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California Library Association Home

February 10, 2003

TO:Cla Members/ Systems/ Network Contacts
FROM:Mike Dillon, Lobbyist
Christina Dillon, Lobbyist
RE:News From The Capitol

I. Back to the Drawing Board

Last week, Governor Davis announced that he would veto AB 4X, by Assembly Speaker Herb Wesson, that would increase the vehicle license fee (VLF) to its pre-1998 level. Anticipating this possible action by the Governor, the Legislature tied several other bills implementing cuts sought by the Governor in areas such as education, healthcare, and general government, to AB 4X. This is known as "double-joining." If the Governor follows through with his veto, as expected, none of the other bills, totaling more than $3 billion in cuts, would take effect. Thus, it will be back to the drawing board.

Last week, State Treasurer Phil Angelides and Governor Davis' new Director of Finance, former Senator Steve Peace, traveled to New York to meet with the large bond houses. Their primary mission was to show that California's bond rating should not be downgraded, despite the fiscal crisis. This will be especially important, as the State may need to borrow several billion dollars early this summer to meet its cash flow obligations. With his Finance team in New York, the Governor held a 2-hour meeting with the Assembly Democratic caucus to explain the reasons for his actions and relieve some of the tension between the Democrats and the Governor over his proposed cuts.

II. Is Legislation Needed to Trigger the VLF?

When State coffers were flush in the final years of Governor Wilson's administration, and several Republican legislators were proposing a constitutional amendment to eliminate the VLF (sometimes referred to as a "car tax"), an agreement was reached between lawmakers and the Administration to reduce it by about two-thirds. Since this was a major revenue source to local governments, Governor Wilson and the Legislature agreed to "backfill" the amount of money being lost by local governments with State General Fund monies (which the Governor now proposes to take away). The agreement also contained a so-called "trigger" that would allow the VLF to be restored to its prior level in bad economic times.

In announcing his intended veto of AB 4X, Governor Davis listed, as one of his reasons for doing so, the need to encourage "bipartisan support" of any eventual Budget plan which will need some Republican votes for passage. Subsequently, Director of Finance Peace indicated that current law allows the Administration to pull "the trigger" administratively and that legislation is not needed. However, recently the newly-elected State Controller, Steve Westly, said he felt legislation was needed, a position with which the Governor's Administration disagrees.

The VLF issue is extremely important to local governments as the Governor's Budget currently proposes to eliminate the $4 billion in State "backfill" funding to local governments. We have heard from several library directors who have indicated that their local services would be severely impacted if the "backfill" is not realized.

III. SB 40-ALPERT: LIBRARY BOND BILL SCHEDULED FOR HEARING

SB 40, by Senator Dede Alpert, principal coauthor Assemblywoman Lois Wolk, and coauthor, Assemblyman Abel Maldonado, has been scheduled for hearing in the Senate Education Committee on Wednesday, March 5, 2003 at 9:30 a.m. The bill seeks to provide $2 billion in General Obligation bonds for the purpose of financing the construction and renovation/remodel of libraries throughout California, if approved by the voters in the 2004 direct primary election.

SB 3-Rainey/Burton/Alpert, which was approved by the voters on the March 2000 ballot, is currently providing $350 million in bond grant funding for the purpose of library construction. However, due to the overwhelming demand for funding during Cycles One, Two, and Three, it is estimated that approximately 75 percent of all applicants will be denied a grant due to lack of available bond funding. Thus, SB 40 hopes to alleviate that pressure amongst applicants by providing an appropriate, and much needed level of funding for library construction.

SB 40 contains the same 35% local match requirement as is currently found in the existing library bond, provides up to $25 million to encourage the development of joint use projects between libraries and school districts that serve K-12 students, and would allow unfunded Cycle 3 applicants to get "first call" on new bond act funds. Remaining funds would be available to any additional applicants.

Please take a moment today to write the members of the Senate Education Committee and encourage their strong support of this important measure:

Sample Address:
The Honorable John Vasconcellos
Chair, Senate Education Committee
State Capitol
Sacramento, CA 95814