July 27, 2009 California Farm Bureau Friday legislative review 

After working though the night on July 23, the Legislature completed it’s work on the State Budget Act and 28 implementing “trailer” bills and adjourned until August 17^th for its Summer Recess.  The Assembly, which had to wait for the Senate’s actions, finally rounded up enough votes to pass all but two of the trailer bills. After a marathon 24-hour session the Assembly balked at the state’s diversion of the local gas tax revenue and the proposed offshore oil drilling on Tranquillon Ridge off the coast of Santa Barbara County. The Assembly’s final action was to join the Senate in adjourning the 4^th Extraordinary Session.

Now the ball is in Governor Schwarzenegger’s court and he is threatening to blue pencil, or line item veto, another $1.1 billion in order to restore a larger reserve fund.   It is presumed additional cuts now by the governor would not have been necessary if the Assembly had approved AB 30 relative to the local gas tax diversion and had not defeated AB 23 that would have allowed off-shore oil drilling on the Tranquillon Ridge off the Santa Barbara coast.   

The Williamson Act subventions were reinstated in final budget negotiations, but they were cut an additional 20 percent, as were most other programs, except the big-ticket items that were cut much more.  The twenty percent reduction would result in a total General Fund backfill to county governments of $27,792,000 for 2009-10.

AB 30 would have shifted $971 million in gasoline excise tax to the state’s General Fund for transportation related general obligation bond payments in 2009-10 and another $750 million in 2010-11.  Local governments mounted a fierce lobbying campaign against the raid on their gas tax funding for local streets and roads.   Now it is possible that other programs of importance to local government may be subject to the governor’s veto including elimination of the Williamson Act subvention.   The environmental community fought hard to kill AB 23, which would have brought $100 million into the General Fund in 2009-10 from oil revenue royalties and $1 to $4 billion over the life of the oil leases depending on the price of the oil.

On another budget matter a large number of agricultural organizations, including numerous County Farm Bureaus, were successful in stopping an attempt to undo an August 2008 Ninth Circuit Court of Appeals decision by requiring the Department of Pesticide Regulation(DPR) to dramatically reduce the amount of plant protection materials that are allowed to be used in San Joaquin Valley and other important agricultural areas of the state. Since anti-pesticide groups lost in court they tried to overturn the court’s decision by slipping this important issue into the budget process although it was clearly not a fiscal matter. However, the language to undo the court decision was not part of the budget approved by the legislature and sent to the governor. A decision has already been rendered by the courts and DPR has already implemented a regulation that is reducing volatile organic compounds (VOC’s) emissions. 

During the budget negotiations there was also an attempt to transfer pesticide risk assessment functions from DPR to the Office of Environmental Health Hazard Assessment (OEHHA).  DPR operates an integrated program of risk assessment for pesticides in California. This multi-disciplinary approach encompasses and assesses dietary, workplace, residential and ecological risk across air, water and land. Transferring the risk assessment functions to OEHHA would have fragmented and subsequently compromised DPR’s programs.   This effort was also defeated by the coalition of agricultural organizations working on the issue and was not included in the final budget language.

The California Department of Food and Agriculture’s general fund budget was cut to $87.4 million not including county local assistance programs. CDFA had a reduction of $1.6 million due to the state employee furlough program and a reduction of $2.3 million due to eliminating 39 positions by closing one of their veterinary laboratories.

The entire list of budget revision bills considered is provided below and all were approved by the legislature except the two so indicated:

·        AB X4 1–2009-10 Budget Revisions

·        AB X4 2–Education funding.

·        AB X4 3–Education #2 that includes 2008-09 reversions, certification, and maintenance factor.

·        AB X4 4–Welfare funding.

·        AB X4 5–Health care programs.

·        AB X4 6–Medi-Cal restructuring and managed care.

·        AB X4 7–Centralized eligibility for welfare programs.

·        AB X4 8–Suspends COLA and provides welfare reforms.

·        AB X4 9–Funding for programs helping those with developmental disabilities.

·        AB X4 10–Transportation funding.

·        AB X4 11–Resources funding.

·        AB X4 12–General Government funding. This bill authorizes the sale of portions of the State Compensation Insurance Fund’s assets and liabilities.   However, approval by the State Compensation Insurance Fund Board is required and the board has already  expressed opposition to such sale. It also includes the creation of the Labor Enforcement and Compliance Fund, funded by surcharges on all employers, for support of the activities of the Division of Labor Standards Enforcement. This measure increases fees on providers of employee housing to $200 per facility and $27 per employee.

·        AB X4 13–Public safety and judicial branch funding.

·        AB X4 14–Suspends Proposition 1A to allow borrowing from local governments pending the resolution of promised lawsuits by cities and counties.

·        AB X4 15–Payback of money borrowed under terms of Proposition 1A.

·        AB X4 16–Cash management and deferrals.

·        AB X4 17–Tax withholding and estimated payments. One of several accounting gimmicks in the package that looks like $2.3 billion in revenue when in reality it is just a matter of getting an interest free loan from taxpayers and requiring paying estimated taxes to pay 10 percent more in their June remittance.

·        AB X4 18–Tax enforcement. By conforming to federal IRC provision relative to seven percent backup withholding for certain reportable payments, the state estimates an increase of $32 million in new revenue. The bill would also require any non-retail business with receipts greater than $100,000 to register with the State Board of Equalization. The purpose of the registration is to better enforce the use tax provisions on out-of-state purchases. By raising compliance with the use tax, it is estimated that the state will garner $58 million in 2009-10 and $155 in 2010-11.

·        AB X4 19–Reforms to save money in the In-Home Supportive Services program.

·        AB X4 20–Consolidation and elimination of boards

·        AB X4 21–Procurement reform.

·        AB X4 22–Asset management includes the sale of the Orange County Fairgrounds in Costa Mesa. The bill also includes the sale or long-term lease of 19 state buildings in Los Angeles, Oakland, Rancho Cordova, Sacramento, San Francisco, and Santa Rosa.

·        AB X4 23–Allows the state to issue a lease for oil drilling off the coast near Santa Barbara. The measure was defeated in the Assembly and the record of the vote was expunged. The royalties to the state would have returned $100 million annually.

·        AB X4 25–Treasurer's Office cash management.

·        AB X4 26–Redirects $1.7 billion of redevelopment property tax increment revenues to K-12 education.

·        AB X4 27–Securitization of redevelopment agency projects.

·        AB X4 30–Implements the diversion of Highway Users Tax Account revenue from local governments to the state. This measure was sent to the Inactive File in the Assembly, thus reducing the package of budget deficit “solutions” by $1.7 billion.

·        SB 90–Supplemental appropriations.

·        SB 63–Eliminates the Integrated Waste Management Board.