At last, one month late and many dollars short, California has a
budget.
At last, one month late and many dollars short, California has a budget. Actually, Gov. Gray Davis has confirmed that he will sign the almost $100 billion document passed Tuesday by a very tired Assembly; it won’t be official until the Senate returns from its three-week summer recess on Aug. 18 and votes one last time.
“It’s not pretty but it could have been a whole lot uglier,” Davis said. “It is far from perfect but further delay was unacceptable.”
The governor is expected to sign the budget Saturday.
The process was lengthy and, at times, acrimonious, because the Legislature was trying to close a $38 billion shortfall and could not agree on how to do so. Republicans refused to agree to any tax increases; Democrats tried to avoid making deep cuts. A two-thirds majority is required by state law for approval and neither party owned that many votes.
Assemblyman John Laird, D-Santa Cruz (and Morgan Hill and San Martin), voted for the budget. He said it was OK’d only because Assembly Speaker Herb Wesson locked them in a room after a 27-hour session.
“It was that marathon that closed the deal,” Laird said. “The Speaker locked us in; we literally could not leave except with an escort by the sergeant at arms.”
Laird said food was brought in and several caught naps on room couches.
“I was very lucky to score a couch for about four hours,” he said. “At one point there were so many sleeping – the snoring had a certain rhythm – it was funny.”
“I think that really moved the Republicans, when they realized at 2 a.m. Tuesday that they were not going to leave until they had a budget,” Laird said. The vote was 56-22.
He said the lock-in also led to a unique stance by those same Republicans.
“On Monday they attacked the Democrats for spending; then later they added spending,” he said.
The Republican contingent added $250 million to the spending bill, adding money for schools and local law enforcement and repealed a tax on milled farm products. They also added money to benefit rural police agencies and to continue the fight against methamphetamine production. The drug production is an on-going South Valley problem.
Morgan Hill City Manager Ed Tewes said the extra police funding was welcome since the city had not expected it.
“The $100,000 minimum per agency COPS grants are now available to us,” he said. “We didn’t expect that so it’s not in our budget.”
The city’s budget, passed on time in May.
Tewes said the final budget lowered the state grab of Redevelopment Agency funds, another bright spot.
“The final take away is only $135 million instead of $250 million,” Tewes said. “Morgan Hill’s part (of the loss) is now $1.1 million.”
In the earlier Senate version the city would have been $1.9 million short in funds Morgan Hill depends upon to build recreational centers, affordable housing units and other benefits to the city infrastructure.
The city will still lose $400,000 from its $16 million general fund..
The $400,000, Tewes said, is a three month gap – between June 30 and Oct. 1– when the state will not continue to “backfill” funds lost from reduced Vehicle License Fees. If legal challenges to returning the VLF to pre-boom levels succeed, the loss will continue.
Morgan Hill, Tewes said, is in better shape than some other cities, Gilroy included, because it does not put its faith in receiving high amounts of sales taxes. Instead, the city banks on the less volatile property taxes.
But there are drawbacks, he said.
“Sales taxes come in every month; property taxes only twice a year.”
The city is not out of the woods. Tewes has frequently said the city is run in a “fiscally prudent” manner and, as such, has built up a significant undesignated balance fund – sometimes called a rainy day fund. The city can meet its obligations without drastic cuts, he said, but there are signs of reduced spending.
“People have noticed that the grass in the parks is not watered as often,” he said, “and street maintenance will take longer; the hiring freeze at City Hall is still in place. It will have impacts. But, we’ve tried not to raise unnecessary alarms and now (with the budget at last) we can do some strategic five-year planning.”
Tewes does not consider that all is well with the state budgetary process.
“There are lots of stories about gimmicks, tricks and rolling over $8 billion in deficits to the following year.”
Laird emphasized that California will continue to have problems passing a budget until some changes are made.
“We need a package of reforms that include a redistricting process that allows for more competitive districts,” he said. “There likely will be a March ballot to end the two-thirds majority (required to pass a budget); petitions are being circulated now,” Laird said. He said lengthening term limits a bit would provide more legislative experience than is present now – a lack that shows at eleventh hour votes. Laird said he favored a simple majority or 55 percent instead.
“This way (late and needing two-thirds) they only pass a budget that will get them out of town,” he said, “not one that will be good for the people of California.”
Next year’s fiscal effort may be a bit easier, Laird said for one reason.
“The June budget vote will be after the (presidential) primary so the threat to Republicans will be less,” he said.
Senate Republican leader, Jim Brulte, R-Rancho Cucumonga, earlier this year promised a hard time for party members who did not follow the party line.
State Senator Bruce McPherson, R-Santa Cruz (also Morgan Hill, San Martin and Gilroy), was one of four Republicans to vote for the Senate version on Monday, ending the month-long deadlock.
“It’s ugly,” he said of the Senate’s version, “but we couldn’t sit on it any longer. This is the best we could do.
“Every day we wait costs California millions of dollars. The bond rating is in the tank. We’ve got to reverse the trend and get stability back in the budget.”
Term limits will keep McPherson from running for another Senate term. Even so Laird said the senator might feel the heat.
“I think Bruce will get a little grief on the budget from both sides,” Laird said.
Those commissions remained in the final budget.
While the budget deal avoids raising sales and income taxes, it counts on a $4 billion annual car tax increase that state officials ordered earlier this year and the elimination of a tax break for manufacturers. Strictly speaking, the The Vehicle License Tax is not a new tax increase but is being returned to levels it reached during the economic boom. So much money was coming in from other sources, officials determined to lower car taxes as long as possible, or until they were needed again.
Many state agencies had their budgets gouged but none more so than the Arts Council.
Funding for the arts around California dropped from $16 million in 2002-03 to $1 million in this budget.
“I’m very unhappy about the arts budget,” Laird said. “There is a potential opportunity to take another look at it in August. For me the loss of arts’ funding is important.”
The budget bill, AB1765, and the budget trailer bill, SB1044, can be found at www.sen.ca.gov
