Senate GOP Budget Update: Week of May 5 - May 9

Friday, May 9, 2014

Contact: Peter DeMarco, Director of Communications @ (916) 651-4029

Subcommittee #1 (Education)

Block (D-San Diego) Chair, Liu (D-La Canada Flintridge) & Wyland (R-Escondido)

Subcommittee supports agricultural education, spikes school facilities fund shifts, and studies options for school transportation.  The Senate budget subcommittee heard several issues this week relating to K-12 and community college education.  Highlights included:

  • Agricultural education affirmed.  The subcommittee voted for the second time to reject the governor’s proposal to eliminate the longstanding $4.1 million allocation that provides tens of thousands of students with access to high quality agricultural education, and continue funding for the program.  After it previously voted to reject the governor’s proposal, some onlookers were unclear as to whether that vote restored the program’s funding.  This second vote confirms the subcommittee’s intention to continue funding the program.

  • School facilities funding shift resisted.  The subcommittee heard but did not act on the governor’s proposal to redirect unspent school facilities funding.  He had proposed shifting funds currently earmarked for career technical education, high performance materials, overcrowding relief, and seismic safety, to new construction and modernization projects, and the LAO recommended a similar shift of charter school facilities funding.  A vote originally planned for this hearing was cancelled due to concerns about the elimination of these specialty funds.  Senate Republicans support career technical education and charter schools, which provide a valuable option to low-income, English-learners, and other students seeking programs that meet their needs, and have strong concerns about the proposal to use these funds for other purposes.

  • School transportation funding options considered.  The subcommittee heard but did not act on the Legislative Analyst’s recent report outlining several options for providing equitable home-to-school transportation funding across the state.  Senate Republicans have consistently endorsed a formula that would provide funding to all districts that need it.  Unfortunately, Senator Vidak’s SB 1166, which would have fully reimbursed schools for these costs, was killed in the Senate education policy committee, where Democrats defeated it by withholding their votes.

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

Beall (D-San Jose) Chair, Jackson (D-Santa Barbara) & Nielsen (R-Gerber)

Legislative Democrats Ensure Future Water Limitations, and Support New Regulations that Will Hurt California Business.  The subcommittee heard a variety of issues within the Natural Resources Agency, Department of Forestry and Fire Protection, Office of Environmental Health Hazard Assessment, Agriculture Labor Relations Board, California Coastal Commission, the Department of Water Resources, the Department of the California Highway Patrol, and California Department of Transportation among others; the most notable items include:

  • Legislative Democrats Reject Funding for Surface Storage Program. Proposition 84 includes funding for development of surface storage projects. The governor’s proposal requests $260,000 from Proposition 84 bond funds to continue the existing Surface Storage Program and would continue the coordination of the development of studies between state, federal, and local entities.  Given the current drought, it is irresponsible for Legislative Democrats to reject funding a program that would allow for future surface water storage capacity to help alleviate the devastating effects that reduced water supplies are having on agricultural communities and California citizens.  Senator Nielsen spoke to the importance of surface storage and was supportive of the governor’s proposal, but Democrats rejected the funding on a 2-1 vote.

  • Legislative Democrats Approve Taxpayer Funds to Force Private Employees to Unionize.  Despite a lawsuit filed against members of the California Agricultural Labor Relations Board (ALRB) by a farmworker claiming that the ALRB denied workers the right to a fair and free election, on another party line vote (2-1 vote, Nielsen ‘No’), Democrats supported the governor’s proposal to spend another $1.9 million General Fund to hire more state lawyers whose main purpose is to investigate and sue agricultural businesses.

  • New Proposition 65 Regulations Could Lead to More Frivolous Lawsuits. The Administration proposed $785,000 from the Safe Drinking Water and Toxic Enforcement Fund for the Office of Health Hazard Assessments to develop new Prop 65 regulations and a public website listing chemical exposure levels.  At a prior hearing, stakeholders expressed concern that recently circulated draft regulations would increase frivolous lawsuits and impose greater liability on California businesses. Historically, many Proposition 65 warnings have resulted in unnecessary litigation and businesses are justifiably concerned with this proposal.  Democrats approved the proposal with Senator Nielsen voting against it (2-1 vote) due to his ongoing concern that the Administration’s proposal did not include any language that would help prevent frivolous lawsuits against businesses.

