Budget Subcommittee Spotlight: April 11, 2019

Friday, April 12, 2019

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

Subcommittee #1 (Education)

Roth (D-Riverside) Chair, Morrell (R-Rancho Cucamonga), & Leyva (D-Chino)

Helping Students with the Greatest Needs.  Community colleges provide educational opportunities to over 2 million students, but high costs for necessities like textbooks, housing, and transportation create challenges, even though tuition is lower than four-year universities.  The Governor has proposed $40 million to make the second year of community college tuition-free for all students.  While this may sound appealing, low-income students already can obtain tuition waivers, and 41 percent of students in fact receive free tuition through this program.  This means that the new proposal would primarily benefit middle- or higher-income students. Senate Republicans are committed to providing opportunities for all students to succeed, and a better option may be to use the $40 million specifically to help lower-income students pay for textbooks, housing, or transportation.

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

Wieckowski (D-Fremont) Chair, Jones (R-Santee), McGuire (D-Santa Rosa), Monning (D-Santa Cruz), & Stern (D-Canoga Park)

DMV Woes Threaten Deficits, Undercut CHP Facility Improvements. Both the Department of Motor Vehicles (DMV) and the California Highway Patrol (CHP) receive funds from vehicle registration fees that Californians pay.  Unfortunately, DMV troubles are creating departmental deficits and undercutting upgrades to CHP facilities.  The Governor’s budget includes an increase of $241 million to the DMV’s budget in an attempt to address DMV problems, including its poor preparation to begin issuing federally compliant driver’s licenses. The DMV’s problems resulted in motorists needing hours, and in some instances all day, to conduct business, as lines wrapped around DMV offices last year. Substantial increases to the DMV’s budget mean revenues are hundreds of millions of dollars short of planned expenditures. To avoid insolvency, the Governor proposed to finance multiple CHP office replacement projects, rather than fund them on a pay-as-you-go basis, resulting in nearly $100 million in future interest costs. Other construction projects for CHP and DMV are set to be suspended. Senator Brian Jones (R-Santee) and Senate Republicans believe Californians have the right to expect accountability for DMV failures, which should not be allowed to delay needed CHP upgrades. The subcommittee discussed potential solutions, but delayed voting until a future hearing.

Subcommittee #3 (Health and Human Services)

Pan (D-Sacramento) Chair, Stone (R-Riverside County), & Hurtado (D-Sanger)

Helping Families Achieve Self-Sufficiency.  The Subcommittee met today to discuss the state’s temporary cash aid program for working families, also known as CalWORKs. Senator Jeff Stone (R-Riverside County) emphasized that the state should assist families in finding and maintaining employment in order to lift themselves out of poverty. Among the various proposals, he supported those that would incentivize families to find full-time, sustainable employment to allow them to transition off temporary aid.

Subcommittee #4 (State Administration and General Government)

Durazo (D-Los Angeles) Chair, Nielsen (R-Tehama), & Umberg (D-Santa Ana)

Governor Proposes Tax Increase on Business Owners.  The budget subcommittee discussed, but did not vote on, the Governor’s proposal to pay for an expanded state Earned Income Tax Credit program (proposed to cost about $1 billion annually) through “conformity” to the 2017 federal Tax Cuts and Jobs Act. However, the Governor’s representatives indicated one provision “conforms with exceptions,” to federal tax changes, meaning it does not conform, and the “exception” would result in $1.2 billion more in tax revenue from business owners in 2019-20. Senator Jim Nielsen (R-Tehama) expressed concern with the Governor’s characterization of “conforming,” stating “words have meaning and the people of California deserve to know this doesn’t actually conform to federal law.”  Californians should not be led to believe a major tax increase is a simple matter of conforming to federal changes. In addition, the Earned Income Tax Credit is a valuable resource for working poor families, and there is no need for the Governor to tie the credit to a tax increase at a time when California already has record-high tax revenues.

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

Skinner (D-Berkeley) Chair, Moorlach (R-Costa Mesa), & Beall (D-San Jose)

Subcommittee #5 did not meet this week.

Due to the Legislative Spring recess, Budget Subcommittees will not meet on April 18th. Hearings will resume on April 25th and you can view the agendas here.