The 2018-19 Budget votes occurred on the Senate Floor exactly after the bills had been in print for 72 hours. I do not mean to be the poop in the proverbial punch bowl, but anticipating a bumper crop and not reducing unfunded liabilities or sharing the wealth with struggling cities and counties, is very troubling.
I served on the Budget Conference Committee and it not only wipes out your calendar and life for a couple of weeks, it seems as if the Committee was irrelevant (see MOORLACH UPDATE — Conference Committee Cram Down — June 8, 2018). Or, as I put it in my Floor speech, a “nothingburger” (see https://vimeo.com/275169442).
The disappointing point in this process for me, after leaving the Capitol last Saturday morning at 1:30 a.m., was that my flight a few hours later was cancelled. So, former California First Lady Gloria Deukmejian, I apologize for missing George’s Memorial Service.
A quick observation is that the Democrats still own it. A small rainy day fund will not hold back a recession and you can expect even more tax increases in the future, should you decide to continue living in California.
Here is a rundown of the various pieces covering yesterday’s legislative session.
The Associated Press covered it, which was picked up by numerous newspapers, including the OC Register. The first piece below is from, appropriately, The Press Democrat.
The Sacramento Bee covers the Capitol, of course, and its sister publication, The Modesto Bee, provides the second piece below.
The LA Times has a Sacramento correspondent, and it recently acquired the San Diego Union-Tribune, bringing us the third piece below.
Fox & Hounds weighs in on the process in the fourth piece below.
On to a different subject, every year I get to nominate a nonprofit organization to be recognized in Sacramento. Two years ago it was the Orange County Rescue Mission, where I was sworn in as Senator. Last year it was HomeAid (see MOORLACH UPDATE — First SB 2-Zone Victory in the OC — August 6, 2017).
This year the honor goes to Mercy House, which recently participated in a glorious facility in Newport Beach (see http://www.latimes.com/socal/daily-pilot/news/tn-dpt-me-cove-opening-20180326-story.html). Congratulations to Larry Haynes and staff! The Daily Pilot and the Orange County Breeze cover the recognition in pieces five and six. Next week we honor the small business of the year.
What? You still want tax and budget news? Well, you’re in luck, as The Bond Buyer satisfies this need in pieces seven and eight below. It addresses the gas tax repeal efforts and the budget, respectively. But, beware, the strategy of “marketing all of the proposed wonderful projects that will be stopped” is being used in full force.
For even more on the gas tax, check out my Bonus directly below. Or, I should say “we interrupt this broadcast with a brief commercial announcement” of a political nature. If you do RSVP to attend, let them know that it was in response to this UPDATE.
Fundraiser to Repeal the Gas Tax
June 21, 2018 – 6-7:30pm
SAN CLEMENTE OUTLETS
2nd Floor above Customer Service
San Clemente, CA 92672
Featuring Our “Gas Tax Repeal Heroes”
Hon. Pat Bates, State Senate Republican Leader
Hon. Bill Brough, State Assemblymember
Hon. Carl DeMaio – Gas Tax Repeal Chairman
The Car and Gas Tax Hikes will cost the typical family of four more than $770 more per year! Don’t sit on the sidelines – be part of the taxpayer revolt that will shake up Sacramento. If we all work together, anything is possible!! Please attend this important event – and make a contribution today to the Gas Tax Repeal campaign to help roll back these tax hikes! Personal or corporate contributions welcome in any amount.
RSVP and Secure Contribution Link: https://fs2.formsite.com/therightcompanies/form76/index.html
California lawmakers pass budget expanding help for poor
AP Photo/Rich Pedroncelli
JONATHAN J. COOPER
State lawmakers approved a $139 billion budget Thursday that uses California’s massive surplus to boost funding for homeless programs, welfare, child care and universities while also socking some money into savings.
The budget, which boosts spending 9 percent for the fiscal year beginning July 1, was approved with support mainly from Democrats.
“We’ve done something pretty great for people in California,” said Sen. Connie Leyva, a Democrat from Chino in the Inland Empire.
