IN THIS ISSUE: December 19, 2008
Issue #47-2008
Page 4: Gov. Schwarzenegger Launches “Bank on California”
Page 5: Honoring Excellence in Public Works – Call for James L. Martin Award Nominations
NLC and CH2M HILL Nominations Open for 2009 Awards for Municipal Excellence Program
Find a Bill, Legislators, Leg Committee, or Ask League Leg Staff
GOVERNOR ANNOUNCES HE WILL VETO $18.1 BILLION BUDGET PACKAGE
An hour after Democrats in the Senate and Assembly pushed through an $18.2 billion budget
package yesterday, Gov. Schwarzenegger announced that he would veto the package because it
included some, but not enough, of the economic stimulus measures he wants.
For more, see Page 2.
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2008 DECEMBER BUDGET BILLS: PRELIMINARY SUMMARY
These measures comprise the package of bills passed by the Legislature on December 18 in the
First Extraordinary Session and sent to the governor for signature. Few of the bills were available
in print at the time they were taken up for vote. They are now all available online. The following
summarizes key provides of these bills. For more, see Page 2.
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MAJORITY-VOTE BUDGET PACKAGE WAS THE
LATEST EFFORT TO CLOSE DEFICIT
The $18.1 billion budget package passed yesterday was a daring move by Democrats who were
clearly determined to find a way to circumvent the Republicans’ refusal to vote for revenue
increases. In fact, two separate proposals had also been proposed this week by Republicans and
Democrats; each had been rejected on a partisan basis. For more, see Page 4.
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‘Veto’ Continued from Page 1…
He did not reference the Republicans’ objections that the revenue measures in the package
required a 2/3 vote, rather than the simple majority vote used to pass the measures by the
Democrats.
The package of 12 majority vote-only bills aimed to cut state expenses and raise revenues to
close the state’s $40 billion, 18-month budget deficit. It achieves about $18.1 billion General
Fund savings, split roughly into $9.3 billion in new revenues and $8.7 billion in cuts. Most of the
bills were joined to AB 1x 2, the new property tax measure – meaning that if that measure was
vetoed, the others would not take effect.
Several of the bills included “economic stimulus” provisions dealing with hospital construction,
surplus property, CEQA, public-private partnerships and design-build rules relating to
transportation, local transit and bond acceleration. These measures passed with bipartisan
support – but evidently did not go as far as the governor wished. In particular, he appears to be
pressing for greater concessions in the areas of environmental compliance relating to
infrastructure projects, and relief from various labor protections.
What’s next? Both houses adjourned the First Extraordinary Session when they adjourned last
night, but the governor has said he will call a new extraordinary session so that they can continue
to work on a budget solution. It appears now that both houses may remain in recess until
January 5, when they will try again to pass a deficit reduction package in the new extraordinary
session.
League Review Continues
While the governor has said that he will veto the budget package, it seems very possible that the
package that passed yesterday could provide the basis for a new, revised proposal taken up for
vote in January. For that reason, League staff will continue our review of these measures. For a
preliminary review, please see “2008 December Budget Bills: Preliminary Summary”, p. 1.
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‘December Bills' Continued from Page 1…
AB 1x 2 (Evans) – State Tax Increases and Swaps. This measure is the heart of the proposed
Democratic revenue package, which attempts to increase state revenues while avoiding the
legislative 2/3rds vote requirement for new taxes. This measure would eliminate the state gas tax
and reduce the state’s portion of the sales tax on gas (total reduction $4.7 billion), while clarifying
that local sales tax levied on the sale of gas is not affected. The measure then imposes a
permanent ½ cent increase in state sales and use tax, a 2.5% increase in personal income tax,
and a 9.9% oil severance tax (total increase $4.6 billion). Because the state tax increase is
offset with an equivalent reduction, the Democrats maintain this is not a state tax increase. The
loss of revenue from the elimination of the state gas tax and the state portion of the sales tax on
gas would be offset by a new fee on gas imposed pursuant to SB 11 X1.
AB 1x 3 (Evans) – Budget Cuts. This measure would impose additional cuts and reductions to
the state 2008-09 budget, including various cuts to state programs and employee compensation.
Of specific importance to local governments, this measure includes a $156 million cut to transit;
eliminates the $34.7 million reimbursement to local governments for implementing the Williamson
Act; and reduces COPS and Juvenile Justice funding by $17.7 million for each program.
AB 1x 4 (Evans) – Education. Reduces state spending on education by $2.5 billion through
various means.
SB 1x 5 (Ducheny) – Health and Human Services. Makes a variety of cuts to social service
programs.
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AB 1x 6 (Evans) – Transportation Fund Shifts. Redirects $100 million in tribal gaming
revenues dedicated to the repayment of transportation loans to the General Fund. Transfers $85
million from the Motor Vehicle Account to the General Fund.
