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Cities Fare Well as Legislature Approves Final FY 2015-16 Budget

June 19, 2015
The Legislature held a rare Friday session today to debate and ultimately adopt the final bills of the FY 2015-16 state budget package.
 
The adoption of the FY 2015-16 state budget got off to a slow start on Monday when the Legislature adopted just five of the 19 budget bills. Then on Tuesday came the announcement that Gov. Jerry Brown and the Democratic leadership of the Legislature had come to an agreement for the final package. While some issues of importance to cities — including redevelopment dissolution, Cap-and-Trade, and transportation funding — remain unresolved, cities fare well in the package adopted today. 
 
Of note, the package passed today adopts a compromise on the local law enforcement grants. Monday’s budget bill contained a legislative alternative that reduced the level of funding available for these grants and funding only special programs. But the final agreement will fund $20 million for local law enforcement grants, provided the cities report data regarding use of force resulting in hospitalization or death. In addition, $6 million will be awarded to local law enforcement agencies in community grants to improve community relations. 
 
The budget package also includes appropriations from Proposition 1 in response to the drought. The budget begins the first of a three-year funding plan to appropriate $1.8 billion Prop. 1 funds. Major funding is allocated to stormwater management, contaminated groundwater cleanup, groundwater management plans, water recycling, public water system infrastructure, and desalination.
 
The FY 2014-15 budget agreement provides continuous funding for 60 percent of Cap-and-Trade auction revenues, with the remaining 40 percent to be used for annual appropriations reflecting the priorities of the Legislature. There continues to be significant disagreement between the Governor, Assembly, and Senate on the use of that 40 percent, and negotiations continue. Favorably, the budget does not make any changes to the agreement from FY 2014-15 that provides for continuous appropriations of 60 percent of Cap-and-Trade auction revenues for affordable housing, transportation, transit, and high speed rail. As a result, these programs will continue to be funded. 
 
While not directly a result of this budget package, cities will soon receive reimbursement for costs incurred in complying with state unfunded mandates prior to 2004. The FY 2014-15 budget agreement provides that, should the May Revision determine that state general fund revenues exceed estimates, additional reimbursement for pre-2004 mandate costs owed to cities counties and special districts are to be made. The May Revision determined that sufficient additional revenues have been received that the entire remaining balance of reimbursements owed may be paid, about $765 million including interest.
 
The Department of Finance (DOF) has issued an executive order to the State Controller’s Office (SCO) for these payments. DOF and SCO expect that payment for principle owed will be made by June 22. DOF has estimated the amount of interest owed for each agency as well but the SCO must verify these amounts prior to payment, expected by September 2015.
 
Unfortunately, not all the news is entirely positive. Several weeks ago the Governor’s office began circulating budget trailer language that would allow the State Water Resources Control Board (SWRCB) to order the consolidation of public water systems or a state small water systems within a disadvantaged community that consistently fail to provide an adequate supply of safe drinking water. While the League strongly supports ensuring that all Californians have access to safe drinking water, the budget trailer bill does not provide the resources needed to support the consolidated water system, thus opening the door to Prop. 218 challenges.
 
Details on these and other issues are included in the list of budget and trailer bills below. The bills will now go to the Governor for action by July 1.
 
Budget and Trailer Bills
 
Summaries below include points that may be the most interesting to cities from the bills adopted today. For more details, bill language can be found at www.cacities.org/billsearch.
 
AB 93 (Weber) – Main Budget Bill and SB 97 (Committee on Budget and Fiscal Review) 
 
Together, these two bills represent the main FY 2015-16 budget. AB 93, the budget bill was passed Monday, and AB 123 makes changes to AB 93 to conform with the agreement between the Governor and Legislature. The bills include appropriations for the items discussed in the budget bills below as well as the following items:
  • $20 million for local law enforcement grants to city police departments. This is down from $40 million last year and comes with new transparency requirements regarding use of force resulting in hospitalization or death;
  • $6 million will be awarded to local law enforcement agencies in competitive grants for community relations;
  • $8 million in competitive grants to local governments to reduce community recidivism rates;
  • $1.5 million for the California Library Services Act, which creates networks that act together on lending policies, bulk purchases and joint training programs;
  • $5.8 million for California Library Literacy Services, $1 million of which is for the Career Online High School Program;
  • $4 million for Library Broadband Services;
  • Requires Caltrans to streamline the cooperative work agreement process related to project initiations document development and oversight to reduce costs to local agencies;
  • Provides additional funding to reduce the timeframe for the Road Usage Charge Pilot Program.
  • $125 million for the Active Transportation Program; and
  • $2.5 million for grants to local governments for boating safety and law enforcement through the Department of Parks and Recreation. 
SB 75 (Committee on Budget and Fiscal Review) – Health
 
Makes various changes related to health including:
  • Provides Medi-Cal coverage to eligible children regardless of immigration status; and
  • Allows the Department of Public Health to purchase syringes and related supplies for syringe exchange programs. 
AB 104 (Committee on Budget) – Education Omnibus Trailer Bill
 
Makes various changes and appropriations to child care, early childhood education, and K-14 education. 
 