The spending plan was negotiated by Democrats Gov. Jerry Brown, Senate President Pro Tem Toni Atkins of San Diego, and Assembly Speaker Anthony Rendon of Lakewood.
California is riding a wave of economic growth that has produced the largest surplus since at least 2000. Even the most conservative forecast pegs the surplus at nearly $9 billion.
Lawmakers and Brown are using that windfall to fill the rainy day fund to the maximum allowed under the state constitution and boost other savings, producing $16 billion in total reserves. Nearly $14 billion of that will be in the rainy day fund, which can only be spent during a budget emergency caused by a natural disaster or decline in revenue.
Republicans praised the focus on savings but said the budget doesn’t do enough to pay down debt and irresponsibly increases long-term commitments that will hamstring the state in the future. Sen. John Moorlach, a Republican from Costa Mesa in Orange County, said the state isn’t doing enough to address growing obligations for pensions and retiree health care.
“In a year when one enjoys a bumper crop, one must set aside cash and pay down the credit card balance,” Moorlach said. “We’ve got to get ahead of this mess.”
The budget will boost assistance for people living in poverty, including more than 13,000 new slots for subsidized child care. People on CalWorks, the state welfare program, will see monthly grants rise by 10 percent in April, the start of a multiyear effort to lift the income of the poorest Californians to 50 percent of the federal poverty level. Advocates said the boost would ensure children aren’t living in deep poverty, which harms their brain development and hinders future performance in school and work.
It includes $500 million for emergency grants to help cities and counties reduce homelessness. The grants can be used on a range of programs, including housing vouchers and shelter construction to help address California’s rapidly rising costs and growing homeless population.
The budget also boosts university funding, forestalling tuition increases at both California State University and University of California, and creates an online community college to offer credentials to working adults unable to attend classes in person. Brown’s administration announced that the first program will offer a credential in medical billing and coding.
The deal left out an expansion of Medi-Cal health care coverage to young immigrants living in the country illegally and financial assistance for people who buy their own insurance in the individual market.
California’s nearly $200 billion total budget includes $138.6 billion in general fund spending, $57.1 billion in special funds that must be spent for specific purposes and $3.9 billion in money from bonds.
As part of the budget negotiations, Brown and lawmakers agreed to allow victims of a notorious California serial killer to get a renewed chance to seek compensation for their emotional trauma or financial losses. Normally, victims have just three years to file with the California Victim Compensation Board for crimes, but the legislation would open a new window for victims to file claims after 72-year-old former police officer Joseph DeAngelo was charged in the Golden State Killer case.
$200 billion California budget sent to Gov. Jerry Brown
BY ADAM ASHTON
California lawmakers approved and sent Gov. Jerry Brown a $200 billion state budget on Thursday, using revenue from a rosy economy to build $16 billion in reserves and steer hundreds of millions of dollars in new funding to universities and programs for the homeless.
The budget agreement passed both houses easily despite some Republican opposition. Democratic majorities highlighted a projected $9 billion surplus as a sign of the state’s recovery since the recession a decade ago.
“This is the best position we’ve been in in years,” said Senate President Pro Tem Toni Atkins, D-San Diego.
The budget hewed fairly closely to the plan Brown presented in May, boosting reserves by billions of dollars rather than committing money to proposals that would have expanded health care and offered tax breaks to undocumented residents.
The budget includes a $138.6 billion general fund. That’s about $70 billion more than the general fund in the state’s 2011-12 budget.
The new budget provides $78 billion for K-12 education, which is about $30 billion more than the state’s recession budget seven years ago.
The budget also frees up $500 million in grants that cities can use to address homelessness. It increases the value of welfare grants through the CalWORKS program, raising spending there by $360 million.
It boosts ongoing funding for the California State University system by $105 million, and provides of hundreds of millions of dollars more for it and the University of California in one-time allocations.
“We have historic investments in K-12 education, historic investments in our higher education. We now have a budget reserve that is larger than the general funds of 33 states,” said Assembly Speaker Anthony Rendon, D-Lakewood. “It’s an investment in our future with respect to early childhood education. It’s also really helps to protect a lot of what we really love about the state, with respect to the environment and our great public schools.”
