Governor Brown, speaking as much to the Legislature as the capitol press corps, released his proposed 2014-15 State Budget one day early on Jan. 9^th. At his Capitol press conference, the governor displayed his quick wit as well as an amazing grasp of the complex spending plan. He noted that “wisdom and prudence should be the order of the day.” He called attention to extreme volatility of capital gains tax revenue and the fact that just because this portion of the state’s tax revenue is up, doesn’t mean that the state should go on a spending spree with respect to salaries and on-going programs.

To reinforce his argument, he once again called attention the “Wall of Debt” that the state managed to build during the recent recession. California’s long-term liabilities are projected to be $354.5 billion including $217.8 billion in unfunded retirement liability. The budget summary blithely notes, “These liabilities will constrain the state’s finances in the future.” Considering the fact the entire state budget is “only” $154.9 billion, that understatement certainly warrants a “You think?” comment.

Although the spending plan says that a portion of the massive debt would be paid down by July 1, 2018 ($11.8 billion this year), the largest component, the $217.8 billion in unfunded retirement liability, goes unaddressed again this year. The governor did commit to working with the stakeholders and the Legislature on the pension funding issue but said it will be a daunting task. The proposed budget does call for strengthening the state’s Rainy Day Fund with a constitutional amendment to facilitate paying down the debt liabilities and save for the next inevitable downturn in revenue. The proposed amendment would do the following:

·       Base deposits on when capital gains revenues rise to more than 6.5 percent of General Fund tax revenues.

·       Create a Proposition 98 reserve, whereby spikes in funding would instead be saved for future years of decline. This would smooth school spending to prevent the damage caused by cuts. The reserve would make no changes to the guaranteed level of funding dedicated to schools under Proposition 98.

·       Double the maximum size of the Rainy Day Fund from 5 percent to 10 percent of revenues.

·       Allow supplemental payments to the Wall of Debt or other long‑term liabilities in lieu of a year’s deposit.

·       Limit the maximum amount that could be withdrawn in the first year of a recession to half of the fund’s balance. This will ensure that the state does not overly rely on the fund at the start of a downturn.

During the question and answer period of this press conference, the governor said he didn’t think that this is the year for new taxes. He said he promised the voters that Prop. 30’s tax increase would be temporary and the state needs to learn to live within its means. He vociferously defended his spending programs to assist the poor and disadvantaged and said that he believed that “education and good health are certainly the way out of poverty.”

He also said that he would withhold judgment on whether or not the proposed water bond should be on the November ballot because “the world is changing with our serious draught conditions.”

Farm Bureau is very pleased with the proposed new funding to support agricultural energy and operational efficiency (including $12 million for dairy digesters), and encouraged that the governor is also proposing $100 million for the Strategic Growth Council. Although not specifically referenced in the budget summary released on January 9^th, we believe that there is a real opportunity this year to restore at least partial funding for our most important farmland protection program, the Williamson Act. Next year, will mark the 50^th Anniversary of the Williamson Act and some state backfill for counties’ costs is crucial. We are increasingly alarmed by the number of counties that refuse to accept new Williamson Act contracts due to the lack of state support for the program. With escalating farm and ranch land values, the property tax relief afforded by the contracts’ restriction on subdivision and development are just as crucial today as in the mid-60s when assessment practices led to vast conversion of farmland around metropolitan areas.

We are increasingly alarmed by the number of counties that refuse to accept new Williamson Act contracts due to the lack of state support for the program. With escalating farm and ranch land values, the property tax relief afforded by the contracts’ restriction on subdivision and development are just as crucial today as in the mid-60s when assessment practices led to vast conversion of farmland around metropolitan areas.

Farm Bureau is also pleased that there are no proposed cuts to the Department of Food and Agriculture’s budget for 2014.

Natural Resources Secretary John Laird, in a budget-related conference call, specifically mentioned his pleasure with the specific inclusion of “preservation of agricultural land” in the governor’s proposed budget. Although he cautioned that expectations of full restoration of the $37 million for Williamson Act funding would be misplaced, he once again stated his strong support for the Williamson Act. Secretary of Food and Agriculture Karen Ross, a new member of the Strategic Growth Council effective January 1^st, also noted in her stakeholders’ conference call that she and Secretary Laird were strong advocates for Williamson Act funding in the development of the governor’s budget proposal.

The Governor included $618.7 million to begin implementing the California Water Action Plan, primarily enhancing existing programs. There is no new revenue included for expanding water storage. The following breaks down the dollars (in millions) proposed for each category.

