CDCAN Disability Rights Report #118-2011  – MAY 31, 2011 – EARLY TUESDAY

WHAT NEXT FOR THE STATE BUDGET?
– As crisis continues – budget subcommittee hearings process ended Friday May 27th – no budget conference committee likely – floor vote next probably week of June 6TH

• Budget Subcommittee Hearings Ended Friday May 27^th
• No Budget Conference Committee – Floor Vote Next

Work on “Placeholder” Trailer Bill Language Ranging from Adult Day Health Care, Developmental Services, Mental Health, Medi-Cal, IHSS Public Authorities Continues and Will Be Finalized As Part of Final Floor Vote on Budget

SACRAMENTO, CALIF  (CDCAN)  [Last Updated 05/31/2011  01:20 AM] -  With the last of the  budget subcommittee hearings held on Friday (May 27^th), the State budget crisis now moves to its final crucial stage, with likely floor votes in both the Assembly and State Senate sometime on or before the June 15^th State Constitutional deadline that requires the Legislature to pass a budget and present it to the Governor.  [CDCAN will issue a report later on Tuesday morning summarizing all the actions taken by the budget subcommittees]  

The Governor and Legislative Democrats still have not yet nailed down the two Republican votes they need in both the Assembly and State Senate in order to pass the Governor’s proposed 2011-2012 State Budget that hinges on over $9 billion in revenue solutions, including extension of the 2009 temporary tax increases that are set to expire June 30^th (see below for details on the revenue solutions).

The Budget Conference Committee will likely not reconvene. No hearings of the Budget Conference Committee, the full Assembly and Senate Budget Committees or additional hearings of the budget subcommittees have been announced or scheduled this week or in the following weeks and none are expected. 

Both Assembly and Senate budget subcommittees in hearings held last week, took identical actions in nearly every vote on the budget, leaving no need for the Budget Conference Committee, which last met in March, to reconvene again (there are other reasons why the conference committee won’t likely reconvene, including the fact that the main budget bill was already passed by the Legislature in March, though not sent to the Governor).

Main Budget Bill Passed In  March But Not Sent to Governor – Will Be Revised & Voted On Again Along With Several New Budget Trailer Bills

• As mentioned, also complicating the “normal State budget process” is the fact that the Assembly and State Senate passed on March 17^th  the original main budget bill for 2011-2012, but never sent it to the Governor because there was no agreement on the issue of extending the temporary 2009 tax increases due to expire June 30, 2011. 
• That main budget bill will be revised, and then voted on again sometime on or before June 15^th along with several new budget trailer bills. 
• What was passed by the Legislature on March 17^th and approved by Governor Brown on March 24^th were 13 budget trailer bills that included over $11 billion in cuts in State general fund spending largely achieved by actual program or service cuts, and also by fund shifts and bringing in new federal dollars – over $6 billion of the reductions and savings from health and human services. 

Revenue Piece Unresolved – Along With Major Reduction Proposal

Still not resolved is the issue of revenues, and some major reductions.  Governor Brown wants to extend or maintain, effective July 1, 2011, for five years most of the 2009 temporary tax increases due to expire June 30, 2011, with a special election to be held sometime likely in the fall to ratify the action by the Legislature, as follows:

• $1.4 billion – extending the 2009 temporary increase of the vehicle license fee (VLF) at current levels for another five years. Of this amount, $1.1 billion would go to local (county) public safety programs and $270 million would go to schools.
• $4.5 billion from extending the 2009 temporary increase of the sales tax rate at current levels for another five years for local (county) public safety programs.
• $2.2 billion from extending the 2009 temporary personal income tax (PIT) dependent exemption credit and maintaining it at the current level for another five years  to fund schools.
• $1.3 billion from continuing the personal income tax (PIT) surcharge in 2012 through 2015 at the 2010 level of 0.25% for schools. The surcharge would not be in effect for state tax year of 2011.

Legislative Democratic leaders, while generally supporting the Governor, have said in recent weeks that they prefer approving extending the 2009 tax increases to go into effect July 1^st, with no special election in the fall, but instead have voters ratify the decision by the Legislature in the June 2012 statewide primary.   Some Legislative Democrats want the Legislature to approve extending the 2009 temporary tax increases as part of the 2011-2012 State Budget without going to the voters for later approval -  a position that will likely be met with stiff Republican opposition. 

The Legislative Republican leadership however believes there are sufficient new revenues coming in from higher than projected tax receipts and with additional new spending cuts, would make extending temporary tax increases – or raising any new revenues – unnecessary. 

The Governor – and Legislative Democratic leaders have said in recent weeks that talks with some individual Legislative Republican members have continued though no agreement has been reached or announced.  Talks include possible budget spending cap that would limit more significantly state spending than current laws; possible pension reforms; and possible regulatory reforms.

Assuming all 52 Assembly and all 25 State Senate Democrats vote for the revised version of the main budget bill, at least two Republican votes would be needed in each house in order to pass it. 

