July 28, 2003
| TO: | Cla Members/ Systems/ Network Contacts |
| FROM: | Mike Dillon, Lobbyist Christina Dillon, Lobbyist |
| RE: | News From The Capitol |
I. BUDGET LIKELY ON WAY TO GOVERNOR - ACTION REQUESTED
Last night, the Senate passed the State Budget and approximately 20 bills related to the Budget, known as "trailer bills." The new 650-page Budget bill is AB 1765 and it is tied to AB 1766, which shifts the ½ cent sales tax from local government to the State to guarantee repayment of the bonds that will be used to finance $10.7 billion of the deficit over the next 5 years. As mentioned previously, the ½ cent local sales tax will be replaced by shifting a like amount of property tax from schools to cities and counties, with the State backfilling the lost property tax to schools with state funds achieved through additional cuts in the Budget. Some of the other budget-related "trailer bills" affecting local government eliminate the $38 million appropriation for local government booking fees, defer funding for most local government mandates, etc. AB 1755 requires a one-time transfer to ERAF of $250 million of redevelopment agency funds while allowing local entities to make these payments on behalf of redevelopment agencies if they choose. AB 1768 eliminates the so-called "VLF backfill." As a result, cities and counties will experience VLF revenue reductions, totaling about $825 million, assuming the rate remains at the current level for the first three months of 2003-04. While we have not seen the details, we are informed that this is being interpreted as a "loan" to the State, with local government being repaid the backfill amount in 2006. Additionally, local government can "borrow" against the amount of the loan in anticipation of its repayment.
As we reported on Friday, Senate President pro Tem John Burton and Senate Republican Leader Jim Brulte had been working hard on a deal that would involve no new taxes, as the Republicans had demanded, and the protection of aged, blind, elderly and at-risk groups, as demanded by the Democratic leadership. Last Friday afternoon, the deal came together and Senators Burton and Brulte announced at a press conference that an agreement had been reached. While we have been informed that a major piece almost blew up over the weekend as details were worked out, once Sunday evening rolled around, there was little fanfare. The Senate convened at 6:00 p.m. last night and after a brief caucus, Senator Burton opened the Session with an explanation of AB 1765 and noted that the Budget had "something in here for almost everyone to hate," adding, "I know all of my colleagues will have to swallow hard to vote for it." Most significantly, he noted, "People expect the Budget to be passed and bills to be paid - if allowed to drag on, childcare providers will not be paid and community colleges will not be able to operate." Subsequently, Senator Brulte rose to state that he would vote for the Budget bill and added, "We were able to kill the Governor's tax increases - - we couldn't kill the car tax - he tripled it, but we are going to court on that issue." With respect to the notion that if the Democrats were to drag out the budget issues, Republicans would eventually cave in on new taxes, Senator Brulte emphatically stated, "We were never going to vote for tax increases, ever." In the end, all of the Budget and all of the major "trailer bills" passed with the bare minimum 27 votes required for passage, with Republicans just putting up the requisite number of votes required for passage with all other Republicans voting "no." About 8:45 p.m., Senator Burton announced that the Senate would be in recess until Monday, August 18th. The Assembly is expected to take up the Budget and "trailer bills" later today or tomorrow. With the Senate having recessed, the Assembly has little choice but to take the same action as the Senate. While they could reject the Budget and hope to call the Senate back or wait until they return August 18th, that is unlikely at this point given the recent severe downgrading of California's credit rating and the negative reputation the State is getting nationally.
II. ACTION REQUESTED
Thanks to the Senate Democrats, particularly Senator Torlakson and others, the Budget bill (AB 1765) contains Fifteen Million, Seven Hundred Sixty-Six Thousand ($15,766,000) for the Public Library Foundation program (PLF). You will recall that, in his May Revision of the Budget, the Governor restored funding for the Transaction Based Reimbursement (TBR), but left only $1,000,000 in the PLF. While the TBR is likely safe from the Governor's blue pencil, the PLF could be jeopardy.
Please take a moment today and write to the Governor respectfully urging him to not reduce the PLF funding. You might mention that even at this $15.8 million level, libraries will have suffered a 72% cut (reduced from $56,870,00 in 2001 to $15,700,000 = 72% cut) to the PLF during the last two years. To reduce it further to the May Revision level ($1 million) would represent a reduction of 98%. It is always helpful to add a few comments about what the cuts mean to your library. Please act now - time is of the essence as the Governor will likely be acting on the Budget within the next few days.
Address:
The Honorable Gray Davis Governor, State of California
State Capitol
Sacramento, CA 95814