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BUDGET CONFERENCE COMMITTEE REJECTS GOVERNOR'S LOCAL GOVERNMENT BORROWING PROPOSAL
Today marks the annual state constitutional deadline for the legislature to deliver to the Governor a balanced Budget. While the 10 member Budget Conference Committee is working expeditiously to complete their work, they are clearly not going to meet today's somewhat arbitrary June 15th deadline, despite the requirement in law. Shortly after 2 p.m. today, the Budget Conference Committee began working through a detailed book of approximately 150 "open items" that currently remained unresolved. As you are aware, one of the items that the Conferees are considering is a proposal by Governor Schwarzenegger, in his May Revision of the Budget, to borrow $2 billion in property taxes from cities, counties and special districts. CLA and other local government groups have been actively working to oppose the Governor's proposal.
This afternoon, when the Budget Conferees brought forward the Governor's property tax borrowing proposal for a vote, Conference Committee Chair Noreen Evans said, "The recommendation is to reject the Governor's proposal to suspend Proposition 1A." There was no debate on the motion and it subsequently passed. It is presumed that in lieu of the borrowing proposal, the $2 billion would be backfilled by a new proposal expected to be released today by Assembly Democrats to tax cigarettes and oil extraction, and possibly close corporate or business tax loopholes. The money generated from these taxes would likely also be used to backfill sizeable cuts in health and human services. While some legislators had been pushing to use $4.5 billion that the Governor had proposed to set aside for a General Fund reserve to balance the Budget, Chairwoman Evans told the Sacramento Bee, "We need the reserve in order to both borrow money and to make sure that we can respond to any new drop!
s in revenue as we go through the year."
While this news regarding the rejection of the property tax borrowing proposal is positive for the time being, it is important to note that the Sacramento Bee is reporting newly elected Assembly Republican Leader Sam Blakeslee is "willing to 'leave on the table for now,' despite his personal reservations, two proposals by Schwarzenegger that would accelerate collection of some taxes into the coming fiscal year and borrow $2 billion from cities and counties that would have to be repaid in three years." The Conference Committee adjourned a few minutes ago and is scheduled to meet again tomorrow upon "call of the Chair." We will keep you informed as more information unfolds.
Submitted by Michael Dillon & Christina DiCaro, CLA Lobbyists
Posted on June 16, 2009 8:20 AM | Permalink