Category Archives: Budget

Jerry Brown Signs Several Budget Bills, Including Clean Vehicle Legislation

Gov. signs several budget bills over the weekend

by Brian Leubitz

The Governor took little time to sign a first big batch of bills after the Legislature ended session. Specifically, he signed seven budget bills on Saturday:

• AB 109 by Assemblymember Philip Y. Ting (D-San Francisco) – Budget Act of 2017.
• AB 129 by the Committee on Budget – Education finance.
• AB 130 by the Committee on Budget – Health and human services.
• AB 131 by the Committee on Budget – Taxation.
• AB 133 by the Committee on Budget – Cannabis Regulation.
• AB 134 by the Committee on Budget – Budget Act of 2017.
• AB 135 by the Committee on Budget – Transportation.

The Budget Acts do basically what you would expect of budget bills: appropriating money to one expense or another. But one part of AB 134 seems to be getting a lot of attention:

Up to $140,000,000 shall be used for the Clean Vehicle Rebate Project.
(1) The State Air Resources Board shall work with the Labor and Workforce Development Agency to develop procedures for certifying manufacturers of vehicles included in the Clean Vehicle Rebate Project as being fair and responsible in the treatment of their workers. It is the intent of the Legislature that beginning in 2018–19 fiscal year, the Labor Secretary shall first certify manufacturers as fair and responsible in the treatment of their workers before their vehicles are included in any rebate program funded with state funds.

Two things here: First, it takes cap and trade money and ships it off to help make electric and plug-in hybrid cars cheaper. I suppose I should issue some sort of trigger warning, as the cap and trade extension bill was controversial to put it mildly. The second point to that, and probably more interesting, was the labor provision put into that extension. (See my added emphasis in the quote above.)

TeslaThis has been getting a lot of attention as summary stories of the legislative session come out. Many of them are framing in this “unions are powerful” and win everything, which plainly is not true. Yet, clearly they win more they than they lose.

This provision is directed at Tesla, which as of yet, is mostly beating back attempts to organize their work force. The standard of “fair and responsible” seems a little open to interpretation, so how much this matters is an open question. Denying the incentive money to a California based company would certainly be a controversial decision, and Tesla has a backlog of Model 3 orders from across the country, but if the Labor Secretary is strict on that provision, it would certainly draw Elon Musk’s attention/ire.

Many more bills will be signed as we head into the October; even despite some setbacks (single payer to name one) this has been a very busy legislative year.

Budget Goes to Governor’s Desk: Republicans Freak Out About HSR

Budget Based on Compromises Leaves Questions

by Brian Leubitz

First, let’s get this out of the way: the budget ($156bn for those counting at home) has now been passed and just awaits a few formalities. It is a budget of compromises, but a solid foundation for California’s priorities.  And there are no big public fights, no big accusations, and no sleepovers in Sacramento. This is all good, and says a lot about the improved process under the majority vote budget system. (And Prop 30, which gives the revenue breathing room that we need.)

All that being said, the Governor wanted to maintain a hard line on spending. It’s nice and prudent and all that, but there are a lot of gaping holes in the budget that should have been addressed. George Skelton’s review of the completed product outlines some of those holes:

But the governor refused to reverse a 10% cut in pay rates for doctors who treat patients in the Medi-Cal program that is greatly expanding under Obamacare. Because of the measly rates – lowest in the nation – more and more doctors are refusing to accept Medi-Cal patients.

And, shamefully, no one even tried to restore previously cut funding for the most vulnerable: the aged, blind and disabled poor living entirely off federal and state subsistence programs (SSI/SSP) – $880 (sic, it is actually $877.40 – BL) monthly for singles and $1,480 for couples. There are roughly 1.5 million Californians receiving SSI/SSP, which was reduced to the federal minimum during the recession. The state is still stiffing them. They’re not unionized and can’t make campaign contributions. Meanwhile, legislators keep raising the minimum wage, bumping up inflation and squeezing these impoverished folks even more.

So the governor and Democrats shouldn’t be patting themselves on the backs all that much for their budget compromise. ([George Skelton / LATimes)

There have been a few good editorials about the Medi-Cal question, including this one in the SF Chronicle. Boiling it down, our reimbursement rates are among the lowest in the nation. And while there is a sharp need to control medical costs. As you can see from the graph in this tweet, our costs are still out of control. But the problem here is that if the tightest controls are isolated to Medi-Cal, doctors simply won’t take Medi-Cal patients. And that is exactly what is happening. As you can see from the ad up top, this was a big deal for the state. But under the current budget, reimbursement rates are still far too low.

