MOORLACH UPDATE — Budget Trailer Bills — June 16, 2017

The Senate approved the 2017-18 State Budget yesterday afternoon and addressed 14 of the 15 budget trailer bills on the file (there are several other trailer bills still being negotiated for votes next week). My Floor speech on AB 97, the Budget Bill, can be seen at

Now that I’ve been up in Sacramento for more than two years, I’m sensing a pattern.

The Governor lets the legislators play in the sandbox with writing, presenting, and voting for their cute little bills. While that distraction is occurring, he waits calmly like a peregrine falcon, to swoop down in the month of June, when he can pounce with his legislative agenda, shrouded in budget trailer bills.

It’s a brilliant strategy. These bills are given the cover of the budget-mania and frenzy that occurs before June 15, the due date of the budget. With everyone scurrying around with their own legislative efforts, he slips in big agenda items and gets them approved. Better yet, they are effective immediately, on July 1st. And, he will sign these bills.

The problem is that this strategy has flaws. One, it surprises certain constituencies. One vivid example is SB 89 in 2011 (see MOORLACH UPDATE — R&T Code Sec. 97.70 — November 15, 2011 november 15, 2011 john moorlach). With one trailer bill, the state stole $73 million from the County of Orange and then some. The bill showed up on a Monday and was voted on the next day, without any time to respond with any voices of opposition. The sad part is that this is technically legal, but it is also highly questionable and iniquitous.

The second is that many of the trailer bills have nothing to do with the budget, but are focused on policy. Major policy changes are crammed through like a drive-by shooting. It’s unconscionable. But, the monopoly party can do it. Such is the joy of controlling the legislature and the Governor’s mansion.

The LA Times provides two examples in their non-dead-tree version below. The first piece deals with a massive change in the State Board of Equalization. I spoke against the bill, stating two Constitutional sections that were being violated and one Government Code Section that requires maneuvers like this to go through the Little Hoover Commission (see But, a budget trailer bill is the opportunity to pounce and make the changes, effective in two weeks. Unbelievable.

In speaking against another trailer bill, I noted that the State Board of Equalization has had a majority of Democrats for as long as I can remember. This should show everyone what happens to agencies run by Democrats for decades–they need reform!! So I congratulated my colleagues with a back-handed compliment, that as Democrats, they are reforming something they helped cause.

The second piece deals with Proposition 56. Although I opposed this tax increase, it has been mind-boggling to watch the Governor take the proceeds and apply them to budget items that were not the intent of this ballot measure’s supporters. But, the Governor can do it because he can do it. But, it’s wrong.

The Orange County Medical Association has been very disappointed with the Governor taking $50 million that was purposed to fund University of California medical school residencies. The annual budget already provides $50 million per year for this expenditure, as we need to keep medical students in California.
Instead of doubling this critical need, the Governor took the additional $50 million and applied it elsewhere.

This blatant repositioning was discussed in the Senate’s Budget and Fiscal Review three-member Subcommittee One, which oversees the Education component of the budget, and where I sit as the lone Republican. When this item came up, it was interesting to hear the rationalizations and justifications (see The bottom line? The Governor can steal it fair and square. To the amazement of the Legislative Analyst’s Office and me.

Those who have been under the Dome for many years have become amazed with the ever increasing number of trailer bills with each passing year. And they are about policy, not budgets. So, watch the skies in June, my friends, it’s the hunting season for peregrines. And odds are you will be the meal.

California Legislature votes to strip key powers from state tax board hit by scandal

Patrick McGreevy

The state Legislature on Thursday voted to strip the state’s scandal-plagued tax board of most of its duties and powers, sending the governor a bill that would transfer taxpayer appeals hearings to a new office of administrative law judges.

The state Board of Equalization has been hit by a series of scandals, including audits showing that it misallocated hundreds of millions of sales tax dollars to the wrong accounts and that elected board members opened field offices and transferred workers without authority to do so.

Sen. Holly Mitchell (D-Los Angeles) said the measure will make structural reforms to address "significant issues of mismanagement and misuse of budget resources and disregard of directives of this Legislature."

The measure, which also shifts oversight of sales and excise taxes to a new collection office, was sent by the Senate and Assembly to Gov. Jerry Brown, who has told lawmakers he supports the change.

Republicans including Sen. Jeff Stone of Murrieta said the action takes away an important process for small businesses that want to appeal tax judgments. Stone said the legislative maneuver used to pass the change was an "abuse" of a process not meant to make sweeping policy change.

Sen. John Moorlach (R-Costa Mesa) said the bill violates the state Constitution and policies restricting how the Legislature can make major structural changes to state departments. That legal issue could be grounds for a ballot measure to restore the board’s powers, said board member George Runner.

In the Assembly, Budget Committee Chairman Phil Ting (D-San Francisco) said having three panels of administrative law judges hearing appeals will greatly speed up the process, which he noted took 15 years for one case.

“No taxpayer should have to wait 15 years to get their day in court,” Ting said.

Republican Assemblyman Jay Obernolte of Big Bear Lake said having elected board members hear tax appeals allows voters to get help from someone independent from the state bureaucracy and hold officials accountable.

“This bill will eliminate that very important taxpayer protection,” Obernolte said.

California’s tobacco tax spending plan, a major sticking point in the state budget, easily clears Legislature

Melanie Mason

The squabble over how to spend around $1.3 billion in new tobacco tax revenues in California was one of the most prolonged standoffs of the budget season. But on Thursday, the compromise plan easily cleared the Legislature.

Under the spending plan, $465 million will go toward increased payments for doctors and dentists who see patients in the Medi-Cal program. Those healthcare providers had envisioned getting more money when they backed Proposition 56 last year, but Gov. Jerry Brown had resisted upping reimbursements at all for most of the budget season.

Democratic lawmakers and some Republicans sided with the medical groups, arguing that voters had backed the tax in order to expand access to Medi-Cal and that higher payments to doctors and dentists would encourage them to participate in the program.

But while Democrats appeared satisfied by the compromise — which also included $50 million to increase payments to family planning providers such as Planned Parenthood — most Republicans said more money should have gone to increase reimbursement rates.

"The will of the voters is being usurped by the governor," state Sen. John Moorlach (R-Costa Mesa) said.

In a subtle jab at Republicans, who largely did not back the $2-per-pack tax hike last fall, state Sen. Richard Pan (D-Sacramento) thanked those of his colleagues that "endorsed and campaigned" for the initiative. He called the higher payments in the spending plan "a substantial step forward."

Still, some Democrats were not fully enthusiastic with the final figure. Assemblyman Jim Wood (D-Healdsburg) said he was "disappointed" that more money was not going to physician and dentist payments but said "less than half a loaf is better than no loaf at all."

The spending plan passed the Senate on a 25-11 vote and the Assembly on a 65-8 vote.


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