January 17, 2003
| TO: | Cla Members/ Systems/ Network Contacts |
| FROM: | Mike Dillon, Lobbyist Christina Dillon, Lobbyist |
| RE: | News From The Capitol |
I. Budget subcommittees work to save cut to plf
You will recall that in December, Governor Davis declared a Special Session on the State Budget, and requested that the Assembly and Senate work expeditiously to act upon $10 billion in proposed current year cuts to the Budget. This week the Assembly and Senate Budget Subcommittees on Education Finance both held hearings to consider options regarding the Governor's Mid Year Cuts, totaling more than $2.5 billion in proposed cuts to the education portion of the Budget. Included in the list of these cuts, is a recommendation by the Governor to reduce the Public Library Foundation (PLF) by $15.8 million, which would bring the current baseline down to $15.7 million.
Assembly subcommittee rejects governor's cut
On Wednesday the Assembly Budget Subcommittee spent a great deal of time debating their specific options relative to the Governor's current year cut to the PLF. During testimony, the Department of Finance was asked to comment on the nature of the cut, with their representative stating, "This cut was one of the difficult choices that the Governor faced. But seeing as the bulk of the money for local assistance in the State Library is contained in this program, we felt it was necessary to take a cut here." CLA was then asked to testify, and while doing so, referenced the "72 percent cut history" chart that our office had developed for legislators and CLA members. Subcommittee Chairman, Assemblyman Joe Simitian (D-Palo Alto), a strong and consistent supporter of the PLF, told the committee that he had "great concerns with a reduction to this program," and said that he was not inclined to make a cut to the PLF in the current year. Chairman Simitian noted that the subcommittee would be better off in protecting the PLF baseline of $31.5 million in the current year, because it would allow libraries to hold the line, at least temporarily. Assemblywoman Jackie Goldberg (D-Los Angeles) echoed her colleague's opposition to the $15.8 million reduction, noting, "I am not willing to make this cut. And I am not willing to make it next year. For a large portion of Californians, this is how they get their books. This is direct services to the locals. There really are some things that are more important than others. Libraries really are of the highest order." In reviewing CLA's chart indicating the 72% cut to the program, she added, "I can't understand why they are getting cut 72%, when [other programs] are getting a smaller cut." Added Assemblywoman Carol Liu (D-La Canada Flintridge), "It's terrible!" The representative from the Legislative Analyst's Office concurred, stating, "This is a program that started out two years ago at $52 million, and it is down to $15 million. You didn't see that kind of a percentage cut in other areas of the Budget this morning." The issue and many others were put over until late Thursday afternoon, to give the committee time to put various Budget options together.
Thursday evening, the subcommittee reconvened and when the Governor's proposed current year cut to the PLF wasbefore them, Chairman Simitian announced, "I would make the motion that the subcommittee not take any action on this request, and leave the dollars in place - With no disagreement, we will leave the item without action and leave it fully funded (at $31.5 million)." He carefully cautioned that because the Governor's 2003-04 Budget also calls for a continuation of the $15.8 million reduction proposed in the current year to the PLF, the library funding will likely face a second challenge again in a few months when the subcommittees begin tackling the larger Budget picture.
The subcommittee reached an impasse on several K-12 items and will complete a final report next Tuesday, and present it to the full Assembly Budget Committee for approval and vote late next week.
Senate subcommittee hears plf - action pending
The Senate Budget Subcommittee on Education Finance also held hearings on Wednesday regarding the Governor's Mid Year cuts, including the PLF. Senator Jack Scott, who previously served as education subcommittee chair while he was in the Assembly, will Chair the Senate Subcommittee, replacing recently termed-out Senator Jack O'Connell. Senator Scott will be joined by Senator John Vasconcellos, Chairman of the Senate Education Committee, and Senator Bob Margett, a returning member of the subcommittee. During the discussion on the proposed PLF cut, Senator Scott discussed the impact upon public library service if state support for local library budgets is reduced by half, per the Governor's proposal. He also asked the State Library and CLA to expand upon the specific services and budget areas that would be diminished or eliminated due to the cuts. The Senate subcommittee took no action on the item, as the hearing was informational in nature only. Yesterday we received a call from Chairman Scott's Education Consultant regarding the PLF, and learned that they are holding ongoing meetings behind closed doors regarding their options on the Governor's Mid Year Cuts. They are not scheduled to meet again until next week to vote on the issues before them.
II. Elimination of the vlf backfill
The Governor's Budget proposes to reduce the Vehicle License Fee (VLF) backfill to cities and counties in both the current and budget years. The total reduction amounts to almost $4.2 billion ($1.265 billion in 2003-03 and $2.929 billion in 2003-04). In order to implement the $1.265 billion reduction in the current year, the legislature must adopt urgency legislation (requiring a 2/3rds vote), or pass a bill in the Special Session by majority vote, which would allow the legislation to take effect 90 days after the close of the Special Session. Many county and city libraries receive VLF funds from their Boards and Councils. If you are one of these libraries, please share the impact of the VLF reductions with your legislators as you discuss other library funding issues this year - e.g. PLF, TBR, etc.
III. Legislative analyst says $34.5 billion deficit projection is too high
You will recall that several months ago the non partisan Legislative Analyst's Office estimated the current Budget deficit at $21.1 billion, absent corrective actions. In December, the Governor released his revised estimate of the growing Budget problem, tagging the new number at $34.6 billion. On Wednesday, the LAO released their "Overview of the Governor's Budget," and probed the question, "So how big is the budget problem?" The LAO has revised their deficit number up slightly to $26 billion. Further, they cite two basic, but important differences for the discrepancy between their office and Department of Finance: 1) Forecasting differences: "About $8 billion (60 percent) of the discrepancy reflects differences in the two agencies' respective forecasts of revenues and, to a lesser degree, the program caseloads that drive expenditures." 2) Definitional Differences: "The remaining $5.5 billion (40 percent) of the discrepancy is primarily 'definitional' in nature, in that it largely reflects differing assumptions about what the 'baseline' level of spending is from which budget adjustments will need to be made." Former Senator Steve Peace, the incoming Director of the Department of Finance and former Chair of the Budget Conference Committee, spoke during a lunch we attended on Wednesday. Mr. Peace says that the baseline figure that Finance uses is one in which all statutory obligations and all other potential and foreseeable expenditures are factored in. The LAO, on the other hand, calculates their baseline by only factoring in statutorily required funding obligations.
Regardless of the baseline debate, the LAO cautions, "Despite the differences as to the true magnitude of the problem at hand, its precise magnitude does not change one very important factor - namely, regardless of which baseline is used, it is extremely important that the Legislature take timely and meaningful action to address the budget shortfall, which, by any standard, is extremely daunting, and will only get worse if left unaddressed."
IV. Senate local government committee hearing: state budget impact on libraries
Senator Tom Torlakson, Chair of the Senate Local Government Committee, has called a special hearing of his committee for next Wednesday, January 22, to discuss the impact of the Governor's Budget proposals for the 2003-04 Budget Year in three specific areas: the Vehicle License Fee (VLF), the Williamson Act, and public libraries. Senator Torlakson's staff has asked CLA to participate in the hearing and to discuss the Governor's Budget proposals as they pertain to the Public Library Foundation and the newly released Transaction Based Reimbursement fee proposal.