CDCAN DISABILITY RIGHTS REPORT
#088-2011  – APRIL 8, 2011 – EARLY FRIDAY AM

CALIFORNIA DISABILITY COMMUNITY ACTION NETWORK 
WEBSITE: www.cdcan.us    TWITTER:  www.twitter.com  – “MartyOmoto”

State Budget Crisis

STATE SENATE BUDGET COMMITTEE HOLDS INFO HEARING ON BUDGET CRISIS – WILL BEGIN LOOKING AT $15 BILLION IN ADDITIONAL SPENDING CUTS

• State Senate Democrats Say The Additional Cuts May Be Necessary If Governor’s Revenue Proposals Are Not Part of Final Budget Plan
• State Senate Republicans Disagree Saying Real Reductions Have Not Yet Been Made In Many Budget Areas Including State Employees
• Governor To Hold Budget Meeting In Riverside Friday on Education
• Informational Hearing by Full Senate Budget Committee April 14^th on Possible Cuts To K-12 Education and Higher Education
• No Agreement Reached Yet In Washington DC To Avert Federal Government Shutdown

SACRAMENTO, CALIF  (CDCAN)  [Last Updated 04/08/2011  03:36 AM] -  With the State budget crisis unresolved, the Senate Budget and Fiscal Review Committee held Thursday late morning (April 7) a one and half hour informational hearing that looked at the possibility of making over $15 billion in new cuts in State general fund spending on top of reductions made in March if the Governor and Legislature are unable to find a way to bridge the remaining budget gap with a five year extension of the 2009 temporary tax increases that are scheduled to expire June 30, 2011.

With the State budget crisis unresolved, the threat of more massive cuts in State general fund spending looms even larger now that could have sweeping permanent impact to health and human services, education and other budget areas impacting children and adults with disabilities, mental health needs, seniors, people with traumatic brain and other injuries, people with MS, Alzheimer’s and other disorders and their families, community organizations, facilities, and individual support workers across California. 

Confusion regarding the on-going State budget crisis is likely to grow over the coming weeks because some of the Governor’s proposed cuts were passed by the Legislature and signed into law, though not the main budget bill – and conflicting proposals and information on the impact of the lack of or the inclusion of the Governor’s revenue proposals in the budget plan.  In addition, much confusion remains regarding the impact of having or not having a special election and the impact of any delay of having a special election. 

No Agreement Yet To Avert Imminent Federal Government Shut Down

• Meanwhile, in Washington DC, as of late Thursday evening, no agreement yet has been reached on a temporary spending plan to keep the federal government operating and to avoid an imminent federal government shutdown that begins Saturday (April 12^th) unless a deal is reached. 
• US House Speaker John Boehner (Republican – Ohio) and US Senate Majority Leader Harry Reid (Democrat -Nevada) emerged from their second meeting Thursday evening without an agreement and released a joint statement that said: “We have narrowed the issues, however, we have not yet reached an agreement. We will continue to work through the night to attempt to resolve our remaining differences.”
• President Obama in comments to reporters, said that the meeting was productive saying that progress was made and that “…differences have been narrowed. And so once again the staff is going to be working tonight, around the clock, in order to see if we can finally close the deal.”
• Any eventual agreement reached by the US House of Representatives – controlled by Republicans – and the US Senate – controlled by Democrats and President Obama, who earlier this week declared he was running for re-election in 2012 – will have major impact on California’s budget crisis.  A federal government shutdown also has impact in the State – though not necessarily immediate impact on health and human service programs. 

No Action Taken At Thursday State Capitol Informational Hearing

• No action was taken at the Senate Budget and Fiscal Review Committee informational hearing chaired by Sen. Mark Leno (Democrat – San Francisco), which included presentations by the Governor’s Department of Finance on what actions (including spending cuts) have been approved by the Legislature and Governor to date on the budget, and a overview by Legislative Analyst Marc Taylor on a list of $13.5 billion in additional new reductions covering nearly every part of the budget including K-12 education if the Governor’s revenue proposals are not adopted. 
• That February 10^th list contained no details, but outlined possible areas for reduction including over $1.150 billion in possible additional reductions in State general fund spending in health and human services.
• The Legislative Analyst said that about $3 billion to $3.5 billion in additional cuts in State general fund spending would be needed to be added to that February 10th list due to certain actions not taken in the Governor’s proposed budget plan – and due to changes resulting from rescinding sale of certain State buildings that was part of the 2010-2011 State Budget approved last October (nearly four months late). 
• The Legislative Analyst Office (LAO),  the non-partisan legislative office that provides analysis and information on State budget issues for the Legislature in presenting again the list of new reductions – most of which were previously presented last month – said it was identifying possible cuts as a “starting point to get the ball rolling” for the Legislature to consider if the Governor’s proposed revenue solutions were not adopted, but stopped short on saying it was a list of actual recommendations.
• Sen. Leno requested that the Legislative Analyst Office provide the Senate budget committee with a list or summary of what another $3 billion to $3.5 billion in spending cuts would mean on top of the previous February 10^th list.
• Senate Republicans on the committee didn’t agree that massive cuts to education were necessary – or even new additional cuts to other programs already hit by reductions, if budget cuts were made to other budget areas including state employees. 

