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Flush with optimism from California's resurgent economy, lawmakers approved a $156.4-billion state budget that expands preschool for children from poor families, increases welfare payments and provides critical funding for building the nation's first bullet train.
The state's financial turnaround has allowed the Democratic-led Legislature, with the blessing of Gov. Jerry Brown, to spend more freely just a few years after the recession prompted deep cuts to government services. And if tax receipts outpace expectations, the budget could send even more money to schools, public universities and local governments.
Lawmakers also are addressing more of California's lingering financial problems, stockpiling cash in a rainy-day fund and chipping away at pension costs.
"This is a much brighter day than what we've seen in years past," Senate Budget Chairman Mark Leno (D-San Francisco) said.
The spending plan — which includes a $108-billion general fund, $7.3 billion larger than last year's — now goes to Brown, who has until the end of the month to sign it. He can still veto items he dislikes.
The budget marks lawmakers' first major effort to combat global warming with revenue from the state cap-and-trade program, which charges fees on polluters when their carbon emissions exceed set limits.
Over the next several years, billions of dollars from those funds could flow to affordable housing, mass transit and environmental programs in a broad effort to get Californians to drive less and consume less energy.
A quarter of the money will be used for building the $68-billion bullet train, a decision that may draw legal challenges from groups that oppose the project and view it as an improper use of cap-and-trade revenue.
Republicans criticized the money for high-speed rail, and Senate Republican leader Bob Huff (R-Diamond Bar) called the budget a "missed opportunity."
"You're enacting policies to make California unnecessarily expensive, drive people into poverty and then propose new government programs to subsidize their life in poverty," Huff said.
Long-term costs for public employee retirements and overdue maintenance continue to weigh on state finances, and the budget starts tackling the $74-billion shortfall in the teacher pension fund. Under the plan, schools, teachers and the state will contribute more money to the fund in an attempt to close the gap over the next three decades.
The budget also deposits $1.6 billion into a reserve fund, a down payment on the state's effort to create a cushion for future economic downturns. Voters will have an opportunity in November to approve a constitutional amendment that would set aside money in the fund every year and help pay off the state's debt and long-term costs.
Despite the budget's increasing size, some cuts remain in place. Most notably, doctors who participate in Medi-Cal will continue receiving reduced payments even as hundreds of thousands of new patients enroll in the state's public healthcare program. Brown's resistance to increasing the payments disappointed lawmakers from both sides of the aisle, who fear fewer doctors will agree to care for Medi-Cal patients.
"The Senate wants to do this, the Assembly wants to do this and the governor understands we need to," Assembly Speaker Toni Atkins (D-San Diego) said. "So we are working as of tomorrow to figure out how soon we can do this. But we have to make sure we can pay for it."
Other programs for California's poor are being boosted. Beginning next April, welfare payments for a family of three in such high-cost counties as Los Angeles would increase to $704 per month, up from $670.
Over the next few years, preschool enrollment is expected to increase by 43,000 4-year-olds from low-income families. There's also more money for subsidized child care.
The budget already had been negotiated among Brown and top Democratic lawmakers before Sunday's vote, tamping down the drama in the Capitol. Still, controversy bubbled over a series of new policy proposals that were included in budget-related bills, sometimes after little public vetting.
For example, Brown has pushed new limits on how much money school districts can keep in their reserve accounts. Administration officials say the schools won't need to stockpile as much cash because the state will have its own rainy-day fund, but angry district officials called the proposal a ploy by the powerful teachers union to make more money available while negotiating contracts.
The California Teachers Assn. spent $4.7 million to help elect Brown in 2010 and donated nearly $290,000 to lawmakers, mostly Democrats, for this year's campaigns.
Lawmakers from both parties criticized the governor for inserting the proposal late in the budget process, but Democrats ensured the bill passed.
Another measure approved by the Legislature would modify California's new rules for granting driver's licenses to immigrants here without documentation, eliminating the requirement for applicants to submit affidavits saying they cannot prove legal residency.
Ronald Coleman, a lobbyist for the California Immigrant Policy Center, said the change would provide "peace of mind" that applying for a license won't increase the risk of deportation for immigrants who are here without those papers.
A separate budget-related bill, also approved Sunday, would remove the ban on drug felons receiving food stamps and welfare payments. Democrats say the measure would help former inmates reintegrate into society, but Republicans were critical.
"In what universe does it make sense to give cash benefit cards to drug users?" Huff said.
More budget bills have yet to be considered by the Legislature. Democrats are angling to pass two new taxes, on fireworks and insurance. The levy on fireworks — 10 cents per pound, to be paid by distributors — is intended to finance the safe destruction of illegal pyrotechnics. The other tax — 15 cents per insurance policy for residential and commercial renters — would fund earthquake research.
via: http://www.latimes.com/local/la-me-pol-state-budget-20140616-story.html
In an effort to more
closely manage how California spends revenue from its fledgling cap-and-trade
program, Senate President Pro Tem Darrell
Steinberg, D-Sacramento, on Monday unveiled a plan to dedicate
ongoing money to affordable housing, mass transit and high-speed rail.
