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CDCAN Report #050-2010: Governor Signs Several Special Session Budget Bills Including Continuing 3% Regional Center Reductions Into 2010-2011 - 4 Other Bills Including Two Critical Transit Bills Set to Governor - Governor Vetoes 1 Bill

Tue, 2010-03-09 20:46 — chris

Governor Vetoes $2.2 Billion Special Session Budget Solutions Bill – But Signs Several Others Including Continuing Regional Center 3% Cuts

Advocates Worry About Fate of Two Transportation Funding Special Session Budget Bills Now On Governor’s Desk

SACRAMENTO, CALIF (CDCAN) [Updated 03/09/2010  05:50 PM (Pacific Time)] - In what is likely to be a forerunner in what is to come in the battle to close the projected nearly $20 billion budget deficit, Governor Arnold Schwarzenegger vetoed on Monday ABx8 2 [the “x8” stands for the 8th special or extraordinary session of the Legislature it has held since the start of the 2009-2010 Legislative session]  that legislative Democrats contend would have reduced State general fund spending in the proposed 2010-2011 State Budget by $2.2 billion.

The bill largely would have delayed spending on certain projects and programs, including delaying the implementation of the Conservatorship and Guardianship Reform Act of 2006 and implementing an anti-fraud initiative in the Department of Health Care Services focused on pharmacy, transportation, medical equipment and physician services that was projected to save $28.3 million in State general funds.  No other health and human service related programs were impacted in that or any other special session budget bill – though cuts to regional centers were made in a separate bill that the Governor did sign.The Governor in his veto message to the Legislature urged them to send him a bill that would make “actual spending reductions” saying that ABx8 2

“…does not actually implement spending reductions and make progress to close our budget gap,” and that “Delaying implementation of the spending reductions I proposed in January will require the Legislature to make even more difficult choices later this year.”

What the Action By the Legislature and Governor Means

With that veto, it means that over half ($2.2 billion) of the $4 billion in budget solutions the Legislature sent to the Governor to chip away at the nearly $20 billion budget deficit projected by June 30, 2011 is gone – though the Governor contended in his veto message that the savings were never there.  That means the projected budget hole remains at about $18 billion – and more if the Governor vetoes the other bills sent to him dealing with transportation finance that includes a gas tax swap. 

Governor Likely To Veto Another Budget Related Bill

The Governor is also likely to veto another bill, SBx8 29 by Senate President Pro Tem Darrell Steinberg (Democrat – Sacramento) dealing with exempting certain state agencies from any furloughs that the Legislature passed on Monday on a bi-partisan vote. 

Governor Signed Several Bills Including Continuing 3% Cuts To Regional Centers Amounting To Over $115 Million in Additional Reductions in 2010-2011

However the Governor did approve on Monday along with several other special session budget related bills, SBx8 4 that will continue the 3% reductions to regional centers amounting to over $115 million in the 2010-2011 State Budget year.  The 21 non-profit regional centers coordinate services under the Department of Developmental Services that are in turn provided by community-based organizations and individuals to over 240,000 children and adults with developmental disabilities. 

This reduction is in addition to cuts amounting to over $400 million (including lost federal matching funds) to regional centers passed as part of the 2009-2010 revised State Budget last July. 

Action on other proposals impacting regional centers – and developmental centers, will be heard in budget subcommittees in the coming weeks and months, including proposed closure of Lanterman Developmental Center in Pomona (see separate CDCAN Report for update budget subcommittee hearing schedule or go to the CDCAN website at www.cdcan.us )

Bill To Defer Certain Program Payments Signed Earlier – Impacts SSI/SSP Program But Shouldn’t Impact When People Receive Grant Checks

The Governor previously signed on March 1, ABx8 5 that gives state officials authority to defer (delay) payments on several programs in the current budget year and also during the 2010-2011 State budget year that begins July 1st.  One of those programs includes the SSI/SSP grant program (the federal Supplemental Security Income/State Supplemental Payment) that gives authority to state officials to delay payments if necessary, to the federal government.