SB 1x 7(Ducheny) -- General Government (COPS and Booking Fee Program). This
measure makes a variety of funding adjustments to state funded programs for cash flow and
other purposes. Most significant to cities this measure would transfer the funding of various local
public safety programs from the General Fund to vehicle license fees (VLF). In brief, $360 million
dollars in current administrative costs charged by the Department of Motor Vehicles to the VLF,
would be replaced by a new $12 dollar registration fee. The VLF previously dedicated to DMV
administration, would now fund local public safety programs, including COPS and Booking Fees.
AB 1x 8 (Assembly Committee on Budget) – Corrections. This bill makes changes to the way
that inmates in both state prison and county jails can receive credits towards sentence reduction;
reduces parole for non-violent, non serious, non-sex offenders to no more than six months; and
adjusts the minimum values for property crimes to reflect inflation. Notably, this bill provides two-
for-one day credit for inmates on fire crew wait lists, whereas current law provides two-for-one
day credits for inmates actively serving on fire crew assignments.
SB 1x 9 (Ducheny) – Undoing the Triple Flip. This measure would undo the “triple flip”
mechanism that was put in place in 2004 to guarantee the repayment of $15 billion Economic
Recovery Bond approved by the state’s voters. The bill achieves this by defining the “revenue
exchange period” as expiring on April 1, 2009. The triple-flip mechanism works as follows: the
state lowered local (Bradley-Burns) sales tax by 1/4 cent, then increased the state sales tax by
the same amount, and dedicated the increased amount to repay the bonds. Local governments
are backfilled for their losses from school ERAF property tax dollars. Schools are backfilled by
the state's general fund. Once the bond is repaid, this mechanism is designed to unravel (the
local sales tax automatically returns to its previous level, and the property tax backfill goes away).
SB 1X 9 undoes these “flips” of revenues, but leaves in place the ¼ cent increase in the state
sales tax. Anti-tax advocates are expected to challenge the legality of this proposal as being a
tax increase requiring a 2/3rds vote of the Legislature.
AB 1x 10 – AB 900 Cleanup language. This bill provides cleanup language to AB 900 (Solorio,
2007) so that construction may begin on facilities under the authority of the Department of
Corrections and Rehabilitation (CDCR). AB 900 authorized CDCR to develop approximately
12,000 new facility beds in secure facilities. CDCR is also authorized to appropriate programming
space and to acquire land, design, construct, and renovate reentry program facilities, and to
construct and establish new buildings at facilities to provide medical, dental, and mental health
treatment or housing for 6,000 inmates.
SB 1x 11 (Ducheny) – New Fee On Gas. This measure imposes a 39-cent fee on the sale of
each gallon of gas, and a 31-cent fee on the sale of each gallon of diesel fuel, and distributes
these fees in a manner similar to the existing distribution of state gas tax, and funds derived from
the sales tax on gas (Prop 42). These new fees would be indexed every three years according to
the California CPI.
AB 1x 12 (Evans) – Tax Withholding on Individual Contractors. This bill would require
businesses and government entities to withhold three percent of payments for goods or services
made to independent contractors, for payments over $600 per calendar year, beginning in 2010.
Economic Stimulus Measures
SB 1x 3 (Ducheny) – Hospital Construction. This bill would allow the Office of Statewide
Health Planning and Development to exempt from the plan review process nonstructural
construction or alteration projects with estimated construction costs less than $500,000; and
projects with construction costs of at least $500,000, but less than $1 million if the designs are
independently peer reviewed by independent plan reviewers.
SB 1x 4 (Ducheny) – Surplus Property. This bill seeks to resolve a long-standing dispute over
whether or not the sale or transfer surplus property is subject to CEQA analysis. The bill provides
a statutory exemption from CEQA for disposition of state surplus lands if the project consists 4
exclusively of the sale or transfer of surplus state real property by a state agency. But it also
requires that the agency conduct a CEQA analysis of the land prior to determining that it is
excess property. It further clarifies that DGS request authorization from the Legislature to
dispose of that land after the state agency determination has been made.
AB 1x 5 (Evans) – Transportation (CEQA Exemption, Public-Private Partnerships, Design-
Build). This bill would, until January 1, 2011, exempt certain transportation projects from CEQA
if certain conditions are met, for example, Caltrans conducting outreach efforts in the project
vicinity, as well as Caltrans and contractors complying with standard construction practices. The
bill also authorizes expanded use of development lease agreements with public and private
partners for toll roads and other revenue-producing infrastructure projects. It further eliminates a
requirement that projects created by negotiated lease agreements for these types of projects be
approved by the Legislature, and instead requires that these reports be approved by a Public
Infrastructure Advisory Commission, created by the bill.