The State Water Resources Control Board (SWRCB):

·       $1.9 - Sustainable Groundwater Management

·       $3.0 - Groundwater Ambient Monitoring and Assessment (GAMA)

·       $4.0 - Interim Replacement Drinking Water in Disadvantaged Communities (DACs)

·       $7.0 - Wastewater Projects in small DACs

The Department of Water Resources (DWR):

·       $2.9 - Groundwater Data Collection and Evaluation

·       $20 - Water & Energy Efficiency

·       $77 - Flood SAFE

·       $472.5 – Integrated Regional Water Management (IRWM)

The Department of Fish and Wildlife:

·       $30 - Restore Coastal & Mountain Watershed/Wetlands for Waterfowl

·       $0.4 - Salton Sea

In addition to potential funding for agricultural land preservation, the Governor also included a total of 18 new positions at the Department of Fish and Wildlife (DFW) and at the State Water Board for enforcement against environmental damage caused by illegal marijuana cultivation. While the funding for these positions does not include money for cleanup of illegal marijuana grow sites, DFW Director Chuck Bonham stated on a conference call that he expects with increased staff resources the state will be able to obtain cleanup funds through prosecutions of the environmental crimes being committed. 

In 2013 the Governor implemented the Local Control Funding Formula that would purportedly expand local control, reduce bureaucracy and insure that the student’s needs would drive the allocation of resources. This year the Governor has proposed to shift $4.4 million Proposition 98 General Fund money from the Agricultural Career Technical Education Incentive Grant program (ACTEIG) to the Local Control Program. Farm Bureau is disappointed with this proposal and will work with the Governor’s office and the legislature to restore that funding for the ACTEIG program that supports more than 300 career technical secondary agricultural education programs in California.

Now the budget process is in the Legislature’s court.

On January 8, the Assembly Labor & Employment Committee rejected AB 907, flexible work schedule legislation by Assembly Republican Leader Connie Conway (R-Tulare) on a party-line 2-5 vote. AB 907 would have allowed employers to adopt flexible work week schedules, such as 4 10-hour days in a single week without incurring any overtime obligations. It also would have eliminated the cumbersome process of a workplace “election” process to adopt flex schedules provided for in current law. AB 907 was broadly supported by employer organizations, including Farm Bureau.

Also on January 8, Assembly Labor & Employment adopted AB 326, legislation offered by Assemblymember Mike Morrell (R-Rancho Cucamonga). The bill will revise the Labor Code to allow employers to make required reports of workplace illness and injuries to the Division of Occupational Safety and Health via telephone and email, and eliminates the option of making those reports via telegraph. The committee adopted AB 326 unanimously, and it is now scheduled for second reading in the Assembly. AB 326 is supported by organizations representing employers, including Farm Bureau.

On December 2, the Division of Occupational Safety and Health formally requested that the Cal/OSHA Standards Board write a regulation increasing illumination required for farm equipment being operated at night in proximity to workers.  While current equipment regulations require limited lighting for equipment operated between one hour after sunset and one hour before sunrise, the new regulation will add trucks to the types of equipment required to be lighted; require that equipment be provided to light areas where workers may be on the ground within 25 feet of operating tractors, trucks, self-propelled or towed equipment. The minimum illumination in these work areas “shall be 10 foot-candles.” The regulation also requires employees working around such equipment to be provided Class 2 high-visibility clothing, similar to that provided to highway workers. The Standards Board expects to begin hearings on the proposal in the spring of 2014.

Legislators introduced two bills this week focusing on the use of antibiotics in animal agriculture. The FDA released Guidance #213 last month that sets in motion a process for pharmaceutical companies to remove growth promotion claims from the labels on antibiotics that are also used in human medicine.  When the labels are changed, antibiotics will no longer be allowed to be administered through feed or water unless a veterinarian issues a veterinary feed directive allowing use of the antibiotic for disease treatment or prevention. 

In response to this announcement, Senator Jerry Hill (D-San Mateo) introduced SB 835, which would essentially require CDFA to prohibit the registration of antibiotics in California, unless they complied with FDA’s Guidance #213. The bill also would require the oversight of a veterinarian for the use of medically important antibiotics to treat individual animals through injection, which is a significant expansion beyond FDA’s Guidance.  Farm Bureau has expressed concerns with codifying a guidance, which could change as it is being implemented, and with requiring prescriptions for antibiotic use. Farm Bureau will continue to present our concerns to the author.

Assembly Member Kevin Mullin (D-South San Francisco) introduced AB 1437, which goes even further than Senator Hill’s bill and eliminates the use of antibiotics for disease prevention purposes unless there is a documented outbreak. It also requires livestock producers to report their antibiotic use annually. This report would be required to include the location where treated livestock will be processed. CDFA would be required to collect these reports and then create a publicly searchable database of antibiotic use in animal agriculture. Farm Bureau has significant concerns with AB 1437 and is opposed to the bill. 

SB 42 Lois Wolk (D-Davis) is scheduled to be heard January 14^th in the Senate Committee on Natural Resources and Water. The measure would repeal provisions of the $11.14 billion Safe, Clean, and Reliable Drinking Water Supply Act currently scheduled to go before California voters in November of this year. The Safe Drinking Water, Water Quality, and Flood Protection Act of 2014 (SB 42) if approved by the voters in its current form would authorize the issuance of bonds in the amount of $6.475 billion in four separate categories. The four categories include $2 billion for Safe Drinking Water, $2.1 billion for Water Quality and Watershed Protection, $1.375 billion for Flood Protection and $1 billion for Water Storage and Water System Operational Improvements. All four categories would require legislative authority to appropriate the funds.

