Ellen Corbett named to Senate Budget Committee

State Senate Majority Leader Ellen Corbett will serve out her final year in the Legislature with a seat on one of its most vital committees.

Ellen CorbettCorbett, D-San Leandro, was named to the Senate Budget and Fiscal Review Committee on Wednesday, and will chair its Health and Human Services subcommittee; the appointment made by the Senate Rules Committee takes effect immediately. The 16-member committee must analyze the state budget proposal that Gov. Jerry Brown offered this month.

“I look forward to working closely with all stakeholders to ensure that the state budget process continues to be transparent and constituent-oriented,” Corbett said in a news release.

She said she’s confident she and her colleagues can produce a final budget “that is both reasonable and ensures that the best interests of Californians are protected,” particularly in her subcommittee’s area. “After previous years of cuts to important health and human services programs, I look forward to approving a budget that minimizes the short- and long-term impacts to the most vulnerable segments of our population, including children, seniors and adults with developmental and other disabilities.”

Corbett also is campaigning this year to unseat fellow Democrat Rep. Eric Swalwell, D-Pleasanton, in the East Bay’s 15th Congressional District.


Court: Chiang shouldn’t have held lawmakers’ pay

State Controller John Chiang overstepped his legal authority in 2011 by deciding to dock lawmakers’ paychecks because he deemed the budget they had passed to be unbalanced, a state appellate court ruled Friday.

“(W)here the Legislature is the entity acting indisputably within its fundamental constitutional jurisdiction to enact what it designates as a balanced budget, the Controller does not have audit authority to determine whether the budget bill is in fact balanced,” Court of Appeal Associate Justice M. Kathleen Butz wrote; associate justices Cole Blease and William Murray Jr. concurred in this affirmation of a lower court’s 2012 decision.

Proposition 25 of 2010, approved by 55 percent of voters, lets the Legislature approve budges on a simple-majority vote, but it also says lawmakers must forfeit their pay and per diems for each day the state is past its constitutional deadline without a budget.

Chiang announced in June 2011 that his office’s review of the budget, which had been passed on the day it was due, “found components that were miscalculated, miscounted or unfinished. The numbers simply did not add up, and the Legislature will forfeit their pay until a balanced budget is sent to the governor.” He ended up withholding about $583,000 from the lawmakers.

Assembly Speaker John Perez, D-Los Angeles, and state Senate President Pro Tem Darrell Steinberg, D-Sacramento, sued on principle, without seeking recovery of that back pay.


How shutdown hurts California programs & budget

California won’t take too much of a hit in the short term, but stands to lose a lot if the federal government shutdown lasts more than a brief time, according to the state Department of Finance.

Deputy Director H.D. Palmer said federal funds for unemployment insurance benefits, MediCal, and supplemental security income/state supplementary payment grants for the elderly, blind or disabled will continue uninterrupted.

But while there’s enough money to keep the Supplemental Nutrition Assistance Program – formerly called food stamps – afloat through October for the 1.9 million California households that rely on it, that funding will dry up in November. It’s the same scenario for school nutrition programs that serve 4.5 million meals per day mostly to low-income students. And money for the Women, Infants and Children nutrition program will last only through late November. (I’d link to the SNAP and WIC programs, but the shutdown already has affected their web pages.)

“The longer this goes on, the greater uncertainty there will be for funding some of these programs,” Palmer said Tuesday.

Meanwhile, California – home to more federal employees than Washington, D.C., – will see a lot of government workers not drawing paychecks, and thus unable to spend their money in their communities or pay their bills. Communities near national parks such as Yosemite will suffer even more while those parks are shuttered, cutting off the tourist flow.

But the worst of it come if Congress refuses to raise the nation’s debt ceiling by Oct. 17 and the nation defaults on its debt, Palmer said. The resulting financial market instability could decimate the capital gains and stock options on which California depends for a huge chunk of its tax revenue, he said, blowing a big, red hole in a state budget that only recently was brought back into the black.


Fitch upgrades California bonds from ‘A-‘ to ‘A’

Fitch Ratings today announced it has upgraded the rating on $72 billion in California general-obligation bonds from “A-” to “A” and upgraded the rating outlook from “stable” to “positive” – another sign of Wall Street’s resurgent confidence in the Golden State.

