Recent News From the Capitol - Updated 2/18/10
February 2010
Legislative Update
There is nothing but gray skies here in Sacramento literally and figuratively. As discussed in the last article that appeared in the CDRC website, the budget deficits for the current year and next year continue to plague the Legislature and the Schwarzenegger administration. In an act that was criticized by Congress but totally understandable from the state perspective, the Governor and legislative leaders traveled to Washington D.C. to request more federal bailout funds. State leaders argue that California contributes far more to the federal government in tax revenues than we receive back in compensation for programs that should be recipients of federal support like border control. The Legislative Analyst recommended swift action, by the end of March, for cuts in order to get the full year impact next year. This will inject a high level of conflict early in the session that will continue throughout the year. More about the budget numbers later.
Bill introductions are at a new low. There have been very few new bills introduced and it is not clear if there will be a cap on new bills beyond the usual one. The Assembly has not announced a new cap while the Senate is considering one limiting bills to 7 new bills per member. Regardless, at this time, CDRC will be interested in two bills.
AB 1588 (Bass and Nava) creates a new mediation program in statute which mirrors proposals that have been adopted in several states to assist homeowners with foreclosures. This bill is in response to the high rate of foreclosures and families at risk of foreclosure due to the collapse of appraised value of homes and rising variable rates. CDRC has already submitted a list of comments to the Assembly Banking committee staff on technical issues. In addition, there is a report that was published last September by the National Consumer Law Center entitled "State and Local Foreclosure Mediation Programs" that reviews the efficacy of the programs and makes recommendations to ensure an effective program.
Additionally, Assemblymember Bill Monning (D-Santa Cruz), has agreed to be the author of the CDRC sponsored legislation to increase the civil court filing fee distribution to the Dispute Resolution Program Act (DRPA). Two years ago, the CDRC bill, SB 1177 authored by Senator Mark Ridley-Thomas, passed the legislature but was vetoed by the Governor in an unexpected action. The increase had been negotiated by the legislative leadership to assist the Courts in long overdue capital projects. Of the initial $35.00 increase to the civil court filing fees, $5.00 was redirected to the DRPA legislation as all parties agreed that the DRPA programs provide access to justice for those parties who cannot afford lawyers. DRPA programs assist the courts by settling disputes before they become lawsuits thus saving court time by relieving the court calendars. DRPA programs have been capped since 1994. These programs have suffered through the economic downturn like most nonprofit organizations. The bill would initiate the increase in January of 2012 when the 3 year moratorium on fee increases sunsets.
Many of the DRPA programs operate on such tight budgets that they are at risk of eliminating programs or shutting down. These funds are essential to providing these important programs for communities. CDRC will be asking community programs to be actively involved this year in educating the legislature on the important work that they do. So while it will be a challenging year because of the dreadful budget situation, there is an opportunity for the CDRC to talk about the important work that dispute resolvers perform for parties and for communities through the Monning legislation. It is also important to note that our author identifies himself as "lawyer/mediator/professor". There will be more in next month's article on new bills.
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SEPTEMBER 2009
END OF SESSION IN SACRAMENTO
Once again, the California Legislature had a lurching to the finish line end to the first year of a two year session. It was not for want of hard work and feverish activity but rather it was the hopes that exhausted political leaders could recoup some positive developments in a many layered dismal year. What does that mean?
The Legislature convened last fall during their normal break to begin the negotiations on an unprecedented deficit. Working for months they announced a budget resolution that was dependent on ballot initiatives that would be put before the voters in May, 2009. Everyone agrees that no one could have predicted the extraordinary melt down of the U.S. and California state economy. Everyone agrees that the extraordinary drop in every possible revenue stream would have dire consequences to a formula driven state budget.
And on some levels, most observers, pundits and leaders will admit that our current political system is dysfunctional in that it is a political impossibility to expect that polarized parties with a 2/3rd vote requirement will creatively and effectively resolve the conflict. You cannot expect to attract parties to resolution when on core issues there is no agreement whatsoever on the role of government, the programs that are funded by state taxes and fees and the appropriate cuts to core programs and services.