State Budget Crisis Continues Unresolved Due to Stalemate on Revenues

• On March 16^th and 17^th the Assembly and State Senate approved and the Governor signed into law on March 24^th, 13 budget related bills (called “ budget trailer bills”) that authorized over $11 billion in budget solutions – most of that cuts in State general fund spending.  Most of the cuts (about $6 billion) came from health and human services.
• The Legislature actually approved just over $14 billion in budget solutions – the bulk of that in spending cuts to the State general fund – but about $3 billion of those solutions are not in the 13 budget trailer bills – but only in the main budget bill.
• That $3 billion in solutions are not yet enacted because they are contained only in the main budget bill (SB 69) which the Legislature approved on a strict party-line vote, has still not been sent to the Governor because budget related legislation dealing with revenues and elimination of redevelopment agencies have not yet been approved.  The Legislature can indefinitely hold a bill it passed – but once it a bill is sent to the Governor, a 12 day time deadline kicks in (except at the very end of the legislative session at the end of August or mid-September, when the Governor is given 30 days). 
• A State budget stalemate exists because the Governor and legislative Democrats cannot get support from legislative Republicans on the Governor’s $12 billion in revenue proposals, including over $11 billion in extending for five years 2009 temporary tax increases that voters would need to approve.
• The Legislature did approve the Governor’s revenue proposal regarding tax enforcement and amnesty ($360 million in revenues during the 2011-2012 State budget year) which only required a majority vote. 
• The Legislature has not yet approved two revenue proposals by the Governor (not tied to a special election ballot)  dealing with making the current single-sales factor corporate tax multi-state apportionment mandatory instead of elective ($1.4 billion in revenues for the 2011-2012 State budget year) and elimination of the enterprise zone tax credits ($924 million in revenues for the 2011-2012 State budget year). 
• In addition the Legislature has not yet approved the Governor’s proposal to eliminate redevelopment agencies (for a spending reduction of $1.7 billion in State general funds), falling one vote short in the Assembly on March 16^th.  The State Senate has not yet taken up that issue. 
• The temporary tax increases were passed as part of the 2009-2010 State Budget in February 2009 with legislative Republican support and are set to expire June 30, 2011, unless extended by 2/3rds  vote of the Legislature or placed on a special election ballot by the Legislature (requiring 2/3rds vote) or placed on a special election ballot by petition gathering sufficient signatures (over 500,000 for an initiative and over 800,000 for a constitutional amendment):

-       Vehicle License Fee  – extend 2009 temporary increase for another five years to fund public safety programs: $1.4 billion (in 2011-2012 State budget year)

-       Sales Tax – extend 2009 temporary increase for another five years to fund local public safety programs:  $4.5 billion (in 2011-2012 State budget year)

-       Personal Income Tax Surcharge and Dependent Exemption Credit – extend 2009 temporary increases and change in exemption credit to fund K-12 education: $5.3 billion (in 2011-2012 State budget year) – $3.3 billion of that coming from the surcharge and $2.0 billion coming from the change in exemption credit.

Assembly Budget Committee May Hold Informational Hearings Around State But Not Focused On “All Cuts Budget” Proposals

• The Senate Budget and Fiscal Review Committee’s counter part in the Assembly – the Assembly Budget Committee – did not meet and has not yet officially scheduled any similar full budget committee informational hearings.
• Assemblymember Bob Blumenfield (Democrat – Van Nuys, 40^th Assembly District) indicated Thursday that there were plans to hold informational hearings in different locations around that State  – though not focusing on a possible “all cuts budget” proposals – later in April or May. 