Republicans warned that the budget did not make a serious dent in the state’s unfunded pension commitments, and that those debts could trigger a financial reckoning in the near future.
“We look like passengers on the Titanic,” Sen. John Moorlach, R-Costa Mesa, said.
But Democrats countered that they’ve carefully accumulated reserves to help the state navigate the next financial downturn.
The budget aims to “fill” the so-called Rainy Day Fund, which by law can hold a sum equivalent to 10 percent of general fund revenue. It sets aside another $2 billion for uncommitted reserves, and opens a new “safety net” reserve for social services with an initial $200 million.
“This is what we’re doing to prepare ourselves for the future because a recession is an inevitability,” said Assemblyman Ian Calderon, D-Whittier.
Some Republicans argued the money would be spent as a rebate to taxpayers. The savings, they asserted, help to lock in high spending that they consider to be irresponsible. “You want a blank check for the future? That’s what this is,” said Assemblyman Jim Patterson, R-Fresno.
California lawmakers meet deadline, sending nearly $200-billion state budget blueprint to Gov. Jerry Brown
By John Myers
Both houses of the California Legislature took final action Thursday on an overarching framework and a few key details of a new state budget, sending the package to Gov. Jerry Brown one day before their legal deadline to take action.
Twenty-five separate pieces of legislation comprise the budget for the state government’s fiscal year that begins next month. Fourteen of the bills were sent to Brown on Thursday, while action is expected early next week on the remaining details.
The $199.6-billion spending plan hews to Brown’s suggestion that a sizable portion of the state’s massive tax windfall be funneled into cash reserves as similar funds were last year, while increasing spending on K-12 education, healthcare and social services. It also provides more than $600 million for new efforts to help California’s homeless, a key component to the deal struck last week by the governor and Democratic legislative leaders.
“This is a solid budget,” Senate President Pro Tem Toni Atkins (D-San Diego) said. “And it builds upon what we’ve already done.”
Republicans provided only a few votes for the overall budget framework in the Assembly and Senate. Other GOP members insisted that the state continues to ignore long-term problems, including looming debt in the years to come.
“We’ve got to get ahead of this mess,” Sen. John Moorlach (R-Costa Mesa) said.
Democrats, however, insisted that the budget offers a reasonable approach to addressing the state’s needs. As is the case in most years, the lion’s share of spending is contained in three categories: education, health and human services, and corrections and rehabilitation.
“We continue our efforts to strengthen the state’s commitment to a human infrastructure,” said Sen. Holly Mitchell (D-Los Angeles), chairwoman of the Senate’s budget committee.
Under state constitutional mandates, K-12 schools and community colleges receive the single largest portion of general fund tax dollars. The new budget puts K-12 funding at $11,639 per student, up slightly from the current year. It includes a phase-in of an effort promoted by Brown to divvy up community college dollars with a new emphasis on student performance outcomes. It also provides $100 million in start-up funds for online community college courses and instruction.
Both the University of California and California State University systems receive funding increases under the budget agreement, though most of the education bills won’t be voted on until next week. The plan offers a combined $344-million one-time boost to the school systems, as well as new ongoing funding that’s expected to expand enrollment on UC and Cal State campuses while allowing university leaders to keep tuition at current levels.
Significant dollars will be spent, too, on health and human services. According to figures provided by the Assembly, almost 1 in 3 state dollars spent under the new budget will go to these programs. Much of it is earmarked for services provided by Medi-Cal, California’s version of Medicaid providing healthcare for its poorest citizens. Some care — including access to physicians, hospitals and child-screening services — is mandated by the federal government, while California adds additional benefits. The governor’s revised budget last month pegged Medi-Cal spending at about $35 billion in the coming fiscal year.
Democratic lawmakers pushed for more spending in one key social services program, persuading Brown to accept a small boost in monthly cash grants to the working poor enrolled in CalWORKS, the state’s welfare assistance program. Those monthly grants have remained unchanged for years, even as inflation pressures have reduced the purchasing power for low-income families. The budget adds $90 million to the grants beginning next spring, as well as a method to more fully fund annual cost-of-living increases in the future.