  • CHP May Have Undermined State Procurement Law.  The subcommittee discussed, but took no action on, a governor’s proposal to provide $14 million from the Motor Vehicle Account (MVA) in 2014-15 as part of a multi-year plan to replace the CHP's aging air fleet.  Last year, the Legislature appropriated $17 million to begin the replacement cycle and an invitation for bid (IFB) went out in February 2014 to procure the first aircraft.  According to testimony from the Department of General Services (DGS) only two companies submitted bids.  The successful bidder was Australia-based GippsAero.  At least one American company, Cessna, was precluded from bidding due to detailed specifications in the IFB that seemed to favor GippsAero's product while excluding others. Senator Nielsen questioned whether CHP considered factors like the availability of parts and service when deciding to award the contract to an overseas company.  He also noted that the bidding was conducted under a state program called the Alternative Protest Process (APP), which limits the number of challenges to the selection process. If the IFB specifications were intentionally drafted to favor a pre-determined vendor and the APP was used to limit potential protests, this would represent a serious subversion of the state procurement process.  The concerns raised by Senator Nielsen were enough to sway the subcommittee to withhold action on the 2014‑15 proposal until these concerns can be resolved.  Senate Republicans believe that the state procurement process must be open and transparent to ensure that taxpayer funds are spent wisely.  The CHP must demonstrate these qualities before it can expect additional funding for air fleet replacement.

Subcommittee #3 (Health & Human Services)

Corbett (D-Hayward) Chair, Monning (D-Carmel) & Morrell (R- Rancho Cucamonga)

The subcommittee discussed a variety of issues related to health and human services. The most notable items include:

  • New State Budget Deficits Seem to be the Goal.  The Subcommittee heard numerous requests from counties, program advocates, and public employee unions for additional state General Fund spending in many health and human services programs. The total cost of programs on the “wish list” discussed at the hearing could exceed $750 million General Fund annually.  This includes funding for programs that are now a county responsibility and should no longer be funded by state General Fund dollars. Although the subcommittee did not act on these proposals yet, it appears that Democrats consider the governor’s proposed budget a “floor” from which they will increase spending going forward.  The potential merits of these programs notwithstanding, Senate Republicans believe that California must first address the debts and liabilities created by past reckless budget decisions and unfunded pension and retiree health costs. We should not repeat previous mistakes that would place an unfair debt burden on our children and grandchildren.

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

Roth (D-Riverside) Chair, Berryhill (R-Twain Harte), & Torres (D-Pomona)

The subcommittee heard proposals and issues related to the Department of Veterans Affairs, the Department of Housing and Community Development, the Department of Fair Employment and Housing, the Department of Insurance, and the California Military Department; the most notable items include:

  • Eliminating Private Sector Contracts Triples State Costs.  Senate Democrats on a party line vote (Senator Berryhill voted ‘no’) continue to grow state government by approving 45 new civil service employees and  $2.2 million General Fund for the Department of Veterans Affairs.  Private sector contracts are currently used for some food, legal and investigative services.  The new state positions will replace the contract employees, more than tripling the cost for the same services from $755,000 to $2.9 million.  The shift results from public employee union challenges during the contract renewal process, as allowed by a special state law that intentionally limits the state’s contracting ability.  Policies of this nature undermine the public’s confidence and ensure state government will be inefficient and overly costly.

  • Caring for Our Veterans.  On a bipartisan vote the subcommittee approved the Governor’s Budget request for $11.5 million and 132.3 positions to continue ramping up staffing and resident admissions to the Redding and Fresno Veterans’ Homes.  The subcommittee also approved a spring finance letter for $76.1 million in advance of the passage of Proposition 41, slated for the June 2014 ballot.  Proposition 41, if approved by voters, would restructure the Veteran’s Bond Act of 2008 by shifting $600 million in existing bond authority from the underutilized CalVet Home Loan Program that provides loans to Veterans purchasing farms, homes, or mobile home properties to instead fund affordable transitional and rental multifamily housing for veterans and their families.  In 2013, it was estimated that California had 15,179 homeless Veterans. Providing an appropriation in the budget, contingent on voter passage of Proposition 41, will allow the program to begin selling bonds in 2014‑15, providing the funds for construction, renovation, and/or acquisition of affordable multifamily housing for our Veterans.

