[Editor’s Note: Mr. Rice, a lobbyist for City Hall, explains the new budget and updates the fight to save redevelopment agencies, a subject of great interest to smaller California communities.]
Dateline Sacramento — Without question, the major news of yesterday was the Governor, Senate President Pro Tempore and the Speaker of the Assembly announcing they had a budget deal that will be passed with just majority votes. The details are worth repeating:
Democratic aides provided details yesterday afternoon on the handshake budget deal between Gov. Brown and Democratic leaders to bridge a $9.6 billion deficit.
It maintains parts of the package Mr. Brown vetoed nearly two weeks ago:
• $150 million cut each to University of California, California State University
• $150 million cut to state courts
• $200 million in Amazon online tax enforcement
• $2.8 billion in deferrals to K-12 schools and community colleges
• $300 million from $12 per vehicle increase in DMV registration fee
• $50 million from fire fee for rural homeowners
• $1.7 billion from redevelopment agencies
• Higher tax receipts (now worth $1.2 billion from May and June)
The new budget rejects some parts of that package:
• $1.2 billion from selling state buildings
• $900 million from raising a quarter-cent local sales tax
• $1 billion from First 5 commissions
• $500 million cut in local law enforcement grants
• $540 million deferral to University of California
• $700 million in federal funds for Medi-Cal errors
And it adds the following:
• $4 billion in higher projected revenues in 2011-12, with triggered cuts
• 1.06 percentage point sales tax swap that redirects money to local governments for Mr. Brown's “realignment” plan rather than to the state. Sales tax rate will still fall 1 percent on Friday.
The $4 billion “trigger” plan bears some explaining.
First, the plan requires Mr. Brown's Dept. of Finance director, Ana Matosantos, to certify in January whether the $4 billion projection is accurate. She will use revenue totals for July to December and economic indicators to project the remainder of the fiscal year.
The “trigger” cuts are essentially in three tiers, based on how much of the extra $4 billion comes in.
Tier 0: If the state gets $3 billion to $4 billion of the money, the state will not impose additional cuts and roll over any balance of problem into the 2012-13 budget.
Tier 1: If the state gets $2 billion to $3 billion of the money, the state will impose about $600 million of cuts and roll over the remainder into the 2012-13 budget. The $600 million in cuts include a $100 million cut to U.C., a $100 million cut to CSU, a $100 million cut to corrections and a $200 million cut to Health and Human Services.
Tier 2: If the state gets $0 to $2 billion of the money, the state will also impose up to $1.9 billion in cuts, including a $1.5 billion reduction to schools that assumes seven fewer classroom days. It also includes a $250 million elimination of school bus transportation (except for that which is federally mandated). Cuts will be proportionate to how much of the first $2 billion in revenues the state gets. State will also impose the Tier 1 cuts.
As you can see, the governor is still intent on signing the Redevelopment Agency cuts package passed a couple of weeks ago as a part of this next budget. We have not seen any new material from the California Redevelopment Assn. and/or the League of California Cities on this topic since the governor's 3 o’clock press conference, but they previously have acknowledged that should the Redevelopment Agency trailer bills passed a couple of weeks ago be sent to the governor and signed, then the CRA and League believe they have solid grounds to challenge the constitutionality of those actions in a court of law. Frankly, we would be surprised if a lawsuit on behalf of the state's redevelopment agencies was not filed within a week of the governor's signature.
While it is disappointing that a majority of the Legislature decided to vote against our efforts as they related to redevelopment agencies, the constitutionality of those actions will be decided in a completely different venue. Many have claimed that the odds of success through the judicial branch are very high.
Obviously only time will tell in that regard, but the governor's signature on the Redevelopment Agency bills is not the end of the road, but merely the beginning of another chapter in the battle.
Also, the leaders of the Legislature have been stating for some time that there will be “follow up” legislation to make the redevelopment agency bills more “workable” in the real world. However, no one yet knows what this means…in fact, we have had several members sympathetic to our redevelopment agency cause ask leadership in both houses for more specificity on this. They have not been given anything in writing to digest. Nevertheless, we expect some measure of follow-up, and you will need to determine how much you will want to participate in those deliberations.
The Legislature is expected to take the first part of today for each caucus to go over what is in the budget behind closed doors. However long that takes, both the Senate and the Assembly have expressed their desire to pass the main budget bill along with the necessary trailer bills that compose the new pieces of the budget.
Mr. Rice may be contacted at tony@riceenglander.com.
