Budget Subcommittee Spotlight: March 15, 2018

Saturday, March 17, 2018

Please refer media questions to Jacqui Nguyen at (916) 651-4016.

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

Subcommittee #1 (Education)

Portantino (D-Los Angeles) Chair, Moorlach (R-Costa Mesa), & Jackson (D-Santa Barbara)

Universities Get Small Increases While High-Speed Rail Costs Explode: The University of California (UC) and the California State University (CSU) asked the committee for augmentations of about $140 million and $170 million, respectively, beyond the Governor’s modest proposal of $92 million each.  Senator John Moorlach (R-Costa Mesa) urged both universities to create long-term operational plans to justify their growing spending, and he questioned the Governor’s failure to prioritize higher education over the state’s out-of-control high-speed rail project, which is now projected to cost $77 billion, almost double the original cost estimate. 

Governor Continues Tobacco Tax “Bait-and-Switch”: The Governor’s budget proposal would continue to replace $40 million of UC’s annual state support with the same amount of Proposition 56 (2016) tobacco tax revenue.  Senator Moorlach called on the Administration to reverse that fund switch and instead provide $40 million in additional tobacco tax revenue for graduate medical education. Voters who supported the new tobacco taxes were led to believe the money would expand physician training and services, but the Governor has pulled a “bait and switch” by replacing other state funds with the new tobacco money.

Subcommittee #2 (Resources, Environmental Protection, Energy, and Transportation)

Wieckowski (D-Fremont) Chair, Nielsen (R-Tehama), & McGuire (D-Santa Rosa)

Senator Nielsen Requests Funding for Critical Flood Control Projects: Senator Jim Nielsen (R-Tehama) presented a request for $100 million annually for critical flood control infrastructure maintenance, repairs, and improvements.  Unfortunately, the Governor’s budget lacks a proposal to pay for critical water infrastructure maintenance needs across the state, despite the severe damage to the Oroville Dam spillway last year.  Senator Nielsen stated that the $100 million represented a reasonable request for the amount of work that can be achieved each year to incrementally reduce a backlog of potentially $50 billion in maintenance needs. These funds would save lives, protect property, and save the state billions in avoided emergency repairs.  This item was held open.

Despite Large Budget Surplus, Governor Proposes New Taxes: The Governor is proposing four new taxes (on water connections, fertilizer, milk, and confined animals) that would generate between $140 million to $220 million annually for water systems in disadvantaged communities and to cleanup nitrate contamination.  The number of communities needing financial assistance is not known yet, but the Administration has already determined the new tax amounts.  This proposal is a complicated new policy with significant opposition, yet there is no plan for it to be reviewed more thoroughly in any Senate policy committee.  At a time when the state is expecting a $7 billion surplus, these legitimate needs can be addressed with existing money; there is simply no need to tax Californians even more.  Senator Nielsen expressed concerns about the new taxes and called for more public discussion.  The item was held open.

Governor Proposes Fee Rip-Off to Plug Budget Hole: The Governor proposes $51 million in ongoing funding, including $18 million in Motor Vehicle fees and $26 million in Tire Recycling fees, to plug a budget hole of $20 million at the Department of Fish and Wildlife and expand its program activities. The Tire Recycling fee is meant to promote the recycling of waste tires, not to support unrelated programs. The use of Motor Vehicle Fees is problematic since these fees have been increased in recent years to sustain existing programs, and in 2018-19, $88 million from these fees are proposed for transfer to general state uses, growing to $100 million in future years. Senator Nielsen stated that the public has lost trust in government because promises are not being kept, and this is a perfect example of fees imposed for specific programs being ripped off later to fund unrelated government activities.  This item was held open.

Subcommittee #3 (Health and Human Services)

Pan (D-Sacramento) Chair, Stone (R-Riverside County), & Monning (D-Santa Cruz)

Senate Republicans Advocate for Better Care for Disabled Californians: A network of private community service providers in California cares for people with developmental disabilities such as severe autism, epilepsy, and cerebral palsy. Payment rates for these services are typically set by state rules, but Governor Brown’s administration has refused to compensate providers adequately and recognize the real costs that government policies impose. Some providers testified that, although they care for disabled people with highly specialized needs, they cannot afford to pay wages to compete even with entry-level jobs at places like big box stores or fast food restaurants.

“These providers care for our disabled neighbors, and I continue to be concerned about the lack of funds to support this care,” said Senator Jeff Stone (R-Riverside County). “We need to acknowledge reality—the people we are trying to help won’t get great services if providers can’t afford to hire skilled workers. This year I am co-authoring Assembly Bill 2244 with Assembly Member Dante Acosta (R-Santa Clarita) to offer another opportunity for disabled people in our communities to get their needs addressed.”  

In addition, Senator Scott Wilk (R-Antelope Valley) made a special appearance before the subcommittee to present his budget request for $3.2 million in state funds to expand disabled services by moving the eligibility cut‑off age up from 18 to 22 years of age.  The federal government made this adjustment more than 40 years ago, recognizing that the human brain continues to develop past 18 years of age, and 38 other states have done so as well.  Senator Wilk noted, “While policy is often shaped by economics, we have an ethical obligation to ensure there is equity in how we provide support services to our developmentally disabled citizens, and that our definitions are founded in medical fact."  The budget items will be voted on at a later hearing.

Subcommittee #4 (State Administration and General Government)

Roth (D-Riverside) Chair, Wilk (R-Antelope Valley), & Glazer (D-Orinda)

Senate Republicans Support Governor’s Commitment to Strong Reserves: The Governor’s budget proposes the legally required $1.5 billion deposit to the state’s “Rainy Day Fund,” as well as an extra deposit of $3.5 billion.  The additional deposit would bring the Rainy Day Fund reserve level to $13.5 billion (10 percent of revenues) in 2018-19, the maximum amount permitted by the state constitution, which also limits the Legislature’s ability to tap into the funds except in a budget emergency.  Democrats in the Legislature have shown a willingness to tax and spend at unsustainable rates, which would lead to an even bigger budget problem when the next economic downturn arrives.  Senate Republicans applaud the Governor’s commitment to building up strong reserves that will allow the state to better withstand the next recession, thus maintaining critical programs with the minimum amount of disruption to Californians.

Subcommittee #5 (Corrections, Public Safety, and the Judiciary)

Skinner (D-Berkeley) Chair, Anderson (R-Alpine), & Beall (D-San Jose)

Public Employee Union Undercuts Nonprofit Employing People with Disabilities: The Governor proposes to phase out a prison’s janitorial contract with PRIDE Industries in favor of hiring union state employees.  PRIDE, a nonprofit that employs people with disabilities, has been providing custodial services for the state’s prison hospital, the California Health Care Facility, since 2015.  However, the Service Employees International Union (SEIU) filed a grievance to contest the PRIDE contract shortly after it was executed, and the phase-out, which is already underway, will ultimately cost the state at least $3.6 million more annually for the same level of service. Senate Republicans believe that the PRIDE contract, which provides meaningful employment opportunities for people with disabilities and significant savings to the state, is a win-win solution that should be applauded and repeated wherever possible.  Instead, the Governor’s action favors public unions despite reduced opportunities for the disabled and extra costs to taxpayers.  This proposal will be acted upon at a future hearing.

You can view the agendas for next week’s budget subcommittee hearings here.