State Seeks to Turn Tables on Counties

SACRAMENTO — Gov. Pete Wilson sent attorneys and accountants scurrying Tuesday to devise a plan for dealing with a state Supreme Court decision that could affect millions of dollars in state aid to counties.

The court ruled Monday that the state must reimburse counties for what they spent to provide medical care to the uninsured working poor in fiscal years 1989 to 1992. San Diego County, which challenged the state in court, says it alone is owed $22.6 million.

But in anticipation of possibly losing the court case--and to discourage other counties from joining San Diego’s suit--Wilson and state legislators in 1991 enacted “poison pill” legislation that would cut off some sources of state funds to the counties if the state were ordered to reimburse them for the uninsured medical costs. If the poison pill takes effect, the counties could end up worse off than they were before the court case.

“The potential financial impact is enormous,” but it probably will not be fully calculated for some time, said Sean Walsh, the governor’s press secretary.

H. D. Palmer, spokesman for the Department of Finance, said the court’s ruling was being urgently analyzed to determine if the poison pill provision of the law would be activated.

If the mechanism were activated, it would cut off about $898 million in motor vehicle license fees that the state currently turns over to California counties to help pay the medical and social service costs of poor adults. In the 1994-95 fiscal year, the most recent for which figures are available, Los Angeles County received almost $278 million in those license fees.

“Based on an initial review, [the court ruling] is worded in a way that makes it impossible to make a determination right now as to whether and when the poison pill would be activated,” Palmer said. “We need further analysis.”

In response to questions, Palmer also said administration officials would consult with legislative leaders in trying to devise a strategy to avoid a fiscal crisis.

“Clearly, this is something that will be discussed with members of the Legislature,” he said.

He refused to discuss a timetable for putting a strategy into action, but noted that the court decision becomes final in 30 days unless the administration asks for a rehearing. A rehearing is under consideration, Palmer said.

Palmer said accountants were busy Tuesday trying to determine the effect a cutoff of funds would have on individual counties.

Although the court ruled in favor of San Diego County, it left it to the obscure Commission on State Mandates to decide how much is owed.