Budget Subcommittee SPOTLIGHT: April 8, 2016

Thursday, April 14, 2016

Below is a summary of some subcommittee activity from the past week:

Subcommittee #1 (Education)

Block (D-San Diego) Chair, Moorlach (R-Costa Mesa), & Allen (D-Santa Monica)

Senator urges prudent stewardship of state facilities investment.  To address the community colleges’ $6 billion need for scheduled and deferred maintenance projects over the next five years, the Governor proposes to use $255 million in Proposition 98 funding for one-time deferred maintenance and instructional equipment.  Some critics want to use these funds instead for program expansions, but Senator Moorlach noted that we need to be setting funds aside every year to protect the state’s investment, rather than seeking tax hikes for repairs after letting our facilities degrade.  Setting these funds aside for a one-time purpose will also provide a budgetary cushion if revenues come in short of expectations.  In keeping with the priority to respect voters through responsible government, Senate Republicans support prudent stewardship of our assets and a long-term approach to budgeting that protects community college students from future downturns in the economy.

Subcommittee #2 (Resources, Energy, Agriculture & Transportation)

Wolk (D-Davis) Chair, Nielsen (R-Gerber), & Pavley (D- Agoura Hills)

Another Fee Increase on Water Rights Holders.  The Governor has proposed an increase of 8 percent in costs funded by water rights holders, ostensibly to reduce a large backlog in processing water rights applications and permits.  The State Water Resources Control Board (Water Board) has increased fees in the past supposedly to reduce similar backlogs in the water rights program, but unfortunately those backlogs did not get resolved.  Opponents of the fee increase stated that the Water Board lacks transparency in its fee setting procedures and is not forthcoming with critical information needed to justify additional fees.  Senator Nielsen requested that the proposal be held open until the Water Board can explain why the backlog has not been addressed with prior funding increases and can provide a plan for a final resolution.  The item was held open.

Proposal Would Reach into Fee Payer Pockets to Give “Volunteer” Boards Big Pay Raises.  The Governor proposes to increase Regional Water Board member per diem payments from $100 to $500 per day, which would increase annual compensation for board members from an average of $1,663 per year to $12,000 per year.  This would include board meetings as well as per diem to review materials in preparation for board meetings. In addition, each board member could receive $500 per day for other non-board meeting activities which the Administration has not yet defined.  The increase would be funded by fee payers including water rights and waste discharge permit holders. Currently, the average for other state board members is $100 per diem, and no other board members receive $500 per day.  Senator Nielsen (R-Gerber) raised concerns with the lack of justification for the significant pay increase and cautioned that this will set a precedent for every other state board to request the same pay scale.  This proposal was approved by Democrat subcommittee members by a 2-1 vote, with Senator Nielsen voting No.

Subcommittee #3 (Health & Human Services)

Mitchell (D-Los Angeles) Chair, Monning (D-Carmel), & Stone (R-Temecula)

California Falling Short on its Commitment to Disabled Services.  Senate Republicans remain concerned that services for developmentally disabled individuals have yet to be made whole from years of budget reductions and unfunded mandates.  The developmentally disabled, who face challenges like autism and epilepsy, are clearly among the neediest Californians, yet advocates testified that the state has never fully funded costs for minimum wage mandates and that recession-era cuts have yet to be fully restored.  For example, the Administration refuses to pay providers for state-mandated salary levels for “exempt” employees, who must be paid twice the minimum wage.  Senate Republicans note that, in contrast, the Administration included these costs for unionized state employees when it estimated the future costs of the recently passed $15 minimum wage mandate.  In keeping with the priority to honor the state’s commitment to the developmentally disabled, Senate Republicans believe that private nonprofits and businesses who serve this community deserve at least as much consideration as state employees.  These private enterprises have no ability to raise their own prices, so unless the state fully funds its obligations, the recent hard-won rate increases for developmental services will vanish.

Subcommittee #4 (Housing, Veterans Affairs, & General Government)

Roth (D-Riverside) Chair, Nguyen (R-Garden Grove), Pan (D-Sacramento), & Glazer (D-Orinda)

$622 Million Lost to Failed IT Projects. The subcommittee evaluated the recent history of Information Technology (IT) projects initiated by various government agencies.  The expansion of IT projects throughout state government is highly desired, as properly performing IT systems save money, improve efficiency, and allow the redirecting of administrative overhead expenses to direct services for residents of California. During the hearing, Senator Janet Nguyen (R-Garden Grove) expressed concern over recent progress on the development and implementation of IT systems, while applauding Governor Brown for appointing a new IT interim director. “I am concerned about the fact that between 2013 and 2016, state agencies spent $622 million on IT projects that were terminated, suspended, or withdrawn. The track record is not good; this was the case for nine out of 34 IT Projects over that period. Several of those projects were significant, including the State Controller’s 21st Century Project. This is more than $600 million dollars that could have been spent more wisely, for example by expanding child care of adding pre-school slots,” said Senator Nguyen. “I appreciate that the Governor has appointed a new IT interim director. This provides an opportunity to evaluate which other IT projects are at risk of failure, and to take steps to make sure these failures don’t continue.”

Subcommittee #5 (Revenue, Labor, PERS, STRS, Public Safety, & Judiciary)

Hancock (D-Berkeley) Chair, Anderson (R-San Diego), Beall (D-San Jose)

Proposed Jail Construction Funds Badly Needed.  In the wake of the 2011 Public Safety Realignment, which shifted tens of thousands of felons from state to local responsibility, local sheriffs have been struggling to manage their offender populations.  The subcommittee discussed the Governor’s proposal to provide a fourth and final round of funding for local jail construction.  The $250 million proposed would be available to counties that previously did not receive an award or only received a partial award, and is intended to help those counties replace obsolete facilities and add space for offender programming and treatment.  Although around 40 of the 58 counties have received funding to date, rural counties like Modoc and Plumas saw their requests rejected.  Glenn County has applied twice and was rejected both times.  The unmet need in these three small, rural counties alone is more than $40 million, and overall the most recent funding round of $500 million received requests for more than $1.2 billion.  In keeping with the fiscal priority of keeping our communities safe, Senate Republicans support the Governor’s proposal to provide $250 million General Fund for local jail construction projects.