In addition to the heartbreaking failure to restore SSI/SSP funding for some of the state’s most vulnerable, the state’s contributions to CalSTRS are taking a big chunk out of the restoration of funding to K12 education. And even with the $250+ million for both early child education and vocational education, there are still big funding problems at all levels of California education.

The other big issue: yeah, that would be Republican Majority Whip Kevin McCarthy’s non-stop tirade over the high speed rail project. (Seen here looking hilarious in flick user donkeyhotey’s cartoon.) The budget allocates $250m from cap and trade revenue, but long-term funding issues are still out there. At this point, HSR leaders can point to several billion of funding that is out there for the project, but are still a ways off from the full price tag. And if McCarthy becomes Majority Leader as expected, comments like these could mean it becomes a lot more challenging to get federal assistance for the project:

“Governor Brown’s persistence shows he is more interested in protecting his legacy than communities that will be uprooted by its intrusion,” he added. “As long as I am in Congress, I will do whatever I can to ensure that not one dollar of federal funds is directed to this project.” (Melanie Mason / LAT)

But those decisions are for another day. Today, we have a budget that will keep the lights on throughout the state, and that’s good thing.

Budget Negotiations Continue

Process looks set for this weekend

by Brian Leubitz

The budget deadline is this weekend, and without the need to pull a few Republican votes, harmony seems to reign. Well, not so much real harmony, but something that passes for harmony in Sacramento when you look at the past budget fights before the majority vote budget and Prop 30 votes.

With closed-door negotiations bearing fruit, the joint budget committee is expected to meet Wednesday afternoon to nail down more details on state spending.

“We’ll get through most of it,” Assemblywoman Nancy Skinner (D-Berkeley), who is chairing the committee, said in an interview.(LA Times)

Everybody seems to be all happy-go-lucky on getting a deal done. But to be clear, there are a lot of tough choices to be made. K-12 funding is still too low. Court funding is getting a boost, but is probably still too low. Skinner and Steinberg are still fighting Brown’s intention to end overtime pay for homecare workers.

The bigger issue overhanging much of this is whether to include an additional $2.5 billion in projected capital gains revenue, with some sort of compromise likely.

Yes, the negotiations are more civil than in the past, but the issues are very real. Gov. Brown seems to be a bit hesitant to restore funding levels anytime soon, but there is a lot of gap to fill between how much the state needs in services and how much we are providing. The higher end of our economy has clearly recovered, but that is far from universally true across the income spectrum.

May Revise Offers More Education Funding

Additional Revenue will be steered to education under Prop 98

by Brian Leubitz

The Proposition 30 funds will sunset in a few years, but the surplus revenue is nice while it lasts. With the economy picking up speed, and an additional few billion in unexpected revenue, Gov. Brown has some flexibility that wasn’t there a few years ago. So, he’s gone through his laundry list:

For the budget year (2014-15), the May Revision sets aside $1.6 billion to make the final payment on the Economic Recovery Bonds and another $1.6 billion for the Rainy Day Fund.

The May Revision reflects more than $2 billion in added costs over and above the January budget. This includes higher spending to provide health care coverage under Medi-Cal for a million more people, emergency drought assistance, added funding to meet the Proposition 98 guarantee for K-14 schools, caseload increases in the In-Home Supportive Services (IHSS) program, additional contributions to the California Public Employees’ Retirement System (CalPERS) and added staffing to administer California’s unemployment insurance program.

When Governor Brown took office, the state faced a massive $26.6 billion budget deficit and estimated annual shortfalls of roughly $20 billion. These deficits, built up over a decade, have now been eliminated by a combination of budget cuts, temporary taxes and the recovering economy.

Could he have done more to restore some of the massive cuts of the 2007-2012 era? Probably, but Gov. Brown was never going to wipe all that away in one cycle. That has just not been his style since his Oakland mayoral days. But the May revise moves the state forward and is a solid foundational document for the future.

Parts of this will clearly change as the Speaker and Senate leader get a hold of it, and there are certainly improvements to be made. However, with the rainy day deal already done, half the battle is behind us and the politicians are looking to the upcoming elections.