Fitch’s move, the first upgrade the state has seen in three years, follows similar action from Standard & Poor’s in January.

Gov. Jerry Brown tweeted Tuesday afternoon that it’s “a further move toward greater fiscal stability;” spokesman Evan Westrup said it’s a sign that Brown’s approach is working, and underscores the need for continued budgetary discipline.

“The upgrade is based on institutionalized changes to fiscal management in recent years, which combined with the ongoing economic and revenue recovery have enabled the state to materially improve its overall fiscal standing,” according to Fitch’s statement. “Notable progress includes timely, more structurally sound budgets, spending restraint, and sizable reductions in budgetary debt.”

Fitch said California’s economy is “wealthy and unmatched among U.S. states in its size and diversity. After severe, widespread recessionary conditions, growth has resumed, including in California’s housing market.” Meanwhile, “tax-supported debt is moderate, although it has grown in the last decade for infrastructure needs and budgetary borrowing. Pension funded ratios have declined and contributions to the teacher system remain inadequate, but the state has instituted some benefit reforms.”

It ain’t all roses. Fitch reports California’s finances “are subject to periodic, severe budget and cash flow stress due to economic cyclicality, revenue volatility tied to personal income taxes, carried over structural imbalances, a lack of reserves and institutional inflexibility.” But the state “expanded its ability to manage cash flow weakness during the last downturn, and other progress made to date can be expected to make the effects of future downturns more manageable,” the rating agency found.

“Deep recurring spending cuts in recent adopted budgets and a restrained approach to restoring past cuts have significantly lowered the state’s structural imbalance,” the statement says. “Nevertheless, the state carries a heavy burden of budgetary borrowing from the last two fiscal crises and its historical difficulty achieving and sustaining budgetary solutions poses an ongoing risk.”

Fitch also cautioned that voter initiatives “have reduced the state’s discretion to effectively manage budgetary challenges over time. However, more recent initiatives authorizing a simple legislative majority to approve spending and temporarily raising tax revenues have been instrumental to current fiscal progress.”

“Although California’s fiscal situation has improved significantly, Fitch views the state as being a long way from a full recovery from the effects of two fiscal crises over a little more than a decade,” the rating agency found. “Budgetary borrowing in the form of deferrals, internal loans and deficit bonds will remain a drag on current resources for several years even under optimistic scenarios. Despite the institutional reforms of recent years, unmet needs to address unemployment borrowing, underfunding of teacher pensions, and prisons represent material risks.”


3 from Bay Area on budget conference committee

The Bay Area is well-represented on the joint legislative committee tasked with hammering out a state budget deal.

The Joint Conference Committee on the Budget has four assemblymembers and four state senators who’ll reconcile differences over the budget between the two houses of the Legislature.

State Senate President Pro Tem Darrell Steinberg has named state Sen. Mark Leno, D-San Francisco, as a co-chair of the committee, and the other senate appointees are Loni Hancock, D-Berkeley; Kevin De Leon, D-Los Angeles; and Bill Emmerson, R-Redlands.

On the Assembly side, Speaker John Perez named Bob Blumenfield, D-San Fernando Valley, who will serve as co-chair; Nancy Skinner, D-Berkeley; Jeff Gorell, R-Camarillo, and Holly Mitchell, D-Culver City.

“For the first time in years, we are headed into budget negotiations without the dire need to cut billions from the budget, but that doesn’t mean it’s time to celebrate,” Pérez said in a news release. “It is time to assure our citizens that we are putting the state on a path to avoid future devastating cuts to state-provided services and education. I have confidence that the Conference Committee will craft the best budget possible for the people of California.”


Reactions to Jerry Brown’s May budget revision

From Assembly Speaker John Perez, D-Los Angeles:

“The Governor’s May Budget Revision is another key milestone in our effort to pass a balanced on-time budget by June 15th. We appreciate the Governor’s commitment to maintaining the fiscal stability that has come from an improving economy, legislative Democrats making tough but necessary budget cuts, voters approving the majority-vote budget and voters standing with Democrats in supporting temporary tax revenues. We will review the Governor’s proposals and revenue projections, along with the LAO’s revenue projections, in depth, and his revised budget will be thoroughly discussed throughout the Budget committee and subcommittee process. Assemblymembers will review the Governor’s proposal through the prism of principles outlined in our Blueprint for a Responsible Budget: continuing fiscal responsibility, strengthening the middle class, and delivering effective, efficient services for Californians. On the whole, the Governor’s framework and the Assembly’s Blueprint seem to track well, and we’ll spend the next month reconciling our priorities.”

