During a normal
second year of a two-year session, the Legislature would not reconvene
until the first week of January. But because the Governor is asking
for two pieces of legislation that must be voted upon by citizens
statewide on the March primary ballot, he must stick to strict
timelines and attempt to prod the Legislature to staying on schedule
and that requires meeting during the holiday season.
Deficit
Still Growing
The state’s Legislative Analyst, Elizabeth Hill, is estimating
that the budget deficit is at least $10 billion. The Governor
immediately added another $4 billion to that deficit total by
repealing the recent vehicle license (car tax) fee tripling which
was raised by Governor Davis this summer by an executive order.
There is still some discussion within the Legislature as to whether
the Governor can unilaterally repeal the car tax hike.
Repeal
of the Car Tax Has Impacts
The $4 billion would have gone from the state’s General
Fund to local government (cities and counties) coffers. The process
of this monetary transfer has been dubbed the “VLF backfill”.
Local Government is understandably upset and worried about this
major loss in revenue. Governor Schwarzenegger is asking the Legislature
to pass a $15 billion “deficit recovery” bond in order
to both retire the deficit and also backfill local government
for the loss of the VLF backfill.
Regulatory
Rollback
In a surprise move, the Governor issued an executive order rolling
back the implementation of recent regulations by freezing them
for 180 days and also committing to a review of all regulations
adopted since Governor Gray Davis took office in 1999. Take a
look at the executive order at www.governor.ca.gov.
There were four major fee increases that affected water districts
in 2003: waste discharge permit fees (NPDES), water rights fees,
water rights compliance fees, and dam safety fees. ACWA is investigating
how this regulatory rollback and review could impact or avert
fees to our member agencies.
Deficit
Recovery Bond
The Administration originally appeared to be considering what
the press was calling a “burrito” bond with a pricetag
of $20 billion. This burrito bond would refinance both the $10.7
billion bond contained within the current budget and the $1.9
billion pension obligation bond because they have been seriously
challenged in court. The burrito bond’s high cost gave way
to a leaner $15 billion bond that the Governor is now supporting
that will in addition to refinancing the previous bonds, would
backfill the VLF money for cities and counties.
Spending
Cap
This constitutional amendment would create an annual ceiling on
state spending. No details have been offered yet on the scope
of this proposal only that the Administration views this as a
package deal included with the deficit recovery bond. However,
these measures cannot be linked on the ballot leading some to
point out that one could pass and another one could fail leaving
the Governor’s plan only half accomplished.
Proposition
56
This proposition entitiled, “The Budget Accountability Act”
will be on the March primary ballot. It would amend the state’s
constitution to change the state budget process by reducing the
percentage required for the Legislature to pass the state budget
and accompanying tax increases from the present 2/3 down to 55%.
The language of the measure can be found at the Secretary of State’s
website www.ss.ca.gov.