Budget Hearings Scheduled Week of April 11^th

• The Legislature is focused this past week and next week on reviewing and acting on hundreds of regular bills in the various non-budget policy committees.
• That focus will continue after the Legislature breaks for Spring Recess that begins April 15^th through April 24^th. 
• They return April 25^th, Monday and resume that week and the week of May 2^nd for the final round of policy committee hearings (the deadline to pass regular bills having some level of impact on the State general fund is May 6^th – meaning policy committees have to pass these bills out by that date or the bills cannot move any further in the legislative process this year.
• The rule does not apply to budget related bills or to bills that are “urgency” measures. 
• Listed below are legislative budget hearings scheduled for the week of April 11^th.  As of  late Thursday evening (April 7^th) the Assembly has not scheduled any budget hearings that week. 

APRIL 11, 2011 – MONDAY

SENATE BUDGET AND FISCAL REVIEW COMMITTEE

TIME: 12:30 p.m. or upon call of the Chair

WHERE: State Capitol – Room 3191

TELEVISED: Not certain

WHAT:  Hearing on two budget related bills pending rule waiver:

• AB 94 (Assembly Budget Committee) – Criminal Justice Realignment
• AB 117 (Assembly Budget Committee) – Criminal Justice Realignment

APRIL 14, 2011 – THURSDAY

SENATE BUDGET AND FISCAL REVIEW COMMITTEE

TIME:  9:30 a.m. or upon adjournment of State Senate floor session

WHERE: State Capitol – Room 4203

TELEVISED: Yes

WHAT:

• Review of Budget Reductions to K–12 Education
• Review of Budget Reductions to Higher Education
• Public Comment

GOVERNOR TO HOLD BUDGET MEETING ON EDUCATION IN RIVERSIDE – SENATE REPUBLICAN LEADER DUTTON SENDS LETTER WELCOMING GOVERNOR TO HIS DISTRICT BUT URGES OTHER BUDGET SOLUTIONS

• Meanwhile Governor Brown, in an effort to generate public support for his budget revenue proposals, will hold a series of forums or community meetings throughout the State, beginning Friday, April 8^th at 11:15 AM, at the Arlanza Elementary School, 5891 Rutland Avenue in Riverside, 952503. 
• That meeting in Riverside will be with educators and community leaders to discuss how the State’s budget crisis is impacting – and will impact schools in Riverside County.
• It is not clear if the event is open to the public.   
• Legislative Republicans and State Republican Party leaders announced Thursday their plan to conduct meetings and forums throughout the State, beginning in Fresno and continuing through July. 
• Senate Republican Leader Bob Dutton (Republican – Rancho Cucamonga, 31^st State Senate District) released a letter, dated April 7th to Governor Brown welcoming him to his district and thanked him for inviting him to the community meeting but indicated he could not attend due to a schedule conflict.  Dutton in the letter disagreed with the Governor’s proposed budget solutions, especially the revenue proposals. 
• Full Text of Letter from Senate Republican Leader Dutton to Governor:

Dear Governor Brown:

Thank you for the invitation that you extended to me this morning to meet with you regarding the state budget in Riverside County on Friday.

Due to a previously scheduled speaking engagement, I am unable to attend.

It is my pleasure to welcome you to the Inland Empire and the 31st Senate District, which I proudly represent.

Here are a few facts you should know about the people in my district:

The unemployment rate is 14.1 percent in Riverside County and San Bernardino County’s unemployment rate is 13.7 percent. There are more than 242,000 unemployed people in the two-county region. Hopefully, you will take an opportunity to visit with some of our shared unemployed constituents. I believe that the message that you hear will be that they need jobs. Unfortunately, your proposed budget does nothing to create jobs and, in fact, threatens many Inland Empire jobs through your proposals to eliminate Redevelopment Agencies and Enterprise Zones.

When asked in 2009 whether or not to extend taxes for two years, 73 percent of the voters in my district said no. When you ask the voters in my district to hike their taxes by $50 billion over the next five years, please be sure to also tell them you plan to increase government spending by $26 billion over the next three years – a more than 30 percent increase.

Two weeks ago, after Senator Bob Huff and I responded to your request for a list of issues, you called off budget discussions with the Senate Republican Caucus. We had presented you with a path to a bipartisan budget that would have let the people vote on a spending cap and public employee pension reform.

This year’s legislative budget process was the most highly truncated and highly partisan in recent memory. Despite this fact, the Senate Republican Caucus and I stand ready to engage in the needed discussions to negotiate a budget that helps to restore the California economy and gets Californians back to work.

Please enjoy your time in the Inland Empire. I look forward to working with you when you return from your travels.

Sincerely

[signed]

Bob Dutton

Senate Republican Leader

NEXT STEPS AND CDCAN ANALYSIS

When will the Legislature take possible action on any additional spending cuts if it is necessary?

