MOORLACH UPDATE — $214.8 Billion Budget Approved — June 13, 2019

Today the legislature approved the Budget Bill, AB 74, down party lines, 29-11. In anticipation of this budget vote, Techwire provides the details of items focused on information technology and is the first piece below.

In the second piece below, California Globe provides the pork in the proposed budget going to Democratic Districts. These items literally showed up last Sunday evening at the Budget Conference Committee meeting and the six Democrats provided the necessary votes on each item listed.

Associated Press sets up this morning’s budget vote in the third piece below.

The fourth and final piece below is hot-off-the-press from The Sacramento Bee and The Tribune of San Luis Obispo. Someone made a request for $1 million for Lions Park in Costa Mesa, but it was not me.

25th Anniversary Look Back

Derivatives Week announced the election results in their June 13, 1994 edition. Shortly after the Orange County debacle later that year, the Government Accounting Standards Board (GASB) issued Statement Number 31, requiring government investment pools to mark to market.

John Moorlach, a certified public accountant and financial planner from Costa Mesa, Calif., blamed his campaign failure to voter disinterest in the issue of derivatives.

“Talking about derivatives became a MEGO thing–my eyes glaze over,” Moorlach said. He said he tried to warn voters about the risks of having a highly leveraged portfolio, citing the example of Procter & Gamble’s recent $157 million loss, which was incurred closing out two highly leveraged swaps. Had Moorlach won, he would have unwound existing derivatives positions as quickly as possible and marked the portfolio to market, he said.

For the last Look Back, MOORLACH UPDATE — Clean Drinking Water Funding — June 11, 2019.

Innovation Office, DMV Do Well in Budget’s Final Days

The Legislature isn’t expected to approve the new state budget until later this week but so far, three areas of IT initiatives are getting a majority of the funding that leaders sought.


The state’s 2019-2020 budget should contain funding for several of Gov. Gavin Newsom’s key tech projects — but which projects and exactly how much money won’t be certain until the Legislature adopts it, by Saturday, as required by law.

The new fiscal year begins July 1 with, for state government, an emphasis on tech that’s undeniably more urgent than under Newsom’s predecessor, Jerry Brown. And Newsom, who wrote a book on tech, Citizenville: How to Take the Town Square Digital and Reinvent Government, and is considered by some to be the tech governor, is getting the funding and staffing he sought from the Legislature in at least three areas. Here’s what is known, following a budget adoption Sunday by the California Legislature’s Conference Committee on the Budget:

  • Newsom should largely get the Office of Digital Innovation (ODI) he proposed in January. The budget can still be amended, but committee members approved giving ODI 50 positions, 20 of which will be exempt. The budget in print also allocates more than $26.1 million to stand up ODI — although $10 million of that is provided in a revolving fund “to assist entities.” The fund could be tapped by ODI as needed for purchases, and replenished in turn by billing state agencies for its services. That’s a far cry from the $10 million and 10 people recommended last month by an Assembly subcommittee. Techwire should have more ODI specifics later this week.
  • The Department of Motor Vehicles’ (DMV) budget appears to have also fared well, according to committee documentation. Members approved $242.1 million in FY 2019-2020 and $199.8 million in FY 2020-2021 for Real ID compliance and DMV reform and improvement, both amounts sought by Newsom. The committee approved spending just under $17 million in FY 2019-2020 and around $8 million in FY 2020-2021 on IT improvements. It also approved spending around $14 million in FY 2019-2020 and around $10 million in FY 2020-2021 on expanding a customer relationship management (CRM) live-chat system.

But the budget calls on DMV to provide monthly reports on “any technology outages in field offices” and on its progress in hiring a permanent director. The budget requires monthly reports on any additional money needed to meet Real ID workload demands; the number of Real IDs processed; and a “projection of the number of Real IDs” DMV estimates will need to be processed by the Oct. 1, 2020, federal deadline — and through the end of calendar year 2020. In an interview with Techwire, state Sen. John Moorlach, R-Costa Mesa, a committee member, criticized DMV for having “failed to get in front of” the Real ID rollout, but suggested technology may show the way forward.

“Let’s take advantage of whatever IT technology opportunities we have,” Moorlach said. “Make it simple; make it fast. There’s no reason why we can’t do what the private sector’s doing. And we should be outsourcing more. How do we utilize the Auto Club more effectively, and how do we incentivize opportunities for others to be subcontracted?”

