A Fresno judge ruled last week that California's attempt to take $1 billion from First 5 commissions was illegal.
Gov. Jerry Brown and state lawmakers initially relied on the money in March to help balance a then-$26 billion shortfall. Two months later, state leaders backed away from the budget solution because First 5 commissions filed suit to block it. But Brown continued to defend the move in court.
Fresno Superior Court judge Debra J. Kazanjian determined in her ruling that the First 5 take was illegal because it required voter approval under the initial 1998 ballot measure, Proposition 10.
First 5 programs are funded by a voter-approved tobacco tax to provide early childhood development services. State leaders instead dedicated that money toward ongoing Medi-Cal costs for children 0 to 5 years old.
The governor argued that the move was legal because it was consistent with Proposition 10's goal of supporting children in their first five years of life. His defense essentially was that the budget crisis would have otherwise left those children without Medi-Cal services.
Kazanjian disputed that interpretation: "But that argument is disingenuous in that 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 also said elsewhere, "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."
Update (3:00 p.m.): Department of Finance spokesman H.D. Palmer said the state has not yet decided whether to appeal.
The decision should not immediately impact the state budget given that Brown and lawmakers removed the First 5 solution from their final spending plan. But it does close a potential avenue as the state faces a $13 billion shortfall over the next 19 months.