SB 78 (Committee on Budget and Fiscal Review) – Education Finance: Local Control Funding Formula
 
Repeals and revises sections of law made obsolete by the Local Control Funding Formula (LCFF), which replaces the prior revenue limit and categorical funding structure for K-12 education finance. Also includes appropriations necessary for purposes of the LCFF. 
 
SB 79 (Committee on Budget and Fiscal Review) – Human Services
 
Makes various changes to programs and operations within the Department of Social Services including:
  • Increasing the frequency of inspections to community care facilities, residential care facilities for the elderly, child day care centers, and family day care homes; and 
  • Allows counties to continue to provide housing supports to a person who has been discontinued from CalWORKS due to income eligibility requirements. 
SB 80 (Committee on Budget and Fiscal Review) – Earned Income Tax Credit
 
Creates a state Earned Income Tax Credit (EITC), similar to the federal program. The state EITC will focus on households with incomes less than $6,580 if there are no dependents and up to $13,870 if there are three or more dependents. 
 
SB 81 (Committee on Budget and Fiscal Review) – Postsecondary Education: Budget
 
Makes various changes to higher education including changes to CalGrants, the Middle Class Scholarship Program, community colleges, University of California and the California State University budgets. 
 
SB 82 (Committee on Budget and Fiscal Review) – Developmental Services
 
Makes various changes to developmental services, including regional centers, secured facilities, out-of-state placements, and performance objectives.
 
SB 83 (Committee on Budget and Fiscal Review) – Public Resources
  • Establishes the Assistant Director for Environmental Justice in the California Environmental Protection Agency;
  • Authorizes money in the Enhanced Fleet Modernization Subaccount to be available to the State Air Resources Board to implement and administer the enhanced fleet modernization program;
  • Requires, on or after July 1, 2016, the SWRCB to adopt a fee schedule to be paid annually by each public water system to cover the board’s drinking water program and enforcement costs;
  • Requires the Division of Oil, Gas, and Geothermal Resources consult with the SWRCB and appropriate regional water quality boards regarding underground injection control;
  • Establishes the Border Region Solid Waste Working Group to develop and coordinate long-term solutions to address the waste tire, solid waste, and excessive sedimentation along the California Mexico border;
  • Allocates $10 million from the funds reverted to the California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002 for local assistance programs, specifically outdoor education programs;
  • Allows the State Fire Marshall to contract with a federally permitted hauler for disposal or storage of illegal and dangerous fireworks; and
  • Allows the Department of Toxic Substances Control to regulate and enforce actions related to metal recycling facilities. 
SB 84 (Committee on Budget and Fiscal Review) – State Government
  • Changes reporting requirements for local agencies regarding the certified access specialist program (CASp). Local agencies will now report only to the Division of the State Architect rather than to the Legislature. In addition, local agencies will now have to report on activities undertaken to increase CASp services and to facilitate compliance. 
  • Requires the Office of Emergency Services (OES) coordinate with response and recovery operations in each mutual aid region, and to develop and adopt a state fire service and rescue emergency mutual aid plan that would be an annex to the State Emergency Plan.
  • Creates the Regional Railroad Accident Preparedness and Immediate Response Force within the OES to provide regional and onsite response capabilities for hazardous materials spills from railcars or accidents that involve railcars. Requires the Director of Emergency Services to set a fee schedule for the shipment of extremely hazardous materials by rail.
  • Creates the Human Trafficking Victims Assistance Fund within the OES. The fund would provide grants to nonprofit organizations to provide services to victims of human trafficking.
  • Requires the DOF, Secretary of State, and Legislative Analyst’s Office to convene a workgroup to evaluate alternatives for funding elections-related state mandates.
  • Establishes a position within the Governor’s Office of Planning and Research to develop a report on programs and services that serve immigrants. The report is due no later than Jan.1, 2016, and then would be used to create an online clearinghouse of available services. The position would also monitor the implementation of statewide laws and regulations that serve immigrants.
  • Authorizes the Department of Housing and Community Development to provide temporary assistance to people moving out of a housing unit due to a lack of potable water in connection with the drought.
  • Allows the rental of the Office of Migrant Services centers to people who are homeless in connection with the drought.
  • Recognizes that existence of the California Residential Mitigation Program (CRPM), an existing JPA, and allows the CRPM to provide grants and loans to residential property owners for seismic retrofit work. Excludes amounts received from an individual’s gross income for tax purposes. 
  • Requires Cal-OSHA to prioritize accidents involving death or serious injury over non-serious violations.
  • Suspends the fee for the annual and biennial inspections of conveyances by the Division of Occupational Safety and Health for the FY 2015-16. Allows the suspension to continue to reduce the balance of the Elevator Safety Account.
  • Requires the Franchise Tax Board to collect unpaid tolls, toll evasion penalties, and related fees as if they were taxes.
  • Makes various technical changes to the Prepaid Mobile Telephony Service Surcharge Collection Act, which was implemented this year. Among other things, the bill exempts sellers with less than $15,000 in related sales from the requirements to collect the taxes and fees.
  • Makes various other changes to state programs.
  • Includes cleanup language for SB 556 (2014) regarding contractors vehicle and uniform logo requirements.
  • Allows for a retired person to serve as an elected official without reinstatement or interruption of their pension benefits. 
SB 85 (Committee on Budget and Fiscal Review) – Public Safety
 
