May 14, 2003
| TO: | Cla Members/ Systems/ Network Contacts |
| FROM: | Mike Dillon, Lobbyist Christina Dillon, Lobbyist |
| RE: | News From The Capitol |
I. GOVERNOR RELEASES "MAY REVISION" OF BUDGET - DEEPER CUTS AND NEW TAXES FEATURED
Shortly after noon today, Governor Gray Davis released his "May Revision" of the 2003-04 Budget. The "May Revision" or "May Revise" as it is called, is the annual report issued by the Governor which indicates changes in the fiscal forecast since the release of the Governor's Budget in January and offers his remedies for achieving a balanced Budget. The Governor's May Revise is a significant shift from his January strategy in his approach to addressing the enormous $35 billion Budget deficit. The May Revise contains a combination of additional severe cuts to programs, including a large reduction in the Public Library Foundation program, and proposes a new half-cent sales tax increase which would help to generate approximately $2.3 billion to pay for the deficit financing plan.
During his press conference, the Governor stated, "In January, I produced a balanced plan. I was pleased that the Legislative Analyst gave it such high marks. Unfortunately, both parties (Republicans and Democrats) didn't like the plan I produced for a one-year solution. Part of leadership is listening. I met with the 'Big 5' (legislative leaders) 19 times." The Governor indicated that as a result of those meetings, his May Revision will "defer a significant portion of the structural problem to the following budget year," and includes these additional solutions: 1) $18.9 billion in cuts and savings, 2) $6.9 billion in fund shifts, transfers, and loans, 3) $1.7 billion in program realignments to local government, 4) $10.7 billion in debt financing, and 5) the increase of the Vehicle License Fees ($4.2 billion). In addition, the Governor is calling for an on-time Budget and a concerted effort in July and August to engage lawmakers in structural Budget reforms. According to the May Revise document, "The Governor has directed his Cabinet and all areas of State government to cooperate in this effort including a directive to identify ways to more efficiently meet California's needs."
When asked by a member of the media if his proposal would work without new taxes, the Governor responded, "No, we would be borrowing from one pocket, to pay off another pocket. We are simply running out of resources." When asked to comment on the Republicans' plan, which would pay off the Budget debt using existing taxes, the Governor added, "The Republican plan doesn't pencil out. It's a non-starter." Expanding upon the ½ cent sales tax proposal, the Governor's Director of Finance, Steve Peace, commented that the financial advisors and bond holders who would be providing California with its loans have stated that it will be essential to provide a revenue stream or "debt instrument that must be insulated from the General Fund. The legislature must reappropriate [the ½ cent sales tax] each year by a two-thirds vote. It can't be touched for any other purpose other than to retire the debt."
II. HOW THE MAY REVISE AFFECTS LIBRARY PROGRAMS - TBR SAVED BY RAIDING PLF
Today's announcement by the Governor is bittersweet for the library community. While the Governor is proposing that the TBR be reinstated, he is sacrificing all but $1 million in the PLF to reinstate funding for the TBR. (In essence, he is taking from one, to pay for the other.)
We are pleased to report that CLA's lobbying and local grass roots efforts has been successful in staving off - for the time being - an attempt to eliminate all $12.1 million in the Transaction Based Reimbursement program. You will recall that in January the Governor recommended elimination of all funding for the program, and instead suggested libraries levy a $1 fee for direct loans and $5 fee for Inter-Library loans. CLA and the State Library noted strong opposition to the proposal and informed the Department of Finance and the legislature that the proposed cut also put federal funds at risk. The Governor's May Revise notes:
"12,145,000 General Fund increase to rescind the prior proposal to shift funding for the Transaction Based Reimbursements to local fees. The State Library advises that this program is a high priority, relative to other local assistance programs. This proposal will ensure that cost-effective resource-sharing infrastructure remains intact and that California continues to receive federal funds for one-time projects and system enhancements."
However, in order to save the TBR, the Governor proposes to eliminate all but $1 million in the Public Library Fund to offset the TBR restoration. This $14.7 million proposed reduction to the Public Library Foundation is in addition to the Governor's proposed $15.8 million cut that he suggested for the program in his January Budget. The May Revise states:
"14,766,000 reduction for the Public Library Foundation to offset the restoration of Transaction Based Reimbursements and contribute to the overall budget solution. Remaining foundation resources would be provided for the libraries most in need on a fiscal basis."
The Governor has also decided to restore $2 million of a $3 million reduction to the State Library using money from the PLF. The May Revise states that this action is: "to offset a lower, more achievable level of user fees ($1,000,000) for supporting State Library services."
The Budget Subcommittees on Education Finance in the Assembly and Senate are scheduled to hold a series of hearings beginning next week on the Governor's May Revise proposals. CLA will be actively lobbying these members to request they restore partial funding to the PLF.
Please take a moment today to write and/or call the following individuals to express your opposition to the Governor's proposed cut to the PLF:
- Your own Senator and Assemblymember
- The members of the Assembly Budget Subcommittee on Education Finance:
Assemblyman Joe Simitian, Chair
Assemblywoman Wilma Chan
Assemblywoman Lynn Daucher
Assemblywoman Jackie Goldberg
Assemblywoman Carol Liu
Assemblywoman Sharon Runner - The members of the Senate Budget Subcommittee on Education Finance:
Senator Jack Scott, Chair
Senator Bob Margett
Senator John Vasconcellos - Assemblywoman Jenny Oropeza, Assembly Budget Chair
Senator Wes Chesbro, Senate Budget Chair
III. TALK ABOUT FRUSTRATION!
Upon reviewing the Governor's May Revise document, we noted that he makes reference to only a $600,000 cut to the State Library Budget, a budget which includes local funding such as the PLF over the 2002-03 Budget year. Hoping that we were wrong in our quick interpretation of the Governor's numbers, and that, in fact, maybe he was leaving the $15.7 million baseline in the PLF, we sought out one of the Governor's top education officials in the Department of Finance for clarification. The conversation that transpired was not only frustrating, but bordered on the unbelievable. Our question to the representative was: "We note that your May Revision numbers only show a $600,000 reduction to the State Library Budget from last year. However, if we are interpreting your numbers correctly, it is really a reduction of $31.5 million, less the $1 million you are leaving in the PLF." The response from Finance was, "Well, we're working off the January Budget numbers of $15.7 million (PLF January balance)." To which we responded, "That is dishonest reporting. Libraries recently received $31.5 million in funding that was provided by the legislature and the Governor last year. And, next year they will receive nothing (under the Governor's plan released today)." The response from Finance was, "Well, we weren't using last year's numbers - we were using the Governor's January numbers." To which we replied, in great frustration, "That's a pretty hard sell to either the library community or the press."
If this DOF reasoning sounds convoluted, you should have been there!