• Neither the Assembly and State Senate will likely take any action on additional spending reductions – if necessary – until probably after the Governor releases his budget revisions, scheduled for May 13^th (Friday).
•  Those budget revisions will include the latest actual revenue and spending figures (including latest updated figures on what the State actually received in income taxes due April 15^th) 
• Also included in the Governor’s proposed budget revisions will be specifics on several previously approved reductions including his proposal on how $174 million cut in State general fund spending in regional center community-based services for people with developmental disabilities (in additional to other reductions) can be achieved.  [CDCAN will issue Action Alerts for people to come to the State Capitol for these hearings]
• All of the Governor’s proposals in his budget revisions – referred to as the “May Revise” or “May Revision” need approval from the Assembly and State Senate. 
• Even if the Governor and Legislative Democrats are able to find a way to get the Governor’s revenue proposals (to extend for another five years the 2009 temporary tax increases) on a special election ballot in 2011 – there is no way now an election can now be held in June, or likely in July or August.  That would leave at a minimum at least two months – likely more – of lost revenues until (and if) voters approve the extensions of the temporary tax increases in a fall or winter special election. 
• So that could mean billions of dollars of additional cuts in State general fund spending EVEN if a special election is able to be held on the Governor’s proposed revenues, which may or may not be addressed in the Governor’s budget revisions in May. 

When Will the Next Budget Hearings Begin?

• The State Senate Budget and Fiscal Review Committee held an informational budget hearing April 7^th and plans another on April 14^th focusing on what cuts to K-12 education and additional cuts to higher education would look like if the Governor’s proposed revenues are not included in the 2011-2012 State Budget.  Additional informational hearings – not yet officially announced – could be scheduled after the Legislature’s spring recess which begins April 15^th through April 24^th (they return to the State Capitol on April 25^th, Monday afternoon) and could be held in different locations of the State. 
• The Senate Budget and Fiscal Review Committee also has scheduled a budget hearing on April 11^th (Monday) on two budget related bills dealing with criminal justice realignment (transferring certain State responsibilities of those programs to the counties)
• The Assembly Budget Committee may possibly hold its own informational hearings though focused not on  “all cuts budget” proposals, and would possibly hold these hearings at different locations across the State.  No dates or locations have yet been officially announced. 
• Both the Assembly and State Senate budget subcommittees are expected to hold some hearings sometime after the Legislative Spring recess, when the Legislature returns April 25^th focusing on new information from the Governor’s Department of Finance, called “Finance Letters”.  Some hearing dates have been announced – but the main critical budget hearings – where any new reductions might be approved – will likely be held sometime immediately after the release of the Governor’s budget revisions on May 13^th.  So the next crucial budget hearing dates where public turn-out and testimony would be important and could be crucial would be sometime after that in mid-May [CDCAN will issue Action Alerts as information becomes available]

When Will the Legislature Send the Main Budget Bill to the Governor?

• As previously reported, the Assembly and State Senate – on a party-line vote, approved on March 17^th the main State budget bill for 2011-2012 (SB 69) but as of April 8^th, has not yet sent it to the Governor. 
• The Legislature – with the impasse with legislative Republicans continuing on the Governor’s revenue proposals and barring any unforeseen agreement in the near future – is certain NOT to send that main budget bill now in or in the coming weeks.
• The Legislature – controlled by Democrats, will likely bring it back for revisions and a vote in both houses in June (and also bring up the budget related bills tied to the Governor’s revenue proposals).   

But can’t the Democrats in the Legislature revise and pass a State budget on a majority vote without Republican support?

• Yes – but they won’t – at least not now.  Proposition 25, which voters approved in November 2010, changed the State Constitution and now only requires a State budget (and budget trailer bills) to be passed by a simple majority vote in both the Assembly and State Senate (unless it increases taxes, which requires 2/3rds vote) the Legislature.
• Proposition 25 also imposes penalties IF the State Budget is not passed by the Legislature by June 15^th (the State Constitutional deadline) and sent to the Governor. 
• For each day the Legislature misses that deadline, each legislator cannot collect any salary or reimbursements for travel or living expenses. This penalty would be in effect from June 15 until the day that the main State budget bill is passed by the Legislature and actually presented to the Governor.
• The legislators don’t get their money back from those days they forfeited their pay, reimbursements and living expenses. However the legislators start getting paid again once a State Budget bill is presented to the Governor – it doesn’t matter when or if he or she signs it or not. 
• If the Legislature sent to the Governor SB 69 (the current main State budget bill) which it passed on March 17^th  or even brought it back and revised it  and then sent it to the Governor  in April or May or before June 15^th, the June 15^th deadline penalties (of legislators forfeiting their pay) would no longer apply because a State budget was passed and presented to the Governor before that date. 
• Which is why Legislature – controlled by Democrats – will NOT send the main budget bill to the Governor now. 