That delay should not impact directly the date when people with disabilities, the blind and seniors, are scheduled to receive their SSI/SSP monthly grants unless the federal government refuses to front the money until the State sends the funding.  Fronting the money until the State sends the funding is a practice that the federal government has done in the past – most recently early last year when the State experienced a cash flow problem.  Still, advocates will be monitoring the situation closely. 

Two Transit Special Session Budget Bills On Governor’s Desk

Meanwhile 3 other bills – including two transit related measures that are seen by transportation advocates as crucial to local transit agencies facing enormous budget shortfalls (ABx8 6 and ABx8 9) were sent to the Governor on Monday.  The Governor has 12 days to either sign or veto those measures.  The fate of those two transit related bills will have major impact on people with disabilities, mental health needs, the blind, seniors and low income families who depend on public transportation or on local paratransit services – both of which are facing potential major cuts in Sacramento and other areas of the State. 

Next Steps

  • Both houses will soon begin budget subcommittee hearings (see separate CDCAN Report for latest schedule) that will focus on the Governor’s budget proposals for the 2010-2011 State Budget year.
  • Except for continuing the 3% cuts to regional centers into the 2010-2011 State Budget year, neither house took final action yet on any of the Governor’s special session budget proposals dealing with health and human services, including major proposed cuts in eligibility and services to In-Home Supportive Services, proposed elimination of all Medi-Cal funding for Adult Day Health Centers, and other proposed cuts.
  • As previously reported, the Legislature took no action – either in approving or rejecting the Governor’s proposals dealing with shifting and reducing funding for the California Children and Families Commission under Proposition 10 and funding for the Mental Health Services Act under Proposition 63. Those proposed reductions and fund shifts also requires approval from voters that the Governor hoped would be for the June primary statewide election, but could be placed on the November general election ballot if the Legislature approves it.
  • Final action is expected on those proposals sometime after the Governor release his revisions to his proposed 2010-2011 State Budget in mid-May. 

SPECIAL SESSION BUDGET BILLS SIGNED BY GOVERNOR

SBx8 4 – DEVELOPMENTAL SERVICES & FOSTER CARE

AUTHOR: Senate Budget & Fiscal Review Committee
CDCAN SUMMARY (as last amended 02/25/2010):

  • Foster Care Program:  Expands eligibility for federal financial participation (federal matching funds) in foster care program costs that could bring in an additional $6 million in new federal dollars in the 2009-2010 State budget year and another $69.5 million in new federal money in the 2010-2011 State Budget year.
  • Regional Center Community-Based Providers: Continues the  3% reduction in payments to most regional center providers that was set to expire on June 30, 2010, into the 2010-2011 State Budget year (July 1, 2010 through June 30, 2011), unless the regional center demonstrates that a non reduced payment is necessary to protect the health and safety of the individual for whom the services and supports are proposed to be purchased, and the Department of Developmental Services has granted prior written approval.
  • Continues the exemption from this reduction, into the 2010-2011 State Budget year for the following: Supported employment services with rates set by Section 4860 of the Welfare and Institutions Code; services with "usual and customary" rates established as authorized by Section 57210 of Title 17 of the California Code of Regulations and payments to offset reductions in Supplemental Security Income/State Supplementary Payment (SSI/SSP) benefits for consumers receiving supported and independent living services.
  • Regional Center Operations: Continues the 3% reduction to regional center operations that was set to expire on June 30, 2010, into the 2010-2011 State Budget year (July 1, 2010 through June 30, 2011).  The requirements that will continue to be suspended into the 2010-2011 State Budget year include:
    • The average service coordinator-to-consumer ratio for certain consumers currently established at 1 coordinator to 66 persons.
    • The overall average service coordinator-to-consumer ratio at a regional center for all consumers to have not moved from a developmental center to the community, currently established at 1 coordinator to 62 persons.
    • The requirement that regional centers shall either have in-house or contract from the following:
      1. criminal justice
      2. special education
      3. family support
      4. housing
      5. community integration, and
      6. quality assurance.
    • The regional centers shall, instead, maintain sufficient service coordinator caseload data to document compliance with the service coordinator-to-consumer ratio requirements in effect pursuant to this section.

