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Legislature Preparing for Budget Next Week

June 8, 2012

With the June 15 constitutional deadline to pass a budget, Democratic leadership are working behind the scenes in order to address outstanding items. Republicans are left out of the negotiations because Proposition 25, passed in November 2010, requires only a majority vote.

 

Since Prop. 25’s  enactment, the primary motivator for an on time budget is the requirement that legislators forfeit salary for every day that they fail to pass a budget after June 15.

State Controller John Chiang challenged the budget the Legislature initiatlly adopted in 2011 as not being balanced and therefore withheld 12 days of legislator pay citing Prop. 25’s requirements.

However, the Legislature fired back earlier this year with a lawsuit against the Controller claiming he did not have the authority to make a determination on whether a budget passed by the Legislature was balanced. In April, a Sacramento Superior Court judge ruled in favor of the Legislature finding that the Controller violated the separations of powers clause of the California Constitution. This decision provides some additional flexibility for the Legislature.

Budget bills will likely be in print by next week and votes may occur on either Thursday or Friday.

Budget Problem at $15.7 Billion

Gov. Brown’s initial FY 2012-13 Budget pegged the deficit at $9.2 billion, however in his May Budget Revise, the deficit jumped substantially to $15.7 billion. The increase was attributed to overly optimistic revenue forecasts, increased Prop. 98 spending and federal court rulings blocking several budget cuts.

Gov. Brown proposes to close the budget gap with solutions including deeper cuts to health and safety programs, the suspension of state mandates, a reduced four-day state employee work week, and the expected sweep of $1.4 billion in former redevelopment agency funds for this fiscal year. The plan also relies on the passage of his November 2012 tax initiative.

If voters reject the Governor’s tax initiative, additional trigger cuts would follow mainly affecting K-12 schools, higher education, courts, fire protections and a variety of park services. The Governor’s tax initiative also contains constitutional protections against diversion or reduction of realignment funding.

There are also a number of public safety proposals of interest to cities including:

  • $20 million in non-competitive grants for city police departments to mitigate impacts of realignment. The distribution formula will be developed by the Board of State and Community Corrections, which becomes effective as of July 1, 2012, taking over the duties of the Corrections Standards Authority.
  • An additional $500 million in lease bond revenue for local jail facilities in addition to the current $1.2 billion Local Jail Construction Financing Program.
  • A number of Department of Juvenile Justice (DJJ) changes including:
    • Ending state juvenile parole as of January 2013 instead of 2014;
    • Charging counties $24,000 per juvenile inmate committed to DJJ by a juvenile court;
    • Reducing the age jurisdiction of DJJ from 25 to 23 years old; and
    • Reducing administrative staff at the California Department of Corrections and Rehabilitation headquarters and DJJ facilities.

For more, please see both “'Technical Glitch' Forces Early Release of Gov. Jerry Brown’s FY 2012-13 State Budget Proposal” from the Jan. 5 issue of CA Cities Advocate and “Governor Issues May Revise, New Deficit Projection of $15.7 Billion” in the May 14 issue of CA Cities Advocate.

Redevelopment

Following the release of Gov. Brown’s May Budget Revise, the Department of Finance (DOF) circulated its proposed redevelopment budget trailer bill language. The language raised significant concerns with provisions that exponentially increased DOF’s power, further limited local control, reduced payments for enforceable obligations, and scored housing funds and other assets for the state budget. For more please see “Proposed Post-RDA Budget Trailer Bill Raises Major Concerns” in the May 17 issue of CA Cities Advocate.

The Assembly Budget Sub Committee #4 reviewed the draft redevelopment trailer bill language in May and expressed significant concerns with the bill’s approach and the desire for a more balance solution. Highlights from the hearing are available on the League’s YouTube Channel.

The committee also requested further information from DOF on enforceable obligations including process and the number of projects denied and approved and asked witnesses to provide specific information about flaws in the bill. Identifying the many flaws in the language was an enormous undertaking for the League but ultimately resulted in proposed amendments to DOF’s trailer bill language.

The League’s amendments would remove the most objectionable provisions of the DOF trailer bill, propose a more balanced process for resolving various disputes, insert key provisions from AB 1585 (Pérez) and SB 1335 (Pavley), suggest an alternative method of funding affordable housing projects if the housing money is taken for the state budget, propose a safe harbor from asset claw backs for agencies that make specified payments, and many other provisions. A brief summary of the League’s proposed amendments to the DOF redevelopment trailer bill and a full copy of the League’s draft amendments to the DOF redevelopment trailer bill have been posted on the League’s website.

The League sent out draft amendments for review by city on Friday June 1 with a request for comment by Thursday, June 7. The League will submit its revised set of amendments today based on city feedback.

City officials are encouraged to continue to do the following:

  1. Share any issues affecting redevelopment dissolution with your legislator. 
  2. Ask you legislator to oppose the DOF trailer bill and advocate for more balanced solutions that are fair to local government.
  3. If you have a contract lobbyist make sure that this issues are their top priority.
  4. Notify any interest group or individual in your community that may share your concerns and ask them to also communicate with their legislators.

Restructuring and Reorganizing State Government

The Governor’s FY 2012-13 budget proposes a comprehensive package of reorganizations and eliminations of two state agencies, 39 state entities and nine programs. On March 30, the Governor submitted his Governor’s Reorganization Plan (GRP) to the Little Hoover Commission (Commission), activating a 90 day clock in which the Commission and Legislature have to act.

On May 22, the Little Hoover Commission voted 7-0 to recommend to the Legislature that they adopt the Governor’s plan. If not action is taken by the Legislature to formally reject the plan it will become effective and become operative on July 1, 2013.



 
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