Subsidies for child care based on income and additional slots in preschool programs are also included in the budget framework. And both Brown and legislative leaders advocated for expanding access to California’s earned income tax credit to an additional 700,000 households. The tax credit, which provides cash to those with very low incomes, will be modified to account for increases in the state’s minimum wage, and it will be made available to workers between the ages of 18 and 24, and those over 65.
While spending increases under the plan, the budget reflects the continued insistence by Brown and lawmakers to stash funds for future economic downturns. Legislative staffers project that the budget passed Thursday will lead to a $15.9-billion cash reserve by next summer, larger than the general fund of 33 U.S. states.
The bulk of that money — $13.8 billion — will be in the “rainy-day fund” established by voters in 2014. Much of what’s left will be in the state’s regular cash reserves, while $200 million is being set aside in the event future budget deficits trigger cuts to CalWORKS.
Those dollars are the result of multibillion-dollar tax revenue windfalls, which have become surprisingly common in recent years. Lawmakers are taking steps in the new budget to change the process of how those dollars are set aside for future needs.
But the mechanics are complicated. The plan to be signed into law by Brown includes a new and unusual “budget deficit savings account,” which will serve as an initial way station for surplus cash. Most of the money will ultimately be sent to the voter-approved reserve fund, but the accounting maneuver could offer new options for other excess dollars.
Some Republicans asked whether the proposal is a move to avoid triggering a 1979 state spending limit — one rarely breached since its inception and the focus of months of debate about how to properly calculate that limit. The provisions of that constitutional limit could require tax refunds.
“It’s been rigged so that no refund can ever be given to the taxpayers,” Assemblywoman Melissa Melendez (R-Lake Elsinore) said. “And that’s disgraceful.”
Others wondered whether a different plan involving tax windfalls — injected late into budget talks by Brown — would actually subsidize the state’s beleaguered high-speed rail project.
“We’ve set in motion a chain of events that this bill compounds,” Sen. Steve Glazer (D-Orinda) said.
Lawmakers were under the gun to pass key portions of the state budget by Friday or lose a portion of their salary under a 2010 law enacted by voters. That law also lowered the threshold for legislative passage to a simple majority in each house. Those two changes have helped create on-time California budgets for six straight years.
By Joel FoxEditor and Co-Publisher of Fox and Hounds Daily
The state budget passed on time but does anyone long for the good old days of the dragged out budget debates? Remember the deal making to get some Republicans to join majority Democrats to reach the required two-thirds vote? OK, you don’t miss those days because no one enjoyed those drawn-out affairs with IOUs issued to state workers and public services delayed. Yet, by reducing the decision making from the Big 5 (governor, majority and minority leaders of both houses) to the one-party Big 3 (Governor, Assembly Speaker and Senate Pro-tem) something important has been lost in missing hearings and debates over budget priorities.
Listen to Republicans left out of the budget process. Senate Budget Committee Vice-chairman Jim Nielsen complained about cancelled public hearings. “This is a manipulation of the budget process whereby the public and their representatives are completely shut out.” “This year’s mismanagement of the committee hearings is done by design – to keep the public in the dark.”
Senator John Moorlach reacted to Gov. Brown’s announcement that he had reached an agreement on the budget with the speaker and the pro tem with a fair question: “Would somebody explain why I am even here and why am I voting tonight on this “behind closed doors” agreement?”
There are good things in the budget, but that is not the point. The $200 billion state budget seemed to be crafted by three individuals directing their staffs. This was not the way state government was taught in school—or are the workings of state government even taught in school anymore?
Sure, under the Big 5 system came wheeling and dealing, which was also not mentioned in school overviews of the legislative process. But at least under the Big 5 system sections of the budget, the more controversial parts, got an airing before the public and the press. And, we didn’t have to deal with the sneaky and often underhanded process of budget trailer bills that include items that should be part of budget debates.
The Big 5 era was not exactly the Good Old Days but the current budget gamesmanship is not a good-government replacement.
State Sen. Moorlach picks Mercy House as Nonprofit of the Year
State Sen. John Moorlach (R-Costa Mesa) named Mercy House — a Santa Ana-based homeless services provider — as his Nonprofit of the Year.