Next10 Updates Budget Challenge

Interactive website lets you choose budget priorities

by Brian Leubitz

We’ve had a link to the Next10 Budget Challenge on the right sidebar for a while now, and mentioned it once or twice. And while it has a few flaws, after all it is hard to pack a $100B budget into a easily understood little game, it does offer an interesting way to look at the budget. It helps even those who haven’t really had a chance to take more than the briefest of looks into the system. Check out the intro text:

While California is no longer experiencing an immediate budget crisis, important decisions will be made balancing this year’s budget that will impact our shared future.  How quickly should the state pay off $28 billion in budget debt?  What should California do to plan for long-term pension and retiree health care costs?  How much should be invested in programs cut during the recession?  How much should the state have in reserve, and where should those funds come from?

The budget is a months long process, and you aren’t going to get answers in 10 minutes. But, if you know a few folks who would be interested in learning more about the budget, send them over to the Next10 Budget Challenge. Also, give them a chocolate bar to help ease the depression that knowledge of the budget may bring on.

Students and Community in California Take on Big Oil to ReFund Education

California – With student debt reaching over $1 trillion nationally and college tuition continuing to skyrocket, dozens of major national organizations representing students, youth, labor, veterans and policy organizations have come together to unite their efforts to tackle what has become a student debt crisis in America. Higher Ed Not Debt, a new, multi-year campaign to address the twin issues of education debt and college affordability launched on Thursday, March 6, with dozens of events across the country.  

Higher Ed, Not Debt was formed with four key goals: addressing the existing $1.2 trillion of debt; increasing the affordability and quality of higher education; combating the privatization of higher education and the role of Wall Street in compounding the student debt crisis; and sparking civic engagement and political participation among young people.  

“If you’re not rich, in America, college costs more. It costs more because you have to borrow the money and pay and pay and pay. And not just pay the cost of the education, not just pay over time the cost to borrow, but pay to produce a profit,” said Senator Elizabeth Warren at the national launch in Washington, DC. “This thing is a monster that keeps getting and bigger and bigger every single day.”

Here in California, the ReFund California coalition kicked off this national campaign with events in San Francisco and Los Angeles calling for the passage of SB 1017 (Evans) the Oil & Gas Extraction Tax which will raise $2 Billion to fund education and vital services.

Additional revenue is urgently needed. As East LA Community College student Sonny Martinez said, “The biggest misconception about community colleges is that the students are to blame if they don’t graduate in two years when it’s actually the lack of funding that prevents them. It’s only fair that oil companies pay their fair share, so students like me can get an education without wasting years of their lives and falling deeper and deeper into debt.”

The UC, CSU and Community College systems are still far behind pre-crisis funding levels, despite some improvement in state funding since the passage of Prop 30. Faced with the need to borrow more and more, both students and the institutions themselves are burdened with sky-rocketing debt.  52% of California college seniors who graduated last year had student debt, and the average debt amount was $20,269!

ReFund California is bringing students, workers, and community together to address this revenue crisis by building public and political support for holding big corporations and the 1% accountable and making them pay their fair share towards a California that works for everyone.  

For photos of the actions, see:…  

California’s 7 Tea Party Die-hards

Seven Republican House members vote no on budget/debt limit compromise

by Brian Leubitz

The Tea Party has many Republicans running scared across the country, with nearly 2/3 of the Republican House caucus voting no on the Senate driven compromise plan. But here in California, the lack of a primary in a Top-2 system insulates much of that right-wing pressure.

But seven Republicans voted no on the compromise anyway.

California Republicans voting “no” were: John Campbell, R-Irvine, Jeff Denham, R-Turlock (Stanislaus County), Duncan Hunter, R-Alpine (San Diego County), Doug LaMalfa, R-Richvale (Butte County), Tom McClintock, R-Elk Grove (Sacramento County), Dana Rohrabacher, R-Costa Mesa (Orange County), and Ed Royce, R-Fullterton (Orange County).(SF Gate and full roll call vote here)

Perhaps you could argue that if the vote was unsure, that some of them may have switched. But the fact is that they voted to gamble with the national and global economies in a fit of picque. It was a gamble that seven other California Republicans weren’t willing to take. Heck, even Darrell Issa voted for the deal.