Why would the Legislature wait until June to vote again on the main budget bill?

• With no agreement with legislative Republicans on the Governor’s revenue proposals (and none likely in the near future) from a strategic point of view it might make sense for legislative Democrats – if they still wanted Republican votes – to push for a vote close to June 15^th on a revised State Budget that included the Governor’s revenue proposals based on a fall special election
• Why do that?  Well, because the Proposition 25 penalties would kick in if the Assembly and State Senate did not pass a budget by the June 15^th deadline. 
• Legislative Democrats (and the Governor) could use the Proposition 25 penalty that withholds legislative pay, reimbursements for travel and living expenses each day a State budget is not passed and presented to the Governor as leverage to win support from at least 2 Assembly and 2 State Senate Republicans who wouldn’t be able to afford a prolonged loss of income, reimbursements and living expenses. 
• While that penalty would also hurt legislative Democrats too – it might be seen as an incentive for certain legislative Democrats who might have second thoughts about supporting the main State budget bill (and any budget trailer bill that would come up for a vote after that) and keep them in line.
• A June budget vote would also be a likely scenario even if it turned out to be some version of an “all cuts” budget.  While an “all cuts” budget would only need a majority vote – it would also be likely that enough legislative Democrats would refuse to support it – and require legislative Republican votes to pass it. 
• Legislative Republicans could use the June 15^th penalties on legislative salaries and other pay as leverage too in theory – though their advantage would likely be less simply because the Democrats control both houses and the Governor’s office and would only need two Republicans from each house.
• A long budget stalemate could still happen despite the salary and reimbursement penalties after June 15^th, and go on for weeks, or as in recent years – months – but with the penalties on pay and reimbursements, that doesn’t seem as likely now. 

What About Placing the Governor’s Proposals on the Ballot Through Petition?

• That can still happen and some groups are moving forward – including some on other proposals dealing with pension reforms and State budget spending caps.  The Governor – and some legislative Democrats – have indicated they are open to that option – though none have officially endorsed any effort yet. 
• However it is a process outside the Legislature.  In other words, the alternative of placing on a special election ballot in 2011 an initiative statute (which changes or adds State law) or constitutional amendment (which changes the State Constitution) by gathering sufficient signatures by petition, is a process that does not need or require any approval from the Legislature or Governor. 
• There are tight deadlines in order to have sufficient time to gather enough signatures (over 500,000 for an initiative statute and over 800,000 for a constitutional amendment) and to allow for the minimum time needed for the State to review the petitions and determine if they qualify for a special election in 2011.  Under the current deadlines, the earliest time a petition could qualify would be for a November special election – assuming petitions were turned in sometime in June. 
• A special election however can be held during any month – so in theory, a special election could be held in December or a later month (with the deadlines moving back as well).  The same goes if the Legislature is able to gather enough votes to place directly on a special election ballot,  a ballot proposal. However while the time needed to gather signatures by petition is not needed, about 2 months or longer would be needed for the Secretary of State and local county registrars of voters to prepare for a special election, meaning if by a miracle a State budget was passed in late June that also approved placing proposals for a special election ballot, the soonest a special election could be held would likely be in September, possibly October. 
• Of course, no one really knows what happens IF there is a special election at some point and IF the voters reject the Governor’s revenue proposals, which would leave a budget hole of billions – and an on-going hole of $11 billion or more. 

If the main State budget bill has not yet been sent to the Governor or approved by him – does that main the 13 budget trailer bills are not yet in effect too?

• No – those 13 budget related (“trailer”)  bills were passed by the Legislature and signed into law March 24^th by the Governor and went into effect immediately. 
• However most of the reductions authorized in those bills don’t take effect until July 1^st or after (depending on what the bill says).  In some cases – regarding Medi-Cal provider cuts and elimination of Adult Day Health Centers – those cuts take effect sometime in June.
• Some cuts – like the $2.5 million reduction to the MSSP (Multipurpose Senior Services Program) were not mentioned in any of the 13 budget trailer bills – but instead are only in the main budget bill – in this case SB 69 which was passed by the Legislature but has not yet been sent to the Governor (see above for long, long explanation on THAT issue).  That cut is technically not official or law yet – but the cut wasn’t scheduled to be effective until July 1^st anyway.