  • A new wildfire tech procurement tipped in February continues to have funding proposed in the budget’s May revision. The committee approved a one-time $15 million General Fund increase to “enable Cal Fire [the California Department of Forestry and Fire Protection] to procure innovative solutions to combat the state’s wildfire crisis.” The effort is guided by Newsom’s Jan. 8 executive order mandating “a new flexible approach to procurement called RFI2 or Request for Innovative Ideas.”

The funding targets “contracts for one or more Proof of Concept vendors,” and can be augmented by the state Department of Finance by up to $35 million. However, the budget in print indicates Cal Fire shall not enter into procurement contracts for the solutions with cumulative ongoing yearly costs of more than $10 million “until the necessary funding has been approved by the Legislature through the regular budget process.”

  • Sunday’s vote, by a 10-member bipartisan committee, melded Democratic and Republican thought, with certain areas referring to “Conference Compromise.” Following the committee’s vote, the budget went into print Monday morning. It must remain “in print” for three days, after which time — mid-morning on Thursday — the full Legislature will have until day’s end Saturday to approve the budget. Then, it will head to Newsom for a signature.

In a statement Sunday, Newsom said he appreciated the committee’s hard work in approving a budget that “is balanced, creates historic reserves and expands budget resiliency.”

“It also invests in emergency preparedness and response, provides sustainable funding for safe drinking water, and includes important funding augmentations to address the cost crisis in our state — tax cuts for small businesses and working families, expanded health care subsidies, historic funding for our schools and funding to serve more students at UC and CSU,” Newsom said. A representative of the governor’s office told Techwire via email that the agency had “nothing further to share.”

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Record Pork Barrel Projects in California’s Largest State Budget in Many Years

Part l: Pet projects by lawmakers to bring money home to the district

By Katy Grimes

Pork Barrel projects are a usual occurrence in the state budget, but California hasn’t see pork added on like this in years. To understand how government spending sprees occur every fiscal year, this is how spending takes place.

Pork barrel is the expression used to explain the appropriation of government spending for pet projects by lawmakers (some good, some not), secured solely to bring money to a lawmaker’s district.

California’s largest state budget ever — $214 billion — is larded with a record number of local pork-barrel projects injected by individual legislators, often in exchange for “horse trading”  votes on passage of certain pieces of legislation.

The Legislature has already passed the bulk of the budget, which is expected to be signed by Gov. Gavin Newsom. But it is filled with more pork than ever — those pet projects that lawmakers love — costing California taxpayers billions. The following lists show many projects in individual legislators’ districtsm approved by the Conference Committee on the Budget.

There is pork in every aspect of this budget: General Government Augmentations in 2019-20 Budget, Education, Resources and Transportation, Health and Human Services, and Public Safety.

This article will address the General Government Pork in 2019-20 Budget – nearly $150 million of extras:

TOTAL $149,270,000,000 million

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California lawmakers poised to approve $214.8 billion budget


California lawmakers are poised to approve a framework for a $214.8 billion operating budget on Thursday, the first step in a spending package that seeks to address the teacher shortage, expand health care to some adults living in the country illegally and bolster the state’s top firefighting agency following the most devastating wildfire season in state history.

State law requires lawmakers to pass the framework by midnight Saturday. If they don’t, they don’t get paid. Lawmakers reached an agreement on Sunday night and scheduled a vote for Thursday, days ahead of the deadline.

“I do think it’s a good budget,” said state Sen. Holly Mitchell, a Los Angeles Democrat and chairwoman of the Senate Budget and Fiscal Review Committee. “In every budget there is good and there is could be better.”

The massive bill, totaling more than 900 pages, directs tax dollars in the state’s most populous state. But lawmakers must still pass more than a dozen other bills to implement the budget. These “trailer bills” could contain important details, including implementing a monthly fee on cellphone bills to pay for upgrades to the 911 system.

The spending plan is the first under Democratic Gov. Gavin Newsom, who has positioned himself as resistor-in-chief to Republican President Donald Trump’s administration.