In a resolution last week, Moorlach praised the organization “for providing invaluable services to the people of the local area” and applauded its “long history of community support.”
Moorlach represents the 37th Senate District, which includes Costa Mesa, Huntington Beach, Laguna Beach and Newport Beach.
On June 6, Sen. John Moorlach, R-Costa Mesa, took great pleasure in issuing a resolution selecting Mercy House of Santa Ana as the 37th Senatorial District’s 2018 Nonprofit of the Year.
A California gas tax repeal would halt thousands of projects
Thousands of road projects funded by a recently enacted California gas tax are in jeopardy if voters repeal it.
A Republican-led effort to repeal the gas tax has qualified for November’s ballot and has signs of momentum.
A May 21 USC Dornsife/Los Angeles Times poll found that 51% of California voters favored repealing the law while 38% want to keep it. A poll by the Public Policy Institute of California in February had voters evenly divided with 47% favoring repeal and 48% opposing it.
Democratic state Sen. Josh Newman was recalled by voters in his primarily Orange County district June 5 after conservative talk-show host Carl DeMaio launched a recall effort after Newman voted for Senate Bill 1. DeMaio is also a leading figure in the effort to repeal the gas tax.
SB 1, the gas tax increase approved by the majority Democratic Legislature last year that is expected to raise $5.4 billion annually for 10 years, has fast-tracked projects, but that could stall if the repeal effort succeeds.
“The money collected since last November would still be available for projects since the repeal effort is not retroactive, but the 5,000 projects underway — or those slated to begin soon — would be halted in their tracks,” said Roger Dickinson, executive director of Transportation California, a transportation advocacy organization that supported the gas tax.
“If they could not be paid for with existing funding, they would be dead — and that would apply to the vast majority of projects,” Dickinson said.
“There are smaller ones that could be completed in a year, but many jurisdictions are planning on multi-year funding, and they would not be able to finish the projects they had programmed,” he said.
The tax raised $367 million last year for local streets and road repairs, which was a partial fiscal year for the program, and is expected to bring in $1.1 billion in fiscal 2018-19, said Mitch Weiss, chief deputy director for the California Transportation Commission, the state agency responsible for allocating funds for the state’s transportation construction projects.
The law increased the gasoline tax by 12 cents a gallon, the diesel excise tax by 20 cents a gallon and the diesel sales tax to 5.75% from 1.75%. It also raised annual vehicle registration fees by up to $175. And it created a $100 annual fee, starting in 2020 for zero-emission vehicles that don’t pay gas taxes.
The CTC in May approved $2.7 billion in funding for 61 projects in three programs funded by the gas tax.
Those allocations represent four years of funding for three of the 10 SB 1 programs: the Local Partnership Program, the Solutions for Congested Corridors Program and the Trade Corridor Enhancement Program, according to the state Department of Finance.
Weiss estimates that half of the 4,000 local streets and road projects are solely funded by SB 1 money and would have to be cut. It would then be up to local leaders to figure out how to fund the projects or call them off, he said.
“The bottom line is that projects that are only funded by the SB 1 gas tax are going to be stopped, because they would only receive a year’s worth of funding,” he said.
Santa Barbara and Sonoma counties received $132.8 million and $84.7 million, respectively, for projects that include adding carpool lanes on 15 miles of U.S. 101 through Santa Barbara and on 6.6 miles of the freeway through Marin and Sonoma counties. The San Mateo County Transportation Authority would receive $20 million toward the $540 million cost of a 22-mile carpool lane in both directions on Route 101 between San Francisco International Airport and the city. Other freeways throughout the state received funding for similar projects.
Many smaller cities received awards for everything from road reconstruction to bike lane projects. SB 1 funds also supplement a pre-existing California Department of Transportation program that distributes grants for transit projects.
Gov. Jerry Brown, who promised in his January 25 State of the State speech to do “anything in his power to defeat the repeal,” spent the last weeks of May attending groundbreakings of southern California projects funded by the gas tax.