Declaring victory on a budget plan that was held together by the belief that voters would understand a series of ballot propositions that made no sense to experienced political stakeholders was an indication of the desperation of political leaders. They underestimated the despair and fear among voters of the personal impact of the current economic crisis on their wages and standard of living. The public wanted the political leaders to lead and re-assure them. Instead, the public felt that they were being sold a pig in a poke. They rejected the ballot measures and sent legislators back into budget hell.
Alongside the budget negotiations that continued to dominate the debate in Sacramento, legislative leaders and the Governor wanted to achieve some major policy objectives. They choose two challenging issues: renewable energy and water policy. Perhaps in a more normal year, both the Legislature and the Governor may have made different choices. Renewable energy beyond solar and wind energy is a good thing, the public could not be expected to understand the technical issues that would be the barriers to success. Water has been a divisive issue since the days of Mark Twain when he famously stated: “Whiskey is for drinking and water is for fighting over.”
Negotiations on both of these issues would have set the hair on fire for any conflict resolution professional. There were numerous stakeholder groups who were in numerous groups simultaneously supporting or opposing both legislative efforts. Compromise prison budget deals gained begrudging passage while committee hearings on renewable and water legislation suffered through countless amendments in hours long hearings the last night. In other words, one thing is clear: even the most skilled and optimistic ADR professional would have thrown in the towel in Sacramento last week. Perhaps we can hope that what everyone learned from this year is that there must be a better way to resolve the conflict.
On a more focused note, CDRC monitored numerous bills throughout the year but there was very little that occurred that significantly impacted the practice of ADR. This was a year where very little policy was put forward by most interest groups in Sacramento as anything with state costs was not passed. A few bills were amended with sections that CDRC will be working on over the fall in order to protect and advance the practice of ADR. Most of these bills are known as 2 year bills, that is: introduced during the first year of a two year session but will move through the process the second year. We will be there to protect your interests regardless of the state of the state.
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JULY 2009
STATE BUDGET ISSUES DOMINATE SACRAMENTO DISCUSSION; WATER POLICY TO FOLLOW
As of this writing, the state and its current $26.3 billion deficit are in the process of being resolved. The Big 5, comprised of the Governor, Senate President pro tempore Darrell Steinberg, Assembly Speaker Karen Bass, Senate Minority Leader Dennis Hollingsworth and Assembly Minority Leader Sam Blakeslee, came to an agreement earlier this week. At this writing, the Senate has approved approximately 30 budget trailer bills that effectuate the statutory changes to implement the state budget deal. The Assembly has been in session for the past 18 hours and still has a few of the bills pending.
The State Controller just closed the books on 2008-09 and reported that during the past year, the state received $85.2 billion in general fund revenue – including $43.7 billion in personal income taxes, $23.7 billion in sales taxes and $12.3 billion in corporate income taxes – and spent $98.2 billion.
That $85.2 billion is $11.2 billion less than the state received from those same sources in 2007-08, thanks to the recession, with personal income taxes accounting for the entire net decline. Even with sales and income tax rate hikes enacted in February, general fund revenue is expected to be – at best – flat in 2009-10. The current official estimate is $85.8 billion, but the trend is downward and no one would be surprised if revenue dropped to as low as $80 billion.
Put those numbers together and 2009-10 revenue will fall at least $15 billion short of financing the workload budget. Throw in the leftover shortfall from 2008-09 and add a modest reserve, and the deficit facing the state is more than $26 billion. This is precisely why the Big 5 and the Legislature were required to re-open the 18 month budget that they passed in February of this year.
In fact, the non-partisan Legislative Analyst is projecting annual budget deficits in the $25 billion neighborhood into the indefinite future, as the temporary spending cuts and taxes expire. The state's economy shows no signs of hitting bottom, much less rebounding, and the latest tax increases and many of the spending cuts are temporary, effective for no more than a couple of years.
Borrowing From Local Governments and other impacts
The budget deal is structured such that is borrows $2.1 billion from local governments through the suspension of Proposition 1A (2004). The suspension, which requires legislation, allows the state to divert to schools up to 8% of property tax revenues of cities, counties and special districts. Repayment, with interest, must be made within three years. The Governor is also proposing legislation to authorize a joint powers authority to facilitate local government borrowing against the state’s repayment promise. Essentially, local governments would securitize the “loan” to the State, allowing bonds to be sold to investors to replace the borrowed monies. Other fund shifts include $1.5 billion from the Highway Use Tax Account, $1.2 billion from paying state employees on July 1, 2010 instead of June 30, and $4 billion in revenue accelerations and fees including the sale of the State Compensation Insurance Fund’s book of business. At this writing, the $100 million per year revenue item that allows the first new oil well off shore in 40 years has delayed the Assembly vote.