From Assembly Republican Leader Connie Conway, R-Visalia:

“Governor Brown today put forward a revised state spending plan that I believe charts a realistic path forward in meeting the budget priorities of hard-working taxpayers. Republicans share the Governor’s commitment to paying down state debt and holding the line on new spending. It is our hope that Legislative Democrats will follow the Governor’s lead in making fiscal discipline a core budget principle. We must resist the temptation to blow through the surplus using one-time money for ongoing programs and reverse the progress we’ve made in closing the deficit.”

From state Senate President Pro Tem Darrell Steinberg, D-Sacramento:

“Overall, this May Revision is a refreshing change. For the first time in four years, we no longer have to stare at enormous deficits and make agonizing decisions on which cuts will do the least harm to our children, to the poor, and to middle class families.

“That’s the politically correct thing to say, and it happens to be true.

“I agree we must aggressively pay down our state’s debt and set aside money for a reserve, but there’s a disappointing aspect to this proposal. It’s important that we also begin making up for some of the damage done to tens of thousands of Californians. Unless the Legislative Analyst has a different conclusion, the Governor proposes few if any resources to restore cuts made over the past few years to the courts, and to health and human services.

“The Governor’s Local Control Funding Formula is the right policy direction, but our serious concern about how it’s accomplished remains. The concentration grants treat thousands of disadvantaged students unequally. It also fails to expand the proven success of career pathway programs which can reduce dropout rates and improve our kids’ readiness for the workforce by combining rigorous curriculum that’s also relevant to students’ career goals.

“The budget debate begins in earnest. I look forward to a deeper analysis of revenue projections in the coming weeks while we continue to work with the Governor on the best budget for California’s economic recovery and its people.”

From state Senate Republican Leader Bob Huff, R-Brea:

“The Governor has revenue estimates that are lower than anyone expected, largely due to the increased payroll tax suppressing the economy. Higher tax rates and continuing high unemployment mean less money in people’s pockets and less money to propel the economy.

“We have common ground with the Governor in a belief that we cannot return to a culture of overspending that drives new budget crises. Governor Brown referred to this as a ‘Call for Prudence,’ we would call it ‘Common Sense.’ It seems that the Governor’s biggest budget challenge will be in restraining legislative Democrats and their growing wish list of new spending.

“Senate Republicans continue to believe that the State must meet the promises of the voter approved Proposition 30 tax increase measure by increasing funding for K-14 and higher education. We also believe that the Governor should support our efforts to allow Californians to vote on the bi-partisan rainy day reserve fund that had been previously scheduled for the 2012 ballot. Implementing a voter approved rainy day reserve requirement is the best way to protect against future budget crises and ensure stability.

“The Legislature should spend less time on a growing list of additional tax proposals such as soda taxes, oil severance taxes, tobacco taxes and several property tax measures that undermine historic Proposition 13 protections and instead focus on the growing public safety crises caused by the passage of AB 109, the Governor’s Public Safety Realignment scheme that has shifted 65,000 criminals from state prison to our local communities and neighborhoods.”

From California Chief Justice Tani Cantil-Sakauye:

“I’m disappointed that the Governor’s revised budget proposals provide no more fiscal relief to the courts. Given the state’s current fiscal condition, I had hoped for more effort to help stop the downward spiral of the judicial branch budget. Courts across the state are already closing courthouses, courtrooms, and reducing the hours they serve the public. Without reinvestment in the courts, these terrible impacts will only expand, and the poor and middle class residents who rely on the courts to resolve issues that affect their lives and livelihoods will be adversely affected, as well those businesses still digging out from the effects of the great recession. We need adequate, ongoing funding for the courts that will permit us to reverse the damage caused by five years of budget cuts. The reforms I’ve put in place have helped save money and created more efficiencies. We needed critical support a year ago from the other two branches and now the need for justice is urgent. I am heartened by Speaker Perez’s comments last week about the need to begin reinvesting in the courts. I am optimistic that the Legislature and the Governor can work toward reversing some of the adverse impacts on access to justice before a budget bill is passed and signed.”

There’s a whole lot more, after the jump…
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