AB 1331 Anthony Rendon (D-Lakewood) was again amended this week to modify the $11.14 billion Safe, Clean, and Reliable Drinking Water Supply Act. The Clean and Safe Drinking Water Act of 2014 (AB 1331) would authorize the issuance of $6.5 billion in general obligation bonds in five separate categories. The five categories include $1 billion for Water Quality and Clean and Safe Drinking Water, $1.5 billion for Protecting Rivers, Lakes, Streams and Watersheds, $1.5 billion for Climate Change Preparedness for Regional Security, $1 billion for Delta Sustainability, and $1.5 billion for Water Storage for Climate Change. Most significant among the amendments is a requirement for legislative authority to appropriate funds for water storage projects. Previously the Water Storage for Climate Change chapter was continuously appropriated which Farm Bureau believes is essential.  

The measure is not currently scheduled for hearing and is not expected to move forward until February. Additional public hearings on the measure will be held across the state, with the next hearings coming up in Hanford, Eureka and Fresno. No dates have been set.   

Farm Bureau remains actively engaged in efforts to impact the size and structure of the water bond and continues to emphasize the need for increased water storage, area of origin water rights protections and continuous appropriation for water storage dollars. We are highlighting farmers’ continued actions to implement even more efficient use of water in recent years. Farm Bureau has a support position for the current water bond as approved in 2009.

The State Board of Food and Agriculture received a water update and information about water transfers this week. Department of Water Resources drought manager Bill Croyle, State Water Resources Control Board executive director Tom Howard and Paul Fujitani of the U.S. Bureau of Reclamation’s Mid-Pacific Region updated the board on water conditions and state and federal water transfers activities. The board also heard from Northern California Water Agency’s David Guy, Westlands Water District’s Jason Peltier and a Fresno Irrigation District board member about continued challenges associated with water transfers.

State Water Resources Control Board Members appeared before the Senate Rules Committee this week. The Senate Rules Committee unanimously confirmed the appointments of DeeDee D’Adamo, Frances Spivy-Weber and Tam Doduc this week. The three board members will now go before the full legislature for a vote.

The Department of Conservation released the California Land Conservation Act 2012 Status Report. The report represents data submitted by participating counties and cities to the Department of Conservation regarding program participation during 2010 and 2011.

As of 2011 approximately 15 million acres were reported as being enrolled statewide. This is an 8.5 percent drop from the 16.4 million acres accounted for in the 2010 Status Report. This decrease is in large part associated with 10 counties not reporting enrollment to the State, as opposed to an actual decrease in participation. Non-reporting by counties is undoubtedly due to the loss of the Open Space Subvention payments. The acreage enrolled in Land Conservation Act contracts statewide represents approximately 50 percent of California’s total acreage of farmland and approximately 31 percent of the State’s privately owned land. Although subvention payments were effectively eliminated beginning in Fiscal Year 2010-11, contracts between landowners and local governments continue. Only Imperial County has chosen to exit the Program by simultaneously non-renewing contracts covering over 117,000 acres. The other major trend affecting enrolled land during this reporting period is the interest in utility-scale solar power facilities on Williamson Act land.

Governor Brown recently announced the following appointments: 

James Famiglietti, 53, of Irvine, has been appointed to the Santa Ana Regional Water Quality Control Board. Famiglietti has been director of the University of California Center for Hydrologic Modeling since 2009 and professor of earth system science at the University of California, Irvine School of Physical Sciences since 2001. He was a professor at the University of Texas at Austin Department of Geological Sciences from 1994 to 2001 and a postdoctoral research associate at Princeton University and at the National Center for Atmospheric Research from 1992 to 1993. Famiglietti is a member of the Geological Society of America and the American Geophysical Union. He earned a Doctor of Philosophy degree in civil engineering from Princeton University and a Master of Science degree in hydrology from the University of Arizona. This position requires Senate confirmation and the compensation is $100 per diem. Famiglietti is a Democrat.

Robert Powell, 62, of Davis, has been appointed science advisor at the California Natural Resources Agency. Powell will advise the Brown administration on the complex scientific issues involved in well stimulation treatments and will assist in developing the scope of the independent scientific study required by Senate Bill 4. He has been a faculty member at the University of California, Davis since 1984 and is currently on sabbatical from his positions as professor in the Chemical Engineering and Materials Science Department and the Food Science and Technology Department. He served as chair of the Academic Senate of the University of California System from 2012 to 2013 and was vice chair from 2011 to 2012. Powell was an associate professor at Washington University in St. Louis from 1979 to 1984. He earned Doctor of Philosophy and Master of Science degrees in mechanics and materials science from Johns Hopkins University. This position does not require Senate confirmation and there is no compensation. Powell is a Democrat.

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