The Legislature sent some minor budget-related bills to the governor's desk last week, but the measures do not address the entire $20 billion budget deficit that has been projected by state officials. A tax-related proposal remains under discussion in the Legislature.
On February 22, the deadline for the Legislature to send bills to the governor to satisfy a requirement of the special session on budget issues, lawmakers sent approximately $2.3 billion in budget changes to the governor. On February 25, the Assembly acted on additional legislation designed to address cash-flow problems that otherwise might occur in April.
The Monday Assembly session got off to a rough start when the leadership realized that the body had been voting on the wrong versions of the budget bills. The house deleted the votes, then took up the correct versions (those that already had passed the Senate).
A bill that calls for a $1.8 billion gas-tax swap, postponement of business tax incentives, and authorization for local gas taxes (SB8X 6, Senate Budget and Fiscal Review Committee) was approved by the Assembly and is being held in the Senate while Democratic leaders negotiate with Governor Arnold Schwarzenegger. The governor has indicated that he will veto the bill as it is written, because he objects to postponing the job-stimulating tax incentives.
The Assembly vote was 43-24, with Democrats providing all of the "aye" votes, and a bipartisan group of Democrats and Republicans voting "no" or abstaining. The bill has been keyed as a majority-vote bill.
Other bills acted on this week include:
· AB 347 (Bass), which authorizes taxpayers to treat cash contributions to Haiti earthquake relief in 2010 as contributions made in the 2009 tax year. It was approved on a 39-0 vote of the Senate, and now goes to the Assembly for concurrence. The Franchise Tax Board estimates that the bill will result in a revenue loss of $80,000 in fiscal year 2009-10 and a gain of $80,000 in 2010-11.
· AB8X 5 (Assembly Budget Committee) would allow the state to delay $4.9 billion in payments to the courts, schools and state universities in March and April of this year. Assemblywoman Diane Harkey blasted the bill on the Assembly floor, saying it does not solve the budget problem but appears to be intended to "get us through the November election." Ms. Harkey was cut off when she attempted to speak beyond her allotted time limit. The bill, which required a two-thirds vote, passed with one vote to spare – 55-15. Assembly Members Anna Caballero and Manuel Perez joined 13 Republicans in opposition. The bill now goes to the governor's desk.
· AB8X 7 (Assembly Budget Committee) would accelerate a $100 million payment that is due to the state's bottle and can recycling fund, which is insolvent because the Legislature has raided the fund to balance past budgets. The bill was sent to the governor on a 69-0 vote.
· SB8X 4 (Senate Budget and Fiscal Review Committee) extends a 3 percent reduction to local programs for the developmentally disabled, for a savings of approximately $50 million in 2010-11. The bill needed a majority vote, and was approved on a tally of 54-13, with a mixture of Republicans and Democrats on both sides of the issue.
In other budget-related news:
Court Says State Wrongly Tightened Eligibility for Adult Day Care Program. The Sacramento Bee reports: "Disability rights advocates have scored another victory – and thwarted another budget cut – with a federal court injunction this week that blocks tightening eligibility guidelines for getting into California's adult day care program." An Oakland-based judge's preliminary injunction on February 24 appears to thwart a $12.2 million savings in the 2010-11 fiscal year that was supposed to be achieved by tightening the eligibility requirements effective March 1. (Source: The Sacramento Bee, February 25.)
Judge Orders Full Back Pay for More Than 53,000 Furloughed State Workers. An Alameda County judge on February 25 ordered back pay for more than 53,000 state workers who have been furloughed in the past year. The order, following up on the judge's earlier ruling that the governor did not have the legal authority to order furloughs of employees who aren't paid from the general fund, calls for the state to immediately pay their full salaries, and to "cease and desist the furlough of such employees." The Governor's Office said an appeal will be filed, so the order will be stayed and the issue likely will reach the state Supreme Court. Although the employees are not paid out of the general fund, the furloughs were budgeted to save the state approximately $1 billion in the 2009-10 fiscal year. (Source: The Sacramento Bee, February 26.)
Cal-TaxReports, March 1, 2010
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