"National and
international experts say that the climate problem grows worse, that we have no
time to sit back and wait and think about an investment strategy year-to-year
or just short-term. Now is the time to grab the moment and create these
permanent sources," Steinberg said, adding that his plan would avoid an
annual legislative fight over "who's in the front of the line, where is
the need seemingly the greatest."
The proposal differs from
Steinberg's previous proposal to change the state's system for curtailing
carbon emissions. That plan, which the Democratic leader unveiled in February, would
have imposed a gasoline tax rather than have industry purchase allowances
for greenhouse gases emitted from "non-stationary fuels," a category
that includes gas sold at the pump.
Now Steinberg has abandoned
that change, shifting his attention from how California prices greenhouse gases
to how the state allows levies on carbon emitters to be used. His new plan
focuses on funding affordable housing, public transportation projects and the
state's divisive high-speed rail project.
The gas tax plan was hit
from the left and right. On Monday, by contrast, Steinberg spoke amid a phalanx
of backers, including groups representing local government, (the League of
California Cities) labor (the State Building and Construction Trades Council of
California) and environmental (the Natural Resources Defense Council.)
"We stoked a debate a
couple months ago, and a lot of consternation and controversy, and I understand
it. But now many of us stand together," Steinberg said.
Under AB 32, the 2006 law
that created California's cap-and-trade program, industry must purchase permits
for generating the type of emissions blamed for global climate change. After
six auctions, the program has generated $663 million for the state so far,
according to the California Air Resources Board. Steinberg's office projects
the permits could soon bring in $3 billion to $5 billion a year.
Current
law dictates that the revenue will flow into a Greenhouse Gas Reduction
Fund. From there, entities like local governments and transit systems can apply
for some of the proceeds by explaining how they will use the money to reduce
overall emissions. One quarter of the money must go to disadvantaged
communities, an acknowledgment that some of California's poorest places are
choking on poor air quality.
Housing and public
transportation sit at the center of Steinberg's proposal. Forty percent of the
cap-and-trade revenue would go to affordable housing, including communities
built around transit options; 30 percent would subsidize transit projects and
10 percent would fund basic transportation infrastructure like road and highway
maintenance, with all three administered through competitive grants.
"Permanent sources of
funding for mass transit and affordable housing are key if we are committed to
long-term change," Steinberg said on Monday, noting that the two areas
"face a catastrophic funding crisis in California" after years of
cutbacks.
In addition to those
outlays, $200 million a year would go to water efficiency projects, to
fuel-related outlays that include rebates on monthly fuel bills, and to
accommodating the use of electric vehicles.
California's proposed
bullet train would get 20 percent of the money, channeled through a continuous
appropriation that would not require year-to-year approval by the Legislature.
Already, Gov. Jerry Brown's has
stirred controversy by proposing in his budget for this year spending
$250 million from emissions permit sales to fund his financially
precarious high-speed rail project, whose funding plan faces legal
uncertainty. Some environmentalists have called high-speed rail an
inappropriate use of the carbon auction funds.
But Steinberg's blueprint
embraces high-speed rail as a tool for reducing emissions — provided, Steinberg
said, it is one element of a larger strategy.
"I understand that
high-speed rail is controversial," Steinberg said. "If it were the
only thing that we were talking about or the only thing on the table I think
that would be problematic. I think this is a better approach."
PHOTO: The union oil
company refinery in Rodeo, Tuesday, December 17, 2002. The Sacramento Bee
Michael A. Jones.
In a pointed editorial on June 7, 2013, the Sacramento Bee tells California legislators to reject Gov. Brown’s attempt to “borrow” money from the auctions of carbon permits authorized under the state’s cap-and-trade program. That money goes into a Greenhouse Gas Reduction Fund that’s supposed to be used to cut pollution and expand clean energy, with a portion of those investments designated for economically disadvantaged, highly polluted areas.
That provision was written into the bill that authorized the program, AB 32, a law that was resoundingly reaffirmed by voters in 2010.
The Bee editorial concisely explains why the governor’s plan is misguided:
Before a dime is spent on reducing greenhouse gas emissions, the money would be used for other purposes, going against everything AB 32 proponents told Californians. The aim of cap and trade is not, they assured voters, to raise money for the state to solve its budget problems. That money, they insisted, can go only toward energy efficiency, clean and renewable energy generation, transmission and storage, and projects in disadvantaged areas disproportionately affected by pollution.
The state has had six years to craft a comprehensive strategy for next steps that new money could buy and should not squander the opportunity. The projects spelled out are exactly what California needs to boost jobs now and reduce emissions – such as retrofits for utilities and large industrial plants, charging stations for electric vehicles, and efficiency upgrades in low-income and middle-income homes.
The state doesn’t need “more time” to flesh out projects; it needs political will to avoid diversions and lobbyist-driven pork barrel projects.
We couldn’t agree more.