LATEST ACTION 03/08/2010: Signed by the Governor

NEXT STEPS: The bills takes effect on the 91st day after adjournment of the 8th special (extraordinary) session of the Legislature. 

PRIORITY: VERY HIGH

CDCAN COMMENT:

  • This bill was not an urgency or emergency measure, which would take effect immediately upon approval of the Governor.  The 8th special session of the Legislature has not yet formally adjourned. 
  • The supported employment providers were exempted from the 3% reduction because they were subject to a permanent 10% rate reduction as part of the 2008-2009 State Budget passed in September 2008. 
  • The total reduction (including lost federal matching funds) from the 3% cut to regional center payments to providers and operations totals over $115 million in the 2010-2011 State budget year ($99.5 million of which $47.7 million is State general funds from reduction in payments to most regional center providers, and another $16.2 million of which $11.2 million is State general funds from the 3% cut to regional center operations into the 2010-2011 State Budget year. 
  • Two requirements that were suspended as of February 1, 2009 through June 30, 2010, will be reinstated, as scheduled, on July 1, 2010 dealing with regional center salary, and administrative expenditure reports. 
  • Caseload data reports will remain suspended into the 2010-2011 State Budget year – but regional centers will be required instead to “maintain sufficient service coordinator caseload data to document compliance with the service coordinator-to-consumer ratio requirements in effect” as required by this bill  

ABx8 5 – STATE CASH RESOURCES

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY:

This bill addresses the state’s cash crisis that is projected for March and April 2010, and also any potential cash crisis between July 1, 2010 and June 30, 2011, giving authority to the Governor’s Department of Finance, the State Treasurer and the State Controller to take certain specific steps, including deferring certain payments.

  • For projected cash shortage in March and April of 2010 authorizes specific delays of payments to State trial court operations, the California State University, the University of California and the California Community College systems.
  • Requires the State Controller, State Treasurer and Director of the Governor’s Department of Finance to review the actual cash situation prior to implementing the deferrals
  • Specifies that this bill does not affect the timing or amount of state payroll, delay debt service payments, or restrict payment of other legally and constitutionally required payments
  • Specifies that deferrals authorized in this bill are in addition to existing deferrals already authorized in State law.. 
  • Authorizes specified deferrals (delays) in payments for K-12 apportionments, Supplemental Security Income/State Supplementary Payments  (SSI/SSP), local government social services and transportation  payments, and trial court operations as follows: these specific deferrals or delays, if necessary,  are allowed only in July 2010 for no more than 60 days, and in October 2010 for no more than 90 days, and in March 2011for no more than 60 days.
  • Requires the State Controller, State Treasurer and Director of the Governor’s Department of Finance to review the actual cash situation prior to implementing these specific deferrals to determine if they are necessary, and gives them the authority to not implement the deferrals if they determine it is not necessary, and are required to give the Joint Legislative Budget Committee notice of such action within 10 days.  If no such action is taken (to not implement the payment deferrals or delays), the deferrals will be implemented as authorized in this bill.
  • If these deferrals are implemented, it requires the State Controller, State Treasurer and the Director of the Governor’s Department of Finance, after April 1,  to review the actual cash receipts and disbursements each month, or as necessary, to determine when all or a portion of the deferrals can be paid, and to make such payments as soon possible.  Requires notification to the Joint Legislative Budget Committee within 10 days of determining payments can be made.
  • Authorizes the State Controller, State Treasurer and Director of the Governor’s Department of Finance to move these deferrals forward or back one month from those dates specified in the bill, if all three determine it is necessary.  Such a change, however, can not be implemented without 30 day notification to the Joint Legislative Budget Committee.

LATEST ACTION 03/01/2010: Signed by the Governor.