SB 1x 6 (Ducheny) – Local Transit Projects. This bill provides local governments with the
authority to generate additional and more stable revenue for transportation purposes in order to
address the fiscal emergency outlined by the Governor's proclamation. Specifically, this bill
authorizes a county to impose an additional ¼ cent local sales and use tax for transportation
purposes. If all counties successfully elected to increase their sales and use tax rate by ¼ cent, it
is estimated that this bill would generate approximately additional $1.5 billion additional local
revenues for transportation projects.
AB 1x 7 (Evans) – Infrastructure Bond Acceleration. This bill would implement the omnibus
infrastructure bond package that would act as an economic stimulus by appropriating
approximately $2.9 billion in additional infrastructure bond funds, city and county street and road
funds, and other funds from Props. 1B, 1C, and 84. The goal is to accelerate the construction of
projects that are ready to begin construction in the 2009 calendar year.
SB 1x 8 (Ducheny) and AB 1x 8 (Assembly Committee on Budget) - Foreclosure
Moratorium – No vote taken; not sent to the governor.
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‘Majority-Vote’ Continued from Page 1…
On Monday Republicans had come forward with a proposal estimated to save $22 billion over the
next 18 months. It consisted of $15.6 billion in cuts more than two-thirds of which affected
education, and $6 billion in revenue measures. The latter included no new revenues; rather, the
plan proposed to divert revenues from existing programs, including programs that voters had
approved for mentally ill ($3.9 billion from Prop. 63) and health care for children ($2.1 billion from
Prop. 10).
The Republican proposal was not well received by Gov. Schwarzenegger or the Democrats. Both
the Assembly and Senate budget committees held hearings on the proposals, questioning the
deep cuts to education and other priority areas, and the shift of funding away from programs
established by voter-backed initiatives.
The Assembly on Tuesday then held a floor session to take up votes on an alternative
Democratic package of bills, and then on the Republican package. As expected, both packages
failed on a partisan basis, with Democrats refusing to vote for the deep program cuts and revenue
shifts proposed by Republicans, and Republicans refusing to support the revenue increases
proposed by Democrats.
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Gov. Schwarzenegger Launches “Bank on California”
This week Gov. Arnold Schwarzenegger, working in partnership with former President Bill Clinton,
announced the launch of “Bank on California” – the nation’s first statewide initiative to help
Californians without checking or savings accounts open starter accounts at banks and credit
unions.
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“Bank on California” aims to help 100,000 Californians without bank accounts open starter
accounts over the next two years. It is a collaborative, voluntary initiative carried out with the help of
financial institutions, city mayors, federal bank regulatory agencies and community groups. So far,
more than 32 financial institutions, 75 community organizations and 450 coalition members have
joined “Bank on California.” San Francisco, Los Angeles, San Jose, Oakland and Fresno are the
first tier of California cities joining “Bank on California.”
“Through ‘Bank on California’ we will help working families save money by accessing basic financial
services others may take for granted – putting them in the financial mainstream,” said the Governor.
“This simple, innovative idea won’t cost taxpayers a dime, helps working families get ahead and grows
our economy at the same time.”
For more information please visit: www.bankoncalifornia.ca.gov.
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Honoring Excellence in Public Works – Call for James L. Martin Award
Nominations
The Public Works Officers Department is now accepting nominations for the 2009 James L.
Martin Award, an annual award to honor an outstanding member of the public works profession.
This award is presented to a city public works official who has contributed significantly toward
advancing the public works profession and provides an opportunity to display the nominee’s
exemplary career service, leadership, expertise and innovation in the public works field.
Nominations are due Friday, Feb. 6, 2009.
Eligibility information and nomination forms are available at:
http://www.cacities.org/resource_files/27519.Call for James L Martin Award Nominations -
2009.doc .For more information, please contact Dorothy Johnson at 916-658-8214 or
djohnson@cacities.org.
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NLC and CH2M HILL Nominations Open for 2009 Awards for Municipal Excellence
Program
The National League of Cities (NLC) and CH2M HILL are accepting nominations for their Awards
for Municipal Excellence program in 2009. This prestigious award has recognized outstanding
programs across the country that improves the quality of life in America’s communities.
Cities are welcome to submit nominations beginning in February 2009, and two winners will be
selected in each of the four population categories. The deadline for submissions is May 1, 2009.
The eight winning programs will receive awards of $1,000 or $2,000 and will be publicly
recognized for their achievements at a ceremony at NLC’s Congress of Cities Conference and
Exposition in San Antonio, Texas on Nov. 10-14, 2009.
For more information please visit the NLC website at
http://www.nlc.org/resources_for_cities/awards___recognition/7760.aspx to obtain a copy of the
2009 nomination packet.
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Visit (and bookmark!) the League’s Legislative Resources Web page
(www.cacities.org/legresources). You’ll find a roster and contact information for the League’s
legislative staff; the online Bill Search program, background materials on lobbying your
legislators, and more.
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