Brown proposed $4.6 billion in spending from the gas tax in his 2018-19 budget proposal.
Planned projects to construct or rebuild highways, bridges, culverts, local streets and roads, and mass transit already programmed with SB 1 funding “would have to be rescheduled/reprioritized/reprogrammed by the state or local sponsors and moved out to future years to be funded over a longer period with the lower, existing, non-SB funding sources,” California Department of Finance spokesman H.D. Palmer said.
The state’s existing transportation programs are funded using federal and state gas tax revenues, and others receive funding through greenhouse gas cap and trade and diesel sales tax funding, Palmer said.
But new programs created through SB 1 including local partnerships, commuter rail and intercity rail, local planning grants, congested corridors and trade corridors would likely be halted, even on projects that have started, until funding alternatives are identified, Palmer said. Most of the programs received funding following a vigorous series of public meetings to develop program guidelines, he said.
If the gas tax is repealed, Palmer said the suite of projects selected to receive the $400 million estimated to be collected between passage and possible repeal may need to be reevaluated.
“If SB1 revenues are no longer collected, then there would be nothing against which to bond, and there are no plans at this point to pursue GO bonds to fund transportation infrastructure,” Palmer said.
Lodi Mayor Pro Tem JoAnne Mounce, former president of the League of California Cities and a Republican, fervently supports the gas tax.
“It took us almost 10 years to get legislators to come together to create SB1 – and there is nothing to replace it,” Mounce said. “In the meantime, the average citizen is spending $739 dollars annually on vehicle repairs due to the condition of our roads.”
The poor condition of the state’s roads and highways has resulted in highway deaths as well, Mounce said.
“As you know, with the rising cost of pensions, cities have less and less money to do anything else,” Mounce said. “Even in good times, there is not enough money for transportation, that is why the League has been tracking the condition of the state’s roads and bridges.
“We have been saying for the last 10 years they are in deplorable condition – and they are continuing to get worse,” she said.
State Sen. John Moorlach, R-Costa Mesa, supports repealing the gas tax.
Sen. John Moorlach, R-Costa Mesa, who supports the repeal, said there are alternatives and he has proposed them in the Legislature.
He advocates for reforms at the California Department of Transportation to better use the $13 billion the agency spends annually, rather than increase the budget to $18 billion.
“I believe there is money there. We just have to get an effective CEO to run Caltrans,” Moorlach said. “We have to have a completely different mindset in our budgeting. California just seems to spend everything every year – rather than setting money aside – and then wakes up and says, ‘Our roads are bad.’ ”
The state senator said he studied Caltrans in comparison to other state agencies and discovered it is among the least efficient in the country.
“We need to have a modification in the budget that if you build something you need to set aside money to repair or replace it,” Moorlach said. “California needs to be more disciplined in how it manages its finances in terms of addressing whatever it needs to maintain.”
He proposed a bill that would stair-step Caltrans up to outsourcing 25% of its work, but it failed – and the brunt of the opposition came from the Caltrans engineers’ union, not its leadership, he said.
SB1 does require Caltrans to produce efficiencies that result in $100 million in savings, but Moorlach said no metrics have been created to track that goal.
What he believes should happen is first reforms should be made so that the state agency spends the money it already has well – and then if more money is needed, voters should be asked to approve a tax increase. Of every $1 that Caltrans spends, he said, only 20 cents makes it to road improvements.
The state’s failure to keep up with housing demand has forced state residents to commute long distances, he said, which puts more pressure on roads.
A significant percentage of his constituents are struggling financially and the senator said he does not want to make it harder for them to make ends meet.
He pointed to Newman’s recall.
“If you look at who voted to recall him, that wasn’t a Republican vote, it’s an across-the-board vote,” Moorlach said. “People get upset when you start messing with their finances.”
The June election provided a favorable sign for gas tax supporters as a lockbox on gas taxes produced through Senate Bill 1 received 80.8% of the vote to pass. The measure amends the state constitution to ensure that the anticipated revenues from the gas tax are dedicated to transportation spending.
“Transportation funding has not necessarily gone to what it’s earmarked for,” Mounce said. “Several years ago, money for roads and bridges was reallocated for high-speed rail and to projects mandated by Assembly Bill 32’s greenhouse gas reductions.”
