June 14, 2011
TO: CLA MEMBERS/ SYSTEMS/ NETWORK CONTACTS
FROM: Mike Dillon, CLA Lobbyist
Christina DiCaro, CLA Lobbyist
RE: News From the Capitol
BUDGET UPDATE – “A FUZZY ZONE”
Yesterday morning Governor Brown held a press conference to highlight the need for passage of a timely Budget that includes a balance of cuts and the so-called “tax extensions” that are part of his overall plan. The Governor was flanked by leaders representing law enforcement, labor, construction, education, and the California Retailers Association. Bill Dombrowski, Executive Director of the Retailers Association stated that his members were already seeing the impacts of recent Budget cuts and want the tax extensions submitted to the voters “to get the uncertainty removed.” In responding to reporters’ questions, the Governor again expressed his frustrations with the inability to obtain the necessary two Republican votes in both the Senate and Assembly to place his proposal before the voters. Referring specifically to a question about the number of Republican demands that might garner some votes, the Governor, with his usual humor, commented that, “there is a fuzzy zone there that has not been transcended.”
SENATE TACKLES BUDGET AND RELATED BILLS
On Friday, the State Senate met for most of the day to debate and process a series of 10 bills related to the State Budget. With tomorrow’s June 15th constitutional deadline looming for passage of the annual spending plan, the Senators worked in earnest to secure passage of 9 “Budget trailer bills,” and a measure dubbed, “Budget Bill Junior,” which would reflect the most recent changes made to the Budget plan by the Senate Budget Committee. When Senate President pro Tem Darrell Steinberg opened the debate on the measures, he stated, “Five months ago today, the Governor released the January Budget and asked for courage and sacrifice. This package represents the only responsible and balanced Budget plan.” The Senate Republican Leader, Bob Dutton then stated, “We said in December that we wanted to roll up our sleeves and help. Governor Brown opened his office and the lines of communications and Republican Senators met with him….I got together with the five Senators and we put together an outline. The Governor had frustrations over where we stood. The ‘GOP 5’ thought they had some areas of agreement with the Governor. We went over lots of reforms… On the table was pension reform, regulatory reform, a spending cap, education reform, and the redevelopment and the enterprise zone issues. I said there could be four to six votes to put taxes on the ballot to extend them.” Senator Dutton went on to state that with the talks stalling over the last few weeks, “We have done the best we possibly can. Our resources are limited. We don’t control the process.”
Members of the Senate then read from letters prepared by their local county superintendents of schools and sheriffs, indicating the “real world” impacts of not adopting a Budget by June 15th. The big source of debate currently is whether or not there are sufficient Republican votes available to allow for the Governor to extend current taxes that are set to expire on June 30th, through the legislative process, and without a vote of the people. The Governor has indicated that he would prefer that the voters decide the issue of whether or not to extend the taxes, and he is calling for the Republicans to allow that vote to take place, by passing a permissive authority measure in the legislature. Without that $11 billion in revenue package funding, the Governor has warned that an “all cuts Budget” could become an option, meaning deeper cuts to education, public safety, and health and human services. Probably most interesting were the remarks of the members of the so-called “GOP 5” (Senators Berryhill, Blakeslee, Cannella, Emmerson, and Harman), who have been actively negotiating with the Governor. Said Senator Tom Berryhill, “We don’t want these cuts either. A group of us came together and said pension reform is number 1. Everyone knows we can’t sustain it. We got very close. We spent the last few months working on it and it is very complicated. We came close in March and April. We talked about a spending cap. It would be good for our credit rating. We got very close there. With regulatory reforms, we had minor CEQA change and it would allow business to become more stable….We never walked away from the table. The Administration couldn’t get there. We five continue to work and we have a better plan now. Can we get there next week? That is yet to be ratified. We have given a pathway…Our doors are open.” In fact, just yesterday this group of Senate Republicans released a detailed plan defining their proposals in more detail in the hopes that talks would continue.
The various measures passed on a majority vote, with the exception of the so-called “bridge financing measure” AB 18(x), which would have extended the current taxes temporarily until the voters could address the issue at an upcoming election. When that key measure did not receive the necessary two-thirds vote for passage, the Senate President pro Tem had one more interesting card to play – SB 23(x), the former SB 653. You may recall that we reported last week that the Senate President pro Tem said that he would not move his SB 653, provided there was forward momentum on the Budget negotiations. The measure is controversial as it would authorize a county, community college district, or county office of education to levy or increase local personal income taxes, sales taxes, or impose an excise tax on alcohol, cigarettes, tobacco, sweetened beverages, and medical marijuana. The bill is supported by various education, health, and public safety groups, and opposed by business groups. After a vigorous debate, the measure passed on a majority vote and was held at the Senate desk while negotiations continue behind the scenes.
As of this afternoon, we have learned that a Budget bill and “trailer bills” will be put up for a vote tomorrow in the Assembly, that would not contain a revenue solution, but rather would use some borrowing and deferrals in order to bring it into “balance.” The Budget would then be passed on a majority vote, and it is presumed that the Republican list of reforms would become moot. The library funding appears safe at this time, and we believe the $15.2 million “compromise” for the CLSA, PLF, and Literacy program will ultimately go down to the Governor’s office for his signature “as is.” There is also a complicated redevelopment proposal in play, as well as SB 23(X), a controversial sales tax nexus piece. We have been told to “plan for a long Wednesday.” More to follow in the next few days.