Amnesty Program: Fines and Bail: Requires counties to establish an amnesty program for fines and bail due and payable on or before Jan. 1, 2013, similar to the program required under existing law for fines and bail for infractions or misdemeanor violations of the Penal Code and Vehicle Code due and payable on or before Jan. 1, 2009.
  • The program would accept payments of 50 percent the total amount due between Oct. 1, 2015 and March 31, 2017.
  • Participants can receive an additional reduction if they certify under penalty of perjury that they receive public assistance, or that their monthly income is 125 percent or less of current poverty guidelines. 
California Highway Patrol (CHP) Body Camera Program: Requires the CHP to develop a plan for implementing a body-worn camera pilot program by Jan. 1, 2016.
  • Specifies components of the plan, including but not limited to:
    • Types of officers assigned to wear a body camera;
    • Minimum specifications for the cameras;
    • Best practices for notifying members of the public of active recording;
    • Best practices for data storage; and
    • A schedule for reviewing body-worn camera policies and protocols. 
Supplemental Law Enforcement Services Account (SLESA) Funding: Continues payments of $100,000 to each local law enforcement jurisdiction under SLESA.
 
California Community Incentive Grant Program: Specifies schedule of incentive payments to counties for not returning offenders to prison under the California Community Incentive Grant Program.
 
Recidivism Reduction Fund: Removes the sunset from the Recidivism Reduction Fund, and deletes language providing for reversion to the state General Fund one year after allocation of unencumbered monies not dedicated to a community recidivism and crime reduction service provider.
 
SB 88 (Committee on Budget and Fiscal Review) – Water
  • Authorizes the SWRCB to order consolidation with a receiving water system where a public water system, or a state small water system within a disadvantaged community, consistently fails to provide an adequate supply of safe drinking water. Requires, the SWRCB, prior to ordering consolidation or extension of service, to conduct an initial public meeting and a public hearing.  Limits the liability of a consolidated water system, wholesaler, or any other agency in the chain of distribution that delivers water to a consolidated water system.
  • Exempts from the California Environmental Quality Act (CEQA) certain groundwater replenishment projects until Jan. 1, 2017.
  • Exempt from CEQA the development and approval of building standards by state agencies for recycled water systems until July 1, 2017.
  • Exempt from CEQA the adoption of an ordinance to impose stricter conditions on the issuance of well permits or changes in the intensity of land use that would increase demand on groundwater until July 1, 2017.
  • Requires, commencing Jan. 1, 2016, a person who diverts 10 acre-feet of water per year or more under a permit or license to install and maintain a device or employ a method capable of measuring the rate of direct diversion, rate of collection to storage, and rate of withdrawal or release from storage.
  • Expand this civil liability to any violation of any regulation adopted by the SWRCB.
  • Provide that a court or public entity may hold a person civilly liable in an amount not to exceed $10,000 for a violation of a water conservation program ordinance or resolution, or certain emergency regulations adopted by the SWRCB. Prohibit the civil liability assessed by a court or public entity for the first violation by a residential water user from exceeding $1,000.
  • Require the secretary to post information on the Natural Resources Agency's website on changes to project timelines and project spending, in order to facilitate oversight of Prop. 1 funding and projects.
  • Appropriates $10 million to the CalConserve Water Use Efficiency Revolving Fund for loans for water use efficiency projects. Local agencies may receive at or below market interest rate loans. 
AB 117 (Committee on Budget) – Public Resources
 
Extends the CEQA streamlining process in the Jobs and Economic Improvement through Environmental Leadership Act of 2011 from Jan. 1, 2016 to Jan. 1, 2017.
 
SB 98 (Committee on Budget and Fiscal Review) – State Government: Employee Retirement
 
Implements the Governor’s proposal to start having the retiree health care system prefunded, similar to that of pensions. Applies only to state employees.


 
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