(Thanks Sen. Kuehl! Keep on fighting! – promoted by Brian Leubitz)
The Budget Process Through July 21st
This is my third essay for 2007 and the first one I have done on the 2007-2008 budget, which has now passed, after a series of cuts and more cuts. In this first of several essays on the budget, I will set out some of the provisions of the budget originally agreed to by the budget conference committee, the changes that were made to that budget in the Assembly in order to get 6 Republican votes and the reasons for the two-month stalemate in the Senate. Visit my website at www.sen.ca.gov/kuehl to read my previous essays. If you wish to subscribe to receive these essays on a continuing basis, (no charge), please send an e-mail to [email protected], titled “subscribe”.
Edits by Brian For form and space only. See the flip…
Budget Process, January to June
The Governor sends his proposed budget to the two houses of the Legislature in January, shortly after his “State of the State” speech. It is immediately divided into four or five sections and given to the budget sub-committees in each house to analyze, critique, change and adopt, piece by piece. Each administrative Agency and unit appears before a budget sub-committee to defend their budget. In May, the Governor submits a revised budget, called the “May Revise”, based on adjusted (tax) income and expense figures for the current year and expected savings or increases.
Hundreds, perhaps thousands, of individual line items are adopted in exactly the same language by the budget sub-committees in both houses of the legislature. These provisions become a part of the budget without going to the budget Conference Committee for resolution, as none is needed. Those items that are different in the Senate and Assembly versions of their budget sections are sent to the budget Conference Committee where the differences are ironed out and one budget is presented for adoption by both houses.
The Big Four or The Big Five
At the close of the Conference Committee, the closed door dealing among the leaders of both houses and the Governor begins. This is often referred to as a meeting of the Big Five. Unlike previous governors, however, during the Schwarzenegger administration, the Governor is often absent from these deliberations and the four house leaders are left to try to iron out the differences and horse trade on their own. This was the case with discussions on the bond package from last year and the prison “reform” package this year. And it was the case with negotiations related to the Conference budget and cuts taken, as shown below, to get Republican votes on the budget in the Assembly on July 19th.
Why Do We Need Republican Votes on the Budget?
In California, Rhode Island and Arkansas, a 2/3 vote by each house of the state Legislature is required to adopt a budget. In the other 47 states, only a majority is required, which means that the majority party is held to account for their budget and their priorities, and the voters judge them on those priorities. In California, the budget is generally held hostage by the minority party (I was in the minority in my first two years in the Assembly), because the budget vote is the only issue the minority can truly affect.
The Conference Budget Before Changes by the Big Four
The Budget put forward by the Conference Committee was already a lean and mean budget in many ways. It was leaner than the Governor’s May Revision proposal, but managed to reject the Governor’s proposed cuts to CalWorks kids only grants, retained a cost of living increase for the poorest CalWorks working recipients, (however, putting that increase off for six months), and retained funding for the homeless mentally ill the Governor had wanted to cut. In addition, the Conference budget moved $500,000,000 worth of transit money to the general fund, in order to fill some of the “structural deficit”: the difference between revenues and expenditures. The reserve was a healthy one: about two billion, approximately what the Governor had in his budget. The revenue assumption included a $4.8 billion fund balance brought over from last year’s budget, $102.3 billion in revenues and $103 billion in expenditures. The final General Fund reserve in the Conference Budget was projected at $3.4 billion.
Additional cuts and tax credits added by Assembly
The Budget, as originally passed by the Assembly, reflected even deeper cuts, including deleting all funding for CalWORKs cost-of-living adjustments; providing no General Fund help to cover student fee increases at UC and CSU; delaying, from January to June, the state portion of the SSI/SSP cost-of-living adjustment; reducing funding for Proposition 36; and increasing the monies shifted from public transit to the General Fund to a total of $1.2 billion.
The budget, as passed by the Assembly and sent over to the Senate on July 19, provided full funding for growth and a cost of living adjustment for K-12 education but did not create new programs, rejected the Governor’s bid to cut $314 million in CalWORKs that would have penalized children and families seeking to become self-sufficient, invested in a 5 percent rate increase for foster family homes, restored $26 million in academic preparation programs at UC and CSU, and included $1.6 billion to fully fund Proposition 42 (transportation). (This is different from the projects that would have been funded by the gas tax revenues shifted into the general fund and referred to, above.)
The Assembly Vote on the Budget
This year, the Assembly voted on the Budget before the Senate, in one marathon session on Thursday night, July 19th. The Republicans in the Assembly held out for a number of changes until 4:30 in the morning, when they negotiated a $500,000,000 tax credit package in a separate bill, sent the budget to the Senate and left town.
The Senate’s Deliberations on the Budget
Perhaps “deliberations is not quite the right word. The budget and all the trailer bills (except the amazing tax credit package, which had come out of nowhere) were put up for a vote the next day, Friday, July 20th. Each budget vote garnered 25 Democrats for, 14 Republicans against and one abstaining. 27 votes are required to adopt the budget and the trailer bills. The bills were put “on Call” while President pro Temps Perata attempted to get two Republicans to vote. Throughout the next 23 hours, as all Senators remained on the Floor of the Senate (trying to sleep, if at all, in their chairs or taking turns on the couches), the Republican caucus made their demands clear: they would not vote for a budget unless another $700,000,000 was cut from the budget in order that revenues and expenses would zero out. Even though there is a very healthy reserve, that was not sufficient. At 10am Saturday morning, July 21, we were adjourned, with no budget and no budging by the Republicans.
Next…..
Senator Perata told minority leader Senator Ackerman that morning that if his Republican caucus were simply continuing to say “no”, they needed to come up with their own budget, one that clearly showed the cuts they wanted to make. On Wednesday, July 25th, with the Senate again in session, the Republicans failed to present a budget, but had given the press a list of cuts they would like to make to “balance” the budget, including eliminating the subsistence CalWorks payment made to children whose parents have been unable to find work and have “timed out” of CalWorks, or for children of undocumented parents. The demands also included transferring the 200 million left in the gas tax transportation account that had not already been swept into the budget, into the General Fund, leaving several current transportation projects without funding; exempting certain construction projects from the California Environmental Quality Act relating to greenhouse gas emissions; and attempting to add parental consent for reproductive services for minors in the budget, which the electorate of California has turned down twice.
The next day, Senator Ackerman indicated he did not want the Republican budget to be heard on the floor because even his caucus was divided on it. The Governor was unable to secure the two Republican votes needed to pass the budget in the Senate. Republican Senators refused to meet with the Governor and, as the days passed, instead of working on a compromise, the Republican caucus simply increased their demands, cheerfully indicating that they were dedicated to holding out until the Assembly returns into session so they could reopen the entire budget.
No Budget…No Money
For state services, for hospitals, for K-12 education, for community colleges.
See the next essay for the resolution, such as it is, to the budget stalemate.
This will be faxed to Sen. Ackerman’s office today: