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State Capitol Update
PARTISAN BICKERING AT THE CAPITOL JEOPARDIZES IMPORTANT LOCAL GOVERNMENT BILL
On September 4, SB 67, a skeleton bill, by the Senate Committee on Budget and Fiscal Review was substantially amended to contain 28 pages of language pertaining to the Proposition 1A securitization or "Receivables Financing Program." You will recall, that under the agreement to shift $1.9 billion in property tax from cities, counties, and special districts during the July Budget negotiations, the state authorized local governments to borrow money to off-set the loss, using the state's credit worthiness, such as it is, to guarantee the loans. The bill creating the securitization program was AB 15 (4X) by Assemblyman Ted Gaines, which was signed into law by Governor Schwarzenegger. However, soon after the bill became law, the Department of Finance, the State Treasurer's Office, and Bond Counsel requested a series of amendments to correct some technical problems. In addition to those changes, SB 67 would also ensure an accelerated schedule for the securitization of the Proposition 1A loans to occur no later than mid-November, and it scores a potential savings of approximately $200-$300 million in interest costs for the state.
Unfortunately, SB 67 fell victim to a series of late-night partisan bickering in the Senate, during the final hours of the 2009 session on Friday, September 11. The Senate Republican leader, Dennis Hollingsworth, expressed concern that procedural motions were being waived without the consent of the minority party, and noted that his side of the aisle was attempting to advance three pieces of legislation important to their caucus. He told the Los Angeles Times, "In order for us to achieve bipartisan agreements, we have to establish and maintain a level of trust that a deal is a deal. It's not one, two or three items that we're negotiating over. It's one big item - trust." Thus, when bills such as SB 67 were brought forward for a vote on the Floor that night, the Senate Republicans refused to grant their votes - which would have provided the necessary two-thirds vote for passage. Only one Republican, Senator Abel Maldonado, crossed party lines to vote in support of the measures. Senate Democrats, for their part, said that the Senate Republicans were holding up 20 critical measures in order to get Democrats to "cave on three unrelated demands." Failure to act, Democrats noted, would ultimately jeopardize bills pertaining to funding for domestic violence shelters and county funding for swine flu, and SB 67.
Local government groups were dumbfounded when they learned that this important clean-up measure (SB 67) had been part of the late-night fall-out between the Senate Democrats and Republicans. When the dust settled, and the legislature left to begin their Fall recess, the League of Cities, the California State Association of Counties, and the California Special Districts Association immediately sent a letter to Senate President pro Tem Darrell Steinberg and Senate Republican Leader Dennis Hollingsworth. The letter requests that these two leaders "take expedited action to reconvene the California State Senate immediately to approve two budget clean-up measures of critical importance to both local government agencies and the state...We urge you, as leaders of our state, to work together - and if necessary with the leadership of the State Assembly - to take immediate action to pass these measures that are so vital to providing local services and keeping our streets, our neighborhoods, and all Californians safe."
Presumably, the only way that the legislature will be able to address SB 67 is to convene a "special session" to pass a similar measure as an "urgency bill." (An "urgency" measure takes effect 30 days after the Governor signs the bill.) There are already indications that the legislature may return in the Fall to participate in "special sessions" on water, tax reform, and education, so it is plausible that legislators could take up SB 67 during that same time period. CLA will continue to keep members posted as details emerge regarding this unforeseen development regarding the Proposition 1A borrowing.
Submitted to California Libraries by:
Mike Dillon and Christina DiCaro, CLA Lobbyists
Posted on September 23, 2009 9:43 AM | Permalink