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Legislature Acts on GRP, Foreclosure Legislation and Water Bond

July 6, 2012

This week the Legislature indicated it would take up a number of significant items before taking its summer recess, which starts Monday, July 9. The following actions were taken.


Compromise Foreclosure Legislation

On Monday, SB 900/AB 278, also known as the Homeowners Bill of Rights, was passed in both the Senate and the Assembly. The legislation increases protections for homeowners facing foreclosure through several provisions, including setting up fines for lenders filing robosigned documents and allowing borrowers to sue for damages over material violations of the law. The legislation is currently awaiting Gov. Jerry Brown’s signature.

The Governor’s Reorganization Plan (GRP)

The Governor's Reorganization Plan (GRP) revising the structure of various state agencies, departments, and boards has become law. As reported in previous articles, once the GRP was reviewed by the Little Hoover Commission in April, the Legislature had 60 days to either reject the proposal or it would become law. The plan was originally introduced in January as part of the Governor’s budget proposal.  

Although the Legislature did not reject the GRP, there will be changes to the original proposal enacted through budget trailer bills and additional legislation in 2012. For example, one of the trailer bills signed last week as part of the FY 2012-13 budget package (SB 1038) eliminates and reorganizes various state departments including the Division of Labor Statistics and Research and the Fair Employment and Housing Commission. In addition, several bills are being considered today and tomorrow that will make additional changes including the addition of “Housing” to the title of the new Business and Consumer Services Agencies and for additional clarification on the relationship between the California Transportation Commission and the new Transportation Agency. The Legislature has also shown significant interest in codifying the working relationship between transportation departments and housing departments. 

Typically a GRP will become effective the day following the 60 day legislative review period.  However, in this case the Governor included an effective date of July 1, 2013. The impacted state agencies and departments will spend the next year coordinating the transfer of responsibilities to make the transition as smooth and timely as possible. 

Pension Reform

It was rumored that the Conference Committee on Public Employee Pensions (Committee) was expected to release its report sometime this week, but it appears that talks broke down between the Committee and the Governor’s Office. The Governor has indicated that he would like to continue the discussions and work toward a compromise sometime in August. It is difficult to say where the Democrats or Republicans are going to align themselves on a pension package. Both sides of the aisle seem hesitant to support anything for which they haven’t yet seen details or even a summary. 

The Governor’s Office indicated that they have reached agreement on nine of the 12 points of his 12-Point Pension Reform Action Plan, but that three major points are still being negotiated.  The sticking points are likely issues around retirement age, the hybrid plan, and cost sharing.

Language for the package has still not been released. The League will analyze the proposal as soon as it is available.

2012 Water Bond

The Legislature approved AB 1422 (Perea) to move the 2012 Water Bond currently on this November’s ballot to November 2014. This is the second time the Legislature has postponed the $11 billion bond.  The first postponement was in 2010, moving the bond to November 2012. AB 1422 makes no changes to the content of the existing bond.

High Speed Rail

On Thursday, the Assembly approved SB 1029, which would appropriate just over $8 billion total to the high speed rail project ($4.8 billion state and $3.24 billion federal). The real test on the future of the project will be in the Senate, which is expected to vote today. Several Senators have already expressed their opposition to the appropriation, and the vote will be very tight. If the Senate does not approve SB 1029 today, there is a very good chance that the entire project, including the local projects that have now been incorporated as part of the blended approach, will be dead. 

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