  • Department of Fair Employment and Housing Not Getting the Job Done. On a bipartisan vote the subcommittee required the Department of Fair Employment and Housing (DFEH) to submit performance data to the Legislature to address criticisms raised by a December 2013 Senate Office of Oversight and Outcomes report.  That report suggests the DFEH is unable to fulfill its mission as a result of being underfunded and understaffed.    Senator Berryhill expressed interest in obtaining this data so that he and other members of the Legislature can ensure the DFEH is properly resourced and that discrimination cases are being investigated properly and moving through the process expeditiously.

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

Hancock (D-Berkeley) Chair, Anderson (R-San Diego), Mitchell (D-Los Angeles)

The subcommittee discussed issues related to public safety, the most notable included:

  • Board of State and Community Corrections' Efforts Fall Short.  The subcommittee voted unanimously to reduce the Board of State and Community Corrections' (BSCC) budget by $386,000 and to delete five research positions that were added last year.  Senator Anderson described the move as a shot across the BSCC's bow.  It highlights the fact that nearly two years after its creation, and despite explicit direction in the Budget Act of 2013, the Board has still not accomplished one of its most basic tasks – establishing a set of data priorities and a plan for carrying out its mission as a clearinghouse for criminal justice information.  This is especially important given the monumental policy change embodied in the 2011 Public Safety Realignment (Realignment), which shifted responsibility for tens of thousands of dangerous felons from the state to counties on the theory that counties would do a better job rehabilitating these offenders, thus reducing recidivism.  Senate Republicans believe that robust data collection and analysis are essential to developing evidence-based programs and determining which offender programs are effective in reducing recidivism and which are not.  However, multiple sources have indicated an alarming deficit of data by which to measure Realignment's effectiveness, including a January 2014 report by the Public Policy Institute of California (PPIC) and the Bureau of State Audits' September 2013 High Risk ReportTo address this problem, Senator Jim Nielsen (R-Gerber) introduced legislation earlier this year (SB 1097) to establish a system of data collection at the local level to help answer these questions.

  • $500 Million for Local Rehabilitative Facilities.  The subcommittee also heard a proposal by the governor to authorize $500 million in lease-revenue bonds (LRBs) for the construction of local jail facilities.  Senate Republicans have consistently argued that the governor and ruling party failed to provide adequate funding to support the local agencies now tasked with managing tens of thousands of dangerous felons under Realignment.  A May 7, 2014 PPIC report indicates that jails throughout the state are antiquated, inadequate, and not designed to provide medical, mental health, or other necessary services for offenders serving sentences of more than a year.  Now that realigned offenders, many of whom are serving more than a year, compose a large percentage of the jail population, the strained jail system is bursting at the seams.  Yet just last year, Democrats killed a common-sense bill, SB 144 by Senator Anthony Cannella (R-Ceres), that would have directed nearly a billion dollars of state Realignment savings to counties for jail construction, recidivism reduction, and other Realignment-related purposes.   The subcommittee voted unanimously to adopt a modified version that would authorize $500 million in LRBs for the construction of local jails and/or other local facilities "designed to provide rehabilitative services and housing to individuals convicted of crimes."  "Non-jail" facilities could include things like transitional housing, day reporting centers, mental health treatment facilities, and substance abuse treatment facilities.  This funding, in conjunction with that provided in 2007 by AB 900 ($1.2 billion) and 2012 by SB 1022 ($500 million) would bring total state funding for local jails to $2.2 billion.  Senate Republicans believe this is a good start, but it is well short of the $4.2 billion to $7 billion that PPIC says we will likely need to spend over the next two decades or so to replace aging jail facilities and keep up with projected population growth.