And some of those Republicans who voted no were just never going to vote yes, like McClintock. But the biggest name that jumps out on me on that list is Jeff Denham who is still in a district with a Democratic registration advantage, and who won by a fairly slim margin in 2012. If Denham draws a well funded challenger, he’ll need to answer for this vote.

But, really, shouldn’t all of these legislators answer for this vote?  

Not Just the Budget: Legislature Spends Some Time on MediCal

A busy few days for the Legislature as they move forward on important priorities

by Brian Leubitz

The Legislative leaders and the Governor agreed to a framework for the budget at the beginning of last week, but on Friday, the plan was sealed and sent to the Governor. He promptly signed it and tweeted the accomplishment:

The total budget is at $96.3bln, a spending total that should give the state some breathing room. If the revenue totals are higher, as the LAO predicts, Governor Brown intends to put much of it into reserve. There was a trailer bill for some welfare restoration and the partial restoration of some dental services within MediCal.  The dental restoration wasn’t everything, but it was a good start:

“The elimination of adult dental in 2009 was one of the most visible examples of the harm caused by the recession, the 42 billion dollar California budget deficit,” says Steinberg.

Lawmakers were pressured by many groups to restore public services. A broad coalition wanted to stop doctor payment cuts in Medi-Cal. That didn’t happen.

“We can’t restore everything, or nearly everything that has been lost,” Steinberg says. ” But we can pick a few targeted areas where people have suffered the most. And for me, dental care was at the top of the list.”

So Denti-Cal will be restored – to most of what it was before. Patients will be able to have their cavities filled, get crowns on broken teeth, and bridge work. They won’t be getting partial dentures or implants, and Steinberg says they won’t be getting any care right away.  

“It’s going to take some time to rebuild the program since it’s been gone now for over four years,” adds Steinberg.(CapRadio)

Indeed, the Legislature would still like to restore additional funding that was not included in this round. But, for the time being that will wait until additional revenue comes in and an argument that will sway Gov. Brown.

On MediCal, the Legislature also took some time to authorize the build out of that System along the lines envisioned in the Affordable Care Act (aka ObamaCare). The new system will make a million more Californians elibile and streamline the application process.

Gov. Brown Outlines Plan for Good Jobs

by Steve Smith

To some politicians, economic development means giving hundreds of millions of taxpayer dollars to strip clubs, fast food joints and retail giants like Walmart. Gov. Brown, thankfully, has a better idea. Today, the Governor announced a broad coalition of labor, business and others in support of his good jobs plan that will flip the broken enterprise zone program into real incentives for creating quality, middle-class jobs.

Gov. Brown:

California’s 30-year-old Enterprise Zone program is not enterprising, it’s wasteful. It’s inefficient and not giving taxpayers the biggest bang for their buck. There’s a better way and it will help encourage manufacturing in California.

Study after study has shown that the enterprise zone program is a waste of taxpayer dollars. The California Labor Federation has been sounding the alarm on this broken program for several years, and now there’s strong momentum for reform.

California Labor Federation leader Art Pulaski:

The Governor’s plan wisely targets our tax dollars to good jobs that build the middle class and strengthen communities. California workers stand with the Governor in his efforts to create good jobs that will spur our state’s economic growth.

The Governor’s plan directs tax credits to businesses that are actually creating new, quality jobs — something the broken enterprise zone program has failed miserably in achieving. The Governor outlined his program today in a release to media:

 The Governor’s plan, proposed in the May Revision, builds on the framework of existing, targeted programs by redirecting approximately $750 million annually from the current flawed Enterprise Zone program to three new economic development programs:

   Sales tax exemption: A statewide sales tax exemption on manufacturing equipment or research and development equipment purchases by firms engaged in manufacturing or biotechnology research and development. The proposal is estimated to provide sales tax exemptions worth over $400 million annually.

   Hiring credit: A hiring credit targeted to businesses located in areas with the highest unemployment rate and poverty. This credit will be available for the hiring of long-term unemployed workers, unemployed veterans and people receiving the federal earned income tax credit. The credit will only be allowed to taxpayers who have a net increase in jobs. The proposal is expected to provide approximately $100 million annually in hiring credits.

   Investment incentive: The California Competes Credit based on specified criteria including the number of jobs to be created or retained and a set job retention period. This component of the proposal is expected to provide between $100 million and $200 million per year in tax credits.

It’s time to end the enterprise zone abuse of taxpayer dollars. Send a message to your legislators in support of the Governor’s good jobs plan today!