Budget Subcommittee Spotlight: March 21, 2019

Friday, March 22, 2019

Subcommittee #1 (Education)

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

Keeping the University of California (UC) Affordable.  This week’s hearing focused on UC’s finances and performance. Senate Republicans are concerned that high costs at the UC could result in pressure to raise tuition and fees on students.  A recent analysis by the nonpartisan Legislative Analyst’s Office pointed out that “UC professors make notably higher average salaries than the average across [public high-research institutions].”  Senator Mike Morrell (R-Rancho Cucamonga) raised a concern that UC faces more than $30 billion in unfunded liabilities for employee pensions and retiree health care. Senate Republicans believe the UC should place a high priority on keeping its costs down in order to help ensure a UC education stays affordable for California’s students.

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)

Governor Reintroduces Unnecessary Water Tax.  Governor Newsom is giving the Brown Administration’s failed water tax proposal another try, even though it did not pass the Legislature each of the past two years.  The proposal would impose four new taxes (on water connections, fertilizer, milk, and confined animals) that would generate $140 million annually to build and operate water systems in disadvantaged communities and to cleanup nitrate contamination.  Numerous water agencies testified at the hearing in opposition to the proposal, with some pointing out that the new water tax would be regressive.  This means it would cost low-income families a higher percentage of their income.  The state will not know how many communities actually need financial assistance until 2020, but the lack of this critical information has not stopped Governor Newsom from proposing the new taxes. With a $21 billion budget surplus, the state already has the money to help these water systems without new taxes.  The subcommittee delayed voting on the proposal until a future hearing.

Subcommittee #3 (Health and Human Services)

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

$500 Million in Individual Mandate Penalty Revenue Might Not Fund Health Care. The subcommittee heard Governor Newsom’s proposal to impose a new income tax “penalty” on Californians who choose not to carry health insurance. New details of the proposal—released just minutes prior to the hearing—show that the Governor now intends to send the $500 million in annual projected revenues to the state’s General Fund rather than dedicate it for health care, as originally described in the Governor’s January proposal. While the Governor promises to spend an equivalent amount of revenue on health care premium subsidies in the annual budget, his new proposal fails to guarantee that for Californians in need of help. Senator Jeff Stone (R-Riverside County) expressed his disappointment that “the Governor doesn’t want to set aside these funds” but would allow them to go toward a “free-for-all account” to be “used for anything.”  Senator Stone further warned that changing the levels of premium support from year to year would make coverage costs more unpredictable, causing many people to drop health care coverage altogether.  The item was held open for discussion at a later hearing.

Subcommittee #4 (State Administration and General Government)

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

State Should Improve Process to Return Residents’ Property. The budget subcommittee discussed, but did not vote on, the state’s ever-burgeoning balance of unclaimed property, which now provides more than $9 billion in revenue to the state, resulting in billions of dollars in additional spending. The unclaimed property, belonging to hundreds of thousands of Californians, is often uncashed checks, wages, bank accounts, and other property.  In February 2019, the State Controller was able to return $23 million, a miniscule amount compared to the $9 billion sitting in the General Fund. The state needs to make it easier to reunite property with the rightful owners, where it can benefit communities and families struggling with the high cost of living in California.

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

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

Inmate Literacy Proposal Highlights Challenges for Changed Prison Population.  The subcommittee discussed, but did not vote on a proposal from the Department of Corrections and Rehabilitation to hire 35 teachers to train and oversee 700 inmate mentors in an effort to improve literacy within state prisons.  The program would offer a combination of sentence credits and monetary pay to incentivize mentor participation.  The proposal may offer a cost-effective approach to improving inmate educational outcomes, though the nonpartisan Legislative Analyst’s Office raised concerns about how well the program could work.  The challenges discussed illuminate the new reality of working with the current prison population.  Following measures like Realignment and Proposition 47, low-level offenders rarely serve state prisons terms. The remaining population of mostly serious and violent offenders is likely to be harder to rehabilitate, and programs that sound promising may yet again prove to be ineffective. 

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