PRIORITY: VERY HIGH

CDCAN COMMENT: The possible deferral of payments to the SSI/SSP program should not impact directly the individuals and couples with disabilities, the blind and low income seniors who receive these grants (as individuals or couples) unless the federal government refuses to front the funding (that enables the grants to be paid to the individuals and couples) until the State makes the payments to the federal government.  A similar situation occurred February and March last year.  Advocates should monitor this situation however with the three state officials and also the federal government (through their elected representatives) to make sure that the grants to individuals and couples are not delayed. 

ABx8 1 – DEPARTMENT OF PUBLIC HEALTH FUND SHIFT – OFFICE OF AIDS

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY:

Authorizes the Department of Public Health, within the Office of AIDS, to permanently shift $3.5 million in current State budget year federal funds from state support to local assistance.

LATEST ACTION 03/08/2010: Signed by the Governor.

ABx8 3 – FINES & FORFEITURES: FORENSIC LABORATORIES: ALCOHOL BEVERAGE CONTROL FUND – INMATE EDUCATION

AUTHOR: Assembly Budget Committee

LATEST ACTION 03/08/2010: Signed by the Governor.

ABx8 7 – ENVIRONMENTAL POLLUTION – PROGRAM FUNDING

AUTHOR: Assembly Budget Committee

LATEST ACTION 03/08/2010: Signed by the Governor.

ABx8 10 – TRIBAL GAMING: COMPACT ASSETS

AUTHOR: Assembly Budget Committee

LATEST ACTION 03/08/2010: Signed by the Governor.

ABx8 11 – TRANSPORTATION: GENERAL OBLIGATION BONDS – LETTERS OF “NO PREJUDICE”

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY:

Provides authority to the California Transportation Commission allowing them to approve “Letters of No Prejudice” for projects by local transportation agencies under Proposition 116, the “Clean Air and Transportation Improvement Bond Act of 1990” which have been delayed because has not been able to sell general obligation bonds to fund this.  This bill would allow local transportation entities to continue with their projects under Proposition 116 with local funds knowing that their action to continue would not “prejudice” them from receiving eventual reimbursement from the State when funds become available. 

AUTHOR: Assembly Budget Committee

LATEST ACTION 03/08/2010: Signed by the Governor.

NEXT STEPS: The bills takes effect on the 91st day after adjournment of the 8th special (extraordinary) session of the Legislature. 

CDCAN COMMENT: This bill was not an urgency or emergency measure, which would take effect immediately upon approval of the Governor.  The 8th special session of the Legislature has not yet formally adjourned.

This is one of three special session budget bills dealing with transportation.  Two others – ABx8 6 and ABx8 9 were sent to the Governor on March 8th and are considered crucial to local transit agencies that in turn will have enormous impact on public transportation and paratransit services for people with disabilities, mental health needs, seniors, and low income workers and families.

ABx8 12 – PORT AND MARITIME SECURITY: PROPOSITION 1B BOND PROJECT EXTENSION

AUTHOR: Assembly Budget Committee

LATEST ACTION 03/08/2010: Signed by the Governor.

SPECIAL SESSION BUDGET RELATED BILL VETOED BY GOVERNOR

ABx8 2 – CHANGES TO 2010-2011 STATE BUDGET

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY:

Would reduce State spending by $2.2 billion in the 2010-2011 State Budget year by making the following changes to the 2010-11 fiscal year, by making the following changes to the proposed 2010-2011 State Budget:

