and San Diego – are petitioning for the state to reimburse their legal fees, said Kenneth Price, an attorney representing commissions in Fresno, Madera and Merced counties. They have not yet calculated the total cost.

Kendra Rogers, executive director of First 5 Fresno County, said she hopes the decision sparks greater discussion about the state's budget priorities.

"The state Legislature made the decision to pit Prop. 10 against Medi-Cal. That was not a decision they had to make," she said. "We really hope that … they will stand by the kids of the state and not balance the budget on their backs."

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