The Trump administration has sought to weaken former President Barack Obama’s health care law by eliminating a tax on people who refuse to purchase private health insurance. The budget under Newsom would bring that tax back, using part of the money to make California the first state in the country to help middle class families pay a portion of their monthly health insurance premiums.

While the Trump administration continues to crack down on illegal immigration, the budget lawmakers are set to vote on Thursday would make California the first state to give some adults living in the country illegally government-funded health insurance.

Health care for people living in the country illegally is part of Democrats’ plan to eventually get everyone in California to have health insurance. But the policy has angered Republican lawmakers, who argue it’s not fair to tax people in the country legally for not buying health insurance while making people living in the country illegally eligible for taxpayer-funded health insurance.

“I just don’t get the prioritization,” said Republican state Sen. John Moorlach of Costa Mesa, who noted he legally immigrated to the United States from the Netherlands in 1960.

The budget includes increases in public education, bringing the state spending to $12,018 for every student in K-12 public schools. It would give students studying to be teachers grants of up to $20,000 if they promise to teach subject matters impacted by the teacher shortage, including science, technology, math and engineering.

And following the states deadliest wildfire season in history, the spending plan includes $40.3 million for the California Department of Forestry and Fire Protection to buy 13 new fire engines and hire 131 people to operate them. It also includes $13.1 million to accept seven used C-130 air tankers from the federal government. The air tankers are free, but the state must pay to maintain and operate them.

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The Tribune

Dog parks, playgrounds and a theater: California budget loaded with earmarks


California lawmakers are set to send a nearly $215 billion budget to Gov. Gavin Newsom on Thursday, and Republicans in the minority are criticizing hundreds of millions dollars in earmarks for community projects around the state that include dog parks and a sculpture garden.

More than $40 million will go to projects in Senate leader Toni Atkins’s hometown, San Diego. The city stands to gain a wide range of projects, including $21 million for a downtown railroad crossing, $8.7 million for unnamed projects in Balboa Park, $7.3 million to demolish a building at a state historic park, $5 million to prevent suicides along a local bridge and $500,000 for a dog park.

“Years of responsible budgeting, wise decisions by the voters, and a strong economy powered by our small businesses have allowed us not only to significantly increase our budget reserves and strengthen vital state programs, but also to invest directly in our communities,” Atkins said in a statement. “Local governments and organizations have created projects that improve the quality of life in our region and the Legislature and the governor are proud to be able to partner with them.”

Assembly Speaker Anthony Rendon will get $700,000 in the budget for the city of Lakewood to invest in “community facilities, park, or recreational facilities construction, acquisition, or improvements.”

Rendon’s spokesman, Kevin Liao, said the funding was necessary because “these are all needed projects and help local communities who are thus gaining benefits from the taxes they pay.”

Republicans consider spending for such local projects largely unnecessary, and refer to the projects as “pork.” They’re highlighting a range from worth about $150 million to $425 million, depending on which items from the budget are included.

“I see a lot of money going to all kinds of district for pork,” said Sen. John Moorlach, R-Costa Mesa, whose district will benefit from a $1 million grant approved for a city park.

Regardless of the amount, the state party is more concerned about the process through which these proposals were included in the final budget.

“There needs to be more transparency in the process,” said a statement from Matt Fleming, spokesman for the California GOP. “This is not how effective governments are run.”

California projects that it will accumulate a nearly $22 billion surplus over the next year, and it anticipates building up its reserves to about $20 billion.

Assemblywoman Melissa Melendez, R-Lake Elsinore, mocked some of the earmarks in remarks on the Assembly floor, contending the money could be put to better uses.

“Maybe our homeless veterans can sleep in a sculpture garden, or a dog park,” she said.

Budgets have traditionally included plenty of money that Democrats and Republicans want to put back into their own districts for special projects. This year’s budget is no exception.

Lawmakers will vote to spend $3 milllon on a dog park in Rancho Cucamonga and $2.5 million on a new elevator at the California Science Center in Los Angeles. The budget also gives $2 million to the Latino Theater Company, $1.1 million to San Francisco for construction on two LGBTQ spaces and $950,000 to a pair of senior centers.

Sacramento is also the beneficiary of several earmarks, including $1.5 million to study the scope of sex-trafficking in the city, $750,000 for Pannell Center Summer Nights and $354,000 for a parking structure on R Street.


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