Budget Subcommittee SPOTLIGHT: May 6, 2016

Friday, May 6, 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)

Demand for Charter Schools Continues to Grow. The Department of Education reported receiving about 100 applications per year to open new charter schools along with a need for about $50 million annually for start-up costs. The Governor’s budget provides $20 million in state funding, which, along with remaining funds from an expiring federal grant, should be enough to meet the needs of new charter school applicants in the upcoming year.  However, with the expiration of the federal grant, the state will need a longer-term plan to meet these needs in the following year. In keeping with the priority to educate and prepare individuals to be career-ready, Senate Republicans support the widest possible array of family choices for their children’s education, including charter schools and open enrollment policies. 

Minimum Wage Hikes Squeezing After-School Programs. California’s pending minimum wage hikes will squeeze after-school programs, according to advocates at the hearing who testified regarding a need for $73 million in initial funds to offset the higher mandated costs. Senator John Moorlach (R – Costa Mesa) suggested that the squeeze on programs should have been anticipated when the Legislature voted to increase wages. In keeping with the priority to respect the voters through responsible government, Senate Republicans support efficiency in government, and oppose actions that will unnecessarily increase the cost of school programs. The ill-conceived, one-size-fits-all $15 minimum wage plan, which the majority party pushed through the legislature in under a week after a backroom deal was announced, did nothing to assess the effect on schools or how higher costs could crowd out other education efforts.

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

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

New Natural Gas Regulatory Program Goes Beyond Ensuring Public Safety. The Governor has proposed increasing fees yet again on ratepayers, by $13 million this time, theoretically to expand the state’s natural gas regulatory programs. However, the Administration’s budget proposals and new requirements adopted by the majority party go far beyond ensuring the safety of natural gas storage facilities by seeking to control the natural gas industry through cradle-to-grave regulations. The fee increases and new requirements would affect all natural gas storage facilities in the state, even those that have had no safety incidents. These costs will ultimately be borne by ratepayers. Senate Republicans support steps to address concerns stemming from the Aliso Canyon natural gas leak, but the budget process should not be used as a backdoor path for massive policy changes that instead should be given extensive review in appropriate policy committees. Senator Nielsen (R-Gerber) expressed concern that fee payers may not receive benefits from these costs, and requested that Administration officials track all fee expenditures, a critical measure for accountability on proposals that would enact an astounding 60-fold increase in fees, from $160 to approximately $10,000 per gas well, for underground storage facilities. Unless these facilities directly benefit from the new “fees,” the charges should be considered taxes under the Proposition 26 rules enacted by California voters in 2010. Ultimately, the majority party approved the Governor’s proposals on a 2-1 vote (with Senator Nielsen voting No) while making the proposals subject to the passage of “other statutes” not presented before the subcommittee and “unseen” draft trailer bill requirements. 

Subcommittee #3 (Health & Human Services)

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

Problems Getting Proper Care Persist for Medi-Cal Patients. California slashed payment rates for Medi-Cal providers by 10 percent during the recent budget crisis, and those cuts, totaling nearly $400 million per year, are still making it more difficult for Medi-Cal patients to get proper care. Public testimony at the hearing focused on kidney dialysis clinics and clinical laboratory services as providers who still face poor access for patients. Also, a new report by the independent, bipartisan Little Hoover Commission sharply criticized the Denti-Cal program’s woeful track record. However, despite the recent surge in California’s tax revenue, the Governor has not proposed to restore the Medi-Cal payment cuts, and the majority party has created new program expansions rather than fix the existing Medi-Cal program. This week Republicans from both houses issued a joint letter to the Governor seeking $200 million in targeted rate increases to address Denti-Cal’s major problems in actually providing care. Senate Republicans additionally believe that California should not expand or create new programs until the damaging Medi-Cal rate cuts are reversed.

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

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

New Computer System Needed for Campaign and Lobbying Tracking.  The state’s clunky, obsolete campaign and lobbying finance tracking system, known as the California Automated Lobbying and Campaign Contribution and Expenditure Search System (CAL-ACCESS), has a history of being difficult to use and has been inoperable at various times. The Secretary of State now requests $757,000 to complete the next steps in the state’s required process for computer system development. In contrast, Senator Hertzberg (D – Van Nuys) recently sent a letter to the Senate Committee on Budget and Fiscal Review requesting $13.5 million in 2016-17 to replace CAL-ACCESS under the provisions of his bill, SB 1349. Senator Nguyen (R-Garden Grove) expressed her support for an expedited replacement of the system, but also conveyed concerns about the risk related to turning the project completely over to the SOS. “We don’t want to be back here in a year or two discussing what went wrong and starting over,” said Senator Nguyen. Senator Hertzberg’s request would diminish the Department of Technology’s role from approval and oversight to consulting. Unfortunately, California’s government agencies do not have a great record when it comes to IT projects. Senate Republicans support the replacement of CAL-ACCESS to improve campaign and lobbying transparency but believe California needs better accountability for major IT projects. The Subcommittee held this item open for further discussion.

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

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

Kid Gloves Extended to Adults. Majority party members on the subcommittee approved $3.7 million for state prisons to implement SB 261 (Hancock, 2015) that expands a new parole process, intended for juveniles serving de facto life sentences, to also include adults who committed their crimes between the ages of 18 and 23. The parole process for juveniles was established in response to a California Supreme Court ruling that a juvenile serving a de facto life sentence must be afforded a “meaningful opportunity to obtain release based on demonstrated maturity and rehabilitation.” Unfortunately, SB 261 went well beyond the court’s intent, as noted by the California District Attorneys Association, who stated at the time, “We are unaware of any case law under which courts have considered someone a juvenile for an offense committed after they turned 18, but before they reached 23 years of age. We believe that it is wholly inappropriate to expand this expedited parole process to include individuals who were adults when they committed their offenses.” SB 261 created the possibility of parole for some of the most vicious adult offenders who were sentenced to terms of life in prison without the possibility of parole due to the heinous nature of their crimes. Funding its implementation is inconsistent with Senate Republicans’ priority of keeping our communities safe.

Critical Repairs Approved for Rehabilitative Prison Once Slated for Closure. The subcommittee approved $6 million to make long-overdue repairs to the California Rehabilitation Center (CRC) in Norco. The majority party has been pressing for years to close the facility, often citing its poor state of repairs. Senate Republicans have maintained that, despite its dilapidated conditions, the facility provides critical beds for the state’s prison system that are necessary to maintain compliance with a federal court order capping the state prison adult population at 137.5 percent of capacity. The repairs approved by the subcommittee this week will extend CRC’s useful life while helping to ensure the state does not exceed its court-ordered prison population cap. Also heard was a request for $5.4 million for prisons to contract out for a study of aging prison facilities to identify renovations or replacements that will be necessary to maintain the current level of prison operations.  The subcommittee took no action on the study proposal. However, Senate Republicans support the Governor’s proactive stance on identifying prison infrastructure needs before they devolve into crises.