  • Omnibus Conservatorship and Guardianship Reform Act – would delay the implementation of the Conservatorship and Guardianship Reform Act of 2006 (resulting in a reduction of $17.4 million State General Funds.
  • Department of Health Care Services Anti-Fraud Initiative:  Projects  a $28.3 million savings in State general funds by implementing an anti-fraud initiative focused on areas of concern such as pharmacy, transportation, medical equipment and physician services in the Department of Health Care Services.
  • Department of Justice DNA Penalty Fee: would reduce $45.1 million in State general funds in the 2010-2011 State Budget year due to the increase in additional DNA penalty fees. DNA penalty fees allowed under ABx8 3 will generate revenue that will be deposited into the State's DNA Identification Fund and can be used for regional forensic labs, penalty assessment, including lease revenue debt service costs.
  • Department of Fish and Game: would impose a $5 million in unallocated reductions in State general funds to this department.
  • Department of Corrections and Rehabilitation: Savings of $182 million in State general funds to reflect the commutation of inmate sentences by the Governor and the deportation of inmates to their countries of origin.
  • Inmate Medical Services Program: Reduce $811 million in State general funds to the Receiver's Medical Services Program, to reflect spending reductions per-inmate, to a  level that is comparable to other correctional health care programs, such as New York.
  • Juvenile Offender Population Reform: Reduce $41.3 million in State general funds and $6.7 million Proposition 98 State general funds for funding of the Division of Juvenile Justice Facilities.
  • Non-Education Local Mandates: Savings of $228 million in State general funds to reflect the suspension and payment deferrals for certain non-education local mandates, including the  payment of pre-Proposition 1A mandate claims. Would exclude or defer mandates relating to:  law enforcement, election procedures, open meeting requirements, and tax collection. Would exclude the Local Recreational Background Checks mandate and the Crime Victims' Rights mandate from this savings for further review and analysis by the legislative budget subcommittees.
  • Information Technology: At least $140 million in State general funds will not be appropriated to reflect information technology and related savings achieved by state  agencies and the State Chief Information Officer, as provided for in the Governor's Reorganization Plan No.1 of 2009.
  • Governor's Executive Order S-01-10: A net total savings of $580 million in State general funds will be achieved through this Executive Order, which ordered a 5% salary savings through a workforce cap and attrition by July 1, 2010.  The savings are calculated as $450 million in State general funds from the implementation of the 5% reduction to departmental personnel  costs and $130 million in State general funds savings in operating expenses and equipment.
  • Prepayment of Postemployment Benefits: $98.1 million in State general fund savings from reducing funding for Health and Dental Benefits pre-funding and post-employment benefits for State employee annuitants.

LATEST ACTION 03/08/2010: VETOED by the Governor

PRIORITY: VERY HIGH

GOVERNOR’S VETO MESSAGE TO LEGISLATURE:

To the Members of the California State Assembly:

I am returning Assembly Bill X8 2 without my signature as it does not actually implement spending reductions and make progress to close our budget gap.

Delaying implementation of the spending reductions I proposed in January will require the Legislature to make even more difficult choices later this year.

As the Legislative Analyst has said, “Many of the major expenditure reductions in this budget will require significant lead time for departments to implement. Accordingly, the Legislature and the Governor will need to agree to a framework to solve much of the budget problem by the end of March.”

The Legislative Analyst goes on to say that “The Governor’s trigger cuts… are painful and in some cases draconian. Nevertheless, there is no way the Legislature can avoid making some similarly difficult decisions this year.”

In addition, this bill contains certain savings assumptions that are unrealistic.

When I proposed the deportation of undocumented felons last year, I said I would review each case individually and would not commute the sentence of any undocumented felon that had committed serious or violent crime. Based on this review, my January budget includes only $19 million in estimated savings from the commutation and deportation of a select number of undocumented felons, not the $182 million assumed in this legislation. As such, the savings level assumed by this bill will not be achieved.

The longer the Legislature delays action on real reductions, the more difficult the choices become. I encourage the Legislature to return to work in the Extraordinary Session and act on actual spending reductions that will address California’s fiscal emergency.

Sincerely,

Arnold Schwarzenegger

SPECIAL SESSION BUDGET RELATED BILLS SENT TO GOVERNOR ON MARCH 8TH:

The following special session budget related bills – two of which are crucial to local transit agencies facing enormous budget shortfalls – were sent to the Governor on Monday (March 8th). One other bill, dealing with state furloughs, was passed on Monday and is being prepared to be sent to the Governor.  The Governor’s position on the transportation related bills is uncertain – though his office did indicate he plans to veto the bill by Senate President Pro Tem Darrell Steinberg (Democrat – Sacramento) dealing with furloughs once it reaches his desk.