While Proposition 25, passed by voters last November, authorizes a majority vote State budget – it still leaves in place the State Constitution provision that requires 2/3rds vote (54 votes in the Assembly and 27 in the State Senate) to approve a budget with tax increases.  Penalties imposed by Proposition 25 if a State budget is not passed by the Legislature and presented to the Governor on by June 15^th, would also kick in – including loss of pay and travel/living expenses each day for every legislator until a budget is passed and sent to the Governor (the loss of pay and travel/living expense is forfeited permanently).  

Those penalties will be a significant factor on how long a budget stalemate goes on – if one does, though it is not clear if the penalties will have a greater impact on legislative Democrats than legislative Republicans. 

In addition the Governor’s proposal to eliminate redevelopment agencies, which fell one vote short of approval in March (the State Senate never voted on the proposal) is still on the table, with the Governor urging, as part of his May 16^th budget revisions, to approve his proposal.  That proposal to eliminate redevelopment agencies would mean a reduction – or savings to the State general fund of over $1.7 billion, according to the Brown Administration.  Some affordable housing advocates – including those who are advocates for people with disabilities, seniors and low income families – opposed last March the elimination of the redevelopment agencies because of its links to affordable housing that the Governor’s proposal they say, did not address. 

Adding to the budget crisis the fall-out of  last week’s landmark US Supreme Court decision that ordered California to take immediate steps to correct the overcrowding in its state prisons or release thousands of prisoners.

SOME QUESTIONS ANSWERED ON NEXT STEPS

Question: What happens next on the budget related language?

CDCAN Answer: Assembly and State Senate budget committee staff are working to finalize dozens of budget related legislative language that were either proposed by the Brown Administration or by subcommittee staff, which the subcommittees approved as “placeholder” language including language impacting Adult Day Health Centers; developmental services;  In-Home Supportive Services Public Authorities funding; mental health services, and more.  

 The term “placeholder” means while the subcommittee approved the intent or concept as proposed last week, the actual language needs to still be finalized.

 This is a very dangerous time in terms of any placeholder budget trailer bill language because over the next several days the language can go in different directions – sometimes at the last moment – given the pressures of getting a budget deal and passing a budget.  In some cases the language can get more restrictive, or more flexible or have the impact of producing more or less reductions or savings.  

Meanwhile, talks with individual Legislative Republicans and the Governor will continue (along with talks with Legislative Democratic leaders) in order to reach a budget agreement before June 15^th. 

Question: Can the public still offer ideas or suggestions regarding “placeholder” budget trailer bill language?

CDCAN Answer:  Yes, but time is of the essence.  With deadline to finish work on the budget fast approaching, persons interested in making suggestions on budget related legislative language – referred to as budget trailer bill language (because the bill containing the language will follow or trail the main budget bill) – can still send letters to the two budget committee chairs and/or contact their own legislators who represent them (to have them forward their suggestions to the budget committees).

However any proposed changes would need to achieve the same level of reduction or savings to the State general fund that the subcommittees (or the Budget Conference Committee last March) approved.   See below for address and phone number. 

Question: Will the budget subcommittees or full budget committees or Budget Conference Committee need to meet to approve final versions of the “placeholder” budget trailer bill language?

CDCAN Answer: Probably not.  In normal times, “placeholder” budget trailer bill language that both the Assembly and State Senate budget subcommittees gave approval for, is drafted and finalized by budget committee staff from both houses – and is given final approval when the entire budget trailer bills are taken up for final votes on the Assembly and Senate floors. 

Unfortunately there is usually not more than a day advance notice that the Assembly or Senate will be voting on the main budget and trailer bills.  Versions of the budget trailer bills that members vote on usually are not in official form – (meaning formally amended into a bill). 

It is not clear yet when the public will be able to see and review the various “placeholder” budget trailer bill language that need to be finalized in the coming days.  [CDCAN will send out any information or draft copies as they become available]

Versions of various budget trailer bill language posted on the Department of Finance and also individual department websites most likely will not reflect the latest changes made by legislative budget staff and members or reflect the versions that the Assembly and Senate will actually vote on. 

Question: When will the Assembly and State Senate vote on the budget and budget trailer bills? 

CDCAN Answer:  As early as the week of June 6^th  with June 8^th or 9^th talked about as possible dates for budget floor votes. No dates have been formally announced or scheduled – though as mentioned, the State Constitutional deadline of June 15^th (Wednesday) remains in place – and there will be a vote on the budget in both houses on or by that date whether there are votes to pass it or not. 

ADDRESS OF ASSEMBLY AND SENATE BUDGET COMMITTEES

• CDCAN advises that people interested in making suggestions to proposed budget trailer bill language that has not yet been finalized (referred to as “placeholder” budget trailer bill language) should also contact directly their own legislators who represent them, in their district office. 
• Have them contact and forward your ideas and suggestions to the two budget committees – and have them keep you posted on what is happening. 

Sen. Mark Leno, Chair
Senate Budget and Fiscal Review Committee
State Capitol
Sacramento, CA 95814

Assemblymember Bob Blumenfield, Chair
Assembly Budget Committee
State Capitol
Sacramento, CA 95814

# # # #