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Unfinished Product: Legislature Passes Budget Bill, Additional Trailer Bills to be Considered Later

June 15, 2012

Today, both the Senate and Assembly passed the main budget bill, AB 1464, and six budget-related trailer bills. Technically speaking, this package allows the Legislature to meet the constitutional deadline to pass a budget by June 15, and avoid forfeiting salary pursuant to Proposition 25 (2010). The budget package is anticipated to be sent to Gov. Jerry Brown today, but his response is unclear as it does not represent a negotiated deal. 


Today’s budget bill package is just the starting point. Legislators have many other trailer bills to consider in the upcoming weeks, including redevelopment clean-up and local public safety issues. The Senate has scheduled budget hearings next week.

Like last year, the FY 2012-13 budget includes “trigger cuts.” This year the trigger is Gov. Brown’s “Schools and Local Public Safety Protection Act of 2012,” which is expected to be on the November ballot. If the tax initiative does not pass, nine program areas will sustain cuts, with K-14 education taking the biggest cut at $5.5 billion.  

The budget responds to the $15.7 billion deficit with a combination of $8 billion in expenditure cuts, $5.9 billion in revenues, and $2.3 billion in solutions. This leaves a reserve of $500 million. 

There were signs earlier this week that the Democrats may not reach an agreement with Gov. Brown in time to meet the deadline. The Governor had proposed decreasing the cash benefits of welfare recipients, but legislative Democrats balked at the idea. They preferred to cut childcare and job training services, arguing that there was no point in training people for jobs that don’t exist. In the end, a negotiation was reached and the agreement was accepted by both sides. 

As a result of Prop. 25, which lowered the vote threshold to pass a budget from two-thirds to a majority, Republicans are not involved in budget negotiations. In fact, Senate Republicans boycotted the Senate Budget Committee hearing on Thursday. Later that day they requested an opinion from the Controller John Chiang and Treasurer Bill Lockyer on whether the Democratic budget was balanced, citing Prop. 25’s requirement that a balanced budget be passed on time in order for legislators to receive pay. In April, a court ruled in a lawsuit filed by legislative leadership that the Controller lacked this authority.

Budget Trailer Bills

Below is a short summary of the bills approved. Additional trailer bills are expected to be voted on in the upcoming weeks. The Governor has until July 1 to sign the budget.

AB 1464 (Blumenfield) – Main Budget Bill

This bill is the main FY 2012-13 Budget Bill. It includes the “trigger cuts” if the Governor’s tax initiative is not approved by the voters in November.

AB 1465 (Committee on Budget) – Transportation

Makes transfers of transportation-related funding. This will not affect the local shares of the Highway Users Tax Account (HUTA) disbursements. First, the bill transfers the portion of the new HUTA (Prop 42 replacement) being held for off-highway vehicle purposes to the General Fund until June 30, 2015. Following that date, the funds will transfer to state and local governments. The bill also transfers weight fees to pay for debt costs with any remaining funds going to the General Fund. Finally, the bill allows CalTrans to meet public notice requirements for state projects by publishing the notice on the CalTrans website. 

AB 1467 (Committee on Budget) – Health

Makes various statutory changes to health related programs and transfers several programs between state departments. The bill also makes several statutory changes related to Medi-Cal. The bill also extends the sunset date of the California Office of HIPAA (CalOHII) from Jan. 1, 2013 to Jun. 30, 2016, so that continuing and changing federal Health Insurance Portability and Accountability Act (HIPPA) requirements are effectively implemented within the state.

AB 1470 (Committee on Budget) – Department of State Hospitals

Makes various technical statutory changes necessary to eliminate the Department of Mental Health (DMH) and establish the Department of State Hospitals (DSH), which will provide oversight, safety, and accountability at the state's five mental health hospitals and other psychiatric facilities. In addition, allows the DSH to recover a greater share of the cost of housing civil commitments if a county has not contracted with the DSH by July 1 of any given fiscal year. Savings are keyed at $20 million dollars in FY 2012-13.

AB 1472 (Committee on Budget) – Development Services

Achieves $200 million in reductions from the Department of Developmental Services, which administers services for persons with developmental disabilities including residential services in Regional Centers and state-run Developmental Center institutions (DC). Creates new billing and admissions systems within DCs in addition to numerous other related programmatic changes to services offered.

AB 1485 (Committee on Budget) – 2011-12 Supplemental Appropriations Bill

Appropriates funds to various accounts to make up for deficiencies in FY2011-12 Budget Year.

AB 1495 (Committee on Budget) – Budget Bill Junior #1

Incorporates changes to the main budget bill that were negotiated after the Budget Committee approved the main budget bill.

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