ABx8 8 - MOTOR VEHICLE FUEL TAX: DIESEL FUEL TAX

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY (as amended 03/03/2010):

Would raise the gasoline excise tax by up to 17.3 cents.

LATEST ACTION 03/082010:  Sent to Governor at 4:30 PM.

NEXT STEPS:  Governor has 12 days to sign or veto the bill. 

PRIORITY: VERY HIGH

CDCAN COMMENT: This is one of 3 transportation related special session budget bills (the other two, ABx8 11 which was signed by the Governor on March 8th, and the other, ABx8 9, the companion bill to ABx8 6, both of which are considered crucial to local transit agencies facing enormous budget deficits). Both houses passed this bill on March 4th.

ABx8 9 – TRANSPORTATION FINANCE – GAS TAX SWAP - EXPENDITURES

Would appropriate $400 million for transit operations now and at least $350 million for the 2011-2012 State budget year and ongoing.  Would also provide new funding for highways and roads beginning with over $400 million in the 2011-2012 State budget year.  Would also provide $1.1 billion in State general fund “relief” over the current and following State budget years.

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY (as amended 03/03/2010):

LATEST ACTION 03/082010:  Sent to Governor at 4:30 PM. 

NEXT STEPS:  Governor has 12 days to sign or veto the bill. 

PRIORITY: VERY HIGH

CDCAN COMMENT: This is one of 3 transportation related special session budget bills (the other two, ABx8 11 which was signed by the Governor on March 8th, and the other, ABx8 6, the companion bill to ABx8 9, both of which are considered crucial to local transit agencies facing enormous budget deficits). Both houses passed this bill on March 4th.

AB x8 14 – STATE CASH DEFERRALS (CLEAN-UP)

AUTHOR: Assembly Budget Committee

CDCAN SUMMARY (as last amended 03/03/2010):

Would require full apportionment payment for March 2010 to a community college that would have an imminent threat to the fiscal integrity and security of the college with a deferral of payment. Limits funding deferrals for school districts, county offices of education and charter schools. Requires the reporting of payment deferrals for the 2010-11 fiscal year. Requires deferrals from the Highway Users Tax Account to cities and counties during a specified time period to be made on a pro rata basis.

LATEST ACTION 03/082010:  Sent to Governor at 4:30 PM. 

NEXT STEPS:  Governor has 12 days to sign or veto the bill. 

CDCAN COMMENT: This is one of two bills dealing with State cash deferrals – the first, ABx8 5 was signed by the Governor.  This bill was passed by both houses on March 4th.

SBx8 29 – PUBLIC EMPLOYEES: FURLOUGH EXEMPTIONS

AUTHOR: Senate President Pro Tem Darrell Steinberg (Democrat - Sacramento)

CDCAN SUMMARY (as last amended 03/04/2010)

Would exempt state civil service employees from being furloughed if employed in positions funded at least 95%  by sources other than the State general fund.  Would prohibit state agencies, boards, and commissions from implementing, or assisting with implementation of, furloughs for such employees.  Would specifically exempt all employees of the Franchise Tax Board and Board of Equalization from being furloughed.

LATEST ACTION 03/08/2010: Passed Assembly by vote of 70 to 7.  State Senate concurs (agrees) to amendments made in Assembly.  Passed State Senate by vote of 27 to 7. 

NEXT STEPS:  To enrollment (process to prepare the bill to be sent to the Governor).

CDCAN COMMENT: Governor has indicated he will veto this bill when it arrives on his desk.  The bill would exclude about 80,000 state employees if 95% of their funding for their pay comes outside of the State’s general fund. Also exempts employees of the Franchise Tax Board and Board of Equalization from furloughs.  The bill is not an urgency measure.