Funding for transportation projects has just been spread too thin, she said.
The last state gas increase was approved in 1994 and it wasn’t pegged to the consumer price index, Weiss said.
“I am confident that when people start looking at the list of projects happening in their areas, they will see the benefit of those projects to them and why it is important to keep SB 1,” Weiss said. “No one likes paying taxes, but the bottom line is we need a transportation system that can move people and goods.”
Brown’s final California budget approved without drama
California lawmakers broke their tradition of going down to the wire on budget passage by reaching an agreement on a $199.6 billion spending plan Thursday evening.
A rosy economy and an estimated $9 billion surplus by the most conservative estimates resulted in swift passage of the budget through both houses despite some opposition from the Republican minorities.
A constitutional change that allowed budget passage by simple majority, rather than the previous two-thirds supermajority, has enabled the state to pass a budget on time the past six years.
Typically that has meant a budget has passed near midnight on the July 15 deadline, but even that represented a vast improvement over prior years.
Gov. Jerry Brown, who has made efforts to prepare for volatility in state revenues a rallying cry during his nearly eight years in office, convinced lawmakers to set aside $15.9 billion in total reserves, the maximum allowed under the state constitution. All but $2 billion of that goes into the rainy-day fund, which can only be spent during a budget emergency caused by a natural disaster or shrinking revenues. The total also includes $200 million to create a new safety net reserve for CalWorks, the state’s public assistance program.
“This budget strikes an appropriate balance that strengthens our state’s fiscal stability with an unprecedented level of reserves, while prioritizing investments that will address the pressing needs of this state,” said Senator Holly J. Mitchell, D-Los Angeles.
Democrats wanted a significant chunk of the surplus to go for homeless shelters and to build housing for very poor people – and they got that.
The budget agreement included an additional $250 million in one-time emergency aid to local governments to reduce homelessness for $500 million total. It also provides $109 million in ongoing funds for homelessness and $300 million per year for three years beginning in 2019-20 for affordable-housing construction.
“This budget fully funds K-12 and provides $3.6 billion for the neediest schools to provide more resources for their students,” said Sen. Jim Beall, D-San Jose. “We have expanded childcare for the working poor, increased funding for mental health services, and made available a half-billion dollars for local governments to combat homelessness.”
K-14 school funding grew to $78.4 billion in Proposition 98 funding – a 66% increase since 2011-2012. Lawmakers also approved a $3.6 billion increase in the Local Control Funding Formula, which is more than $1 billion above the Jan. 10 proposed budget, and $300 million in one-time money for low-performing students. California State Universities received an additional $260 million while the University of California system got a $210 million increase to prevent tuition increases.
Lawmakers also approved spending $5 billion in Senate Bill 1 transportation funds – money being challenged by an initiative to repeal last year’s gas tax legislation. The budget also included $300 million to tackle deferred maintenance for levees, courthouses, and the two university systems.
“For the first time in years, the state and cities are making progress in maintaining and repairing our aging roads, tunnels and bridges, thanks to Senate Bill 1,” said Beall, the legislation’s author.
They also approved $700 million to rebuild the state Capitol annex. A proposal to expand Medi-Cal health care coverage for immigrants was scrapped.
The Senate Republican caucus decried the 9% increase in spending over last year’s budget.
“While we applaud the governor and the Senate President pro Tem for increasing the rainy day fund, we should also be wary of future economic downturns and pay down more of the massive pension and health debts,” said a joint statement by Senate Republican Leader Patricia Bates, R-Laguna Niguel; Sen. Jim Nielsen, R-Tehama, vice chair of the Senate Budget and Fiscal Review Committee and budget conferee; and Senator John Moorlach, R-Costa Mesa, member of the Senate Budget and Fiscal Review Committee.
In testimony following budget passage, Moorlach called the budget half-baked, saying it will create a fiscal reckoning for future lawmakers.
“When you have a bumper crop you need to set aside money and pay down the credit card balances,” Moorlach said.
Brown has until July 1 to sign the budget.
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