Budget Subcommittee Spotlight: April 20, 2017

Thursday, April 20, 2017

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)

School Budget Problems May Return Despite High Taxes: The subcommittee heard testimony on expected growth in schools’ costs and funding.  Schools that raised salaries as funding surged in recent years while saving nothing for coming pension cost increases will face budget problems.  Senator John Moorlach (R-Costa Mesa) urged state budget staff to provide multi-year funding projections that could help schools plan better for the long term.  He also raised concerns with the governor’s proposal to defer about $860 million in school funding from late June to early July 2017, citing the education community’s anxiety about creating a new wave of deferrals after finally eliminating over $10 billion in past deferrals.  In the absence of healthy local reserves, deferrals can push schools into having to borrow funds for the short term. Senator Moorlach has introduced SB 590 to ensure that onerous restrictions on school budget reserves are not triggered when state tax revenues slow.

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

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

Legislative Democrats Want to Use New Gas Tax for Parks: Senate Democrats on the subcommittee proposed spending $15 million from the brand new transportation tax hike on park restroom maintenance, land for wildlife corridors, and grants to increase park visits from some communities. Senate Bill 1 (Beall), which will increase gas taxes California motorists pay by $5.2 billion per year, hasn’t even been signed by the governor yet, but legislative Democrats are already talking about seizing $15 million of those tax dollars to pay for new park programs.  Constituents of Senator Jim Nielsen (R-Tehama) are outraged when they learned that, instead of fixing roads, this gas tax rip-off will go to parks projects that will not help drivers get to work or home any quicker or safer. This issue appeared in the hearing agenda, but at the last minute (and without explanation) legislative Democrats decided to postpone discussion of the issue until a later hearing. 

Subcommittee #3 (Health and Human Services)

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

Costs of Minimum Wage Bill Rise Higher: In 2016, Governor Brown signed Senate Bill 3 (Leno), a priority of public employee unions.  That bill will raise the minimum wage to $15 an hour by 2022, and it granted In-Home Supportive Services (IHSS) workers three paid sick leave days per year.  (These typically part-time workers have historically been exempt from various employment laws.)  This week, the Subcommittee considered a budget proposal which would provide nearly $5 million to update the IHSS payroll system for sick leave hours.  Senator Jeff Stone (R-Riverside County) asked if the governor factored in these costs when the bill was signed.  A representative of the governor stated that they were not and apologized that it was an “oversight.”  Unfortunately, California taxpayers and voters are often told a new program will cost one thing only to see those costs go up once the new laws or programs are underway.  Senator Stone cautioned that the governor should learn a lesson in moving legislation too quickly.  (The bill was introduced, approved by both houses of the Legislature, and signed by the governor within just five days.)  Senator Stone encouraged the governor’s staff to slow down and conduct more thorough cost analyses for future legislation.  The issue was held open for later action.

Subcommittee #4 (State Administration and General Government)

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

Tax Agency and Board Members on the Hot Seat: Recent independent audits found much to criticize at the troubled state Board of Equalization (BOE), which is governed by elected board members and is responsible for administering over 30 tax and fee programs, including collecting and allocating state and local sales and use tax for cities, counties and other districts. The subcommittee heard testimony from the BOE executives on the audits, which found serious issues within the budgetary and personnel functions, the financial data system, and board activities that may be contrary to state law, such as inappropriately using state staff for outreach purposes. The governor recently restricted the BOE’s authority on personnel and contract management and is seeking legislative changes that can address these critical problems.  Senate Republicans acknowledge the importance of the board’s mission to serve the public through fair and efficient tax administration and look forward to working with legislative Democrats and the governor on reform options that would guard against abuse and discrimination in carrying out California’s tax laws.

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

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

Plan for Prison Changes Lacks Accountability: The subcommittee heard (but did not vote on) several budget proposals that are part of the governor’s plan to implement Proposition 57 (2016), which gave many offenders chances for earlier parole and authorized more sentence credits that reduce prison terms.  The proposals request $16 million for increases in the juvenile ward and adult parolee populations and for additional parole staff and administration.  The requested funding would be offset by estimated savings of about $48 million due to a projected decrease in the adult inmate population.  With more convicted felons expected to return to California communities earlier, Senate Republicans believe the impact on public safety should be the primary concern.  Collecting appropriate data to enable the state to measure this impact will be key to evaluating the successes and failures of Proposition 57. Unfortunately, the governor’s plan lacks any significant data collection, and Senate Republicans are concerned that the plan appears to be more focused on pushing inmates out the door rather than ensuring good public safety outcomes.

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