IMPACT OF NEW BUDGET ON STATE SYSTEM OF JUSTICE
As conflict resolution professionals, our profession may see more activity due to the approximately $.5 billion ($500 million plus cuts) sustained by the courts. The Budget deal approves an additional $169 million reduction to the Judicial Branch, which with the previous cuts to the Judicial Branch's budget totals approximately $503 million. Measures that will effectuate the reduction include one-day per month court closures, redirection of funds designated for court initiatives such as IT projects and construction, utilizing trial court reserves, and various increases to court fees.
These cuts will fall on direct court services. New judgeships and omnibus conservatorship programs have been scaled back as well as court case management programs and new court construction. Those monies were re-directed to cover the deficits created by the reductions in state revenue. The unfortunate impact of these fund shifts is that next year may be worse if state revenues continue to decline.
Additionally, the Administrative Office of the Court will be voting next week and it is expected that it will reluctantly order all courts to close one day a month. The AOC has the power to order this closure and will do so because of the crisis in funding. This closure will impact all courts, not just local courts. Local courts have the authority to choose partial day closures and some will be scheduling those as a result of their diminished budgets. The Chief Justice of the California Supreme Court has also requested all members of the Supreme and Appellate courts to take a 4.5% cut in pay. Court fees increases to offset cuts are as follows: $5.00 increase in the first paper filing fee, $10.00 increase in miscellaneous post judgment fees, and $10.00 increase to the court security fee for criminal convictions.
As most of you know, many parties, especially commercial parties, have turned to ADR because our public system of justice has been overwhelmed and under-funded. This year’s state budget resulted in unprecedented reductions that will seriously interfere with the ability of the courts to provide their essential services. Although many ADR professionals have suffered a decline in business as a result of the economic downturns, it is a sad but true that there may be a silver lining for ADR professionals as we may benefit from the misfortune of the courts.
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MAY 2009
CONVERSATION WITH
NEW ASSEMBLYMEMBER BILL MONNING
FIRST ADR PROFESSIONAL ELECTEDTO STATE ASSEMBLY
Assemblymember Bill Monning was elected in November 2008 to represent the 27th District, including portions of MontereyCounty, Santa CruzCounty and Santa ClaraCounty. He was appointed Chair of the Assembly Labor Committee and serves on the Assembly Judiciary Committee among other assignments. ADR issues routinely are heard in this committee.
Monning is a thoughtful, intelligent legislator who came to ADR through his post law school work as the Executive Director of the Nobel Peace Prize winning organization, the International Physicians for the Prevention of Nuclear War. It was there and through his work with Roger Fisher, that he was exposed to interest based negotiation. His interest deepened in ADR more broadly in both theory and practice to include working in mediation and arbitration. Prior to his service in the State Assembly, Monning was a Professor at the Monterey College of Law and a Professor of International Negotiation and Conflict Resolution at the Monterey Institute of International Studies.
During our conversation, Monning stated that he believes that his training as an ADR professional assists his work in the State Assembly both formally and informally. He believes that the ADR skills sets enhance his relationship building efforts with stakeholders in the everyday state capitol conflict situations. Whether over legislation or issues, most of the negotiations occur before the formal committee hearings or meetings. He said, coming from ADR, he was able to quickly identify the procedures and activities to successful outcomes for his bills and in his role as Chair of Labor Committee, when working on other members bills.
In response to my question that if he could change one law re: ADR what would it be, Monning responded that his choice would be if there were a way to require more “pre-filing” incentives in litigation practice. He explained that one of his goals is to promote a culture of mediation. This is based on his experience with the Monterey court directed mediation program where cases of $100,000 or less went to mediation using a pro bono panel. The program had an 82% settlement rate. Monning stated that the higher damage cases are better equipped to pay for professional mediators and it frees up good lawyers who achieve settlement through mediations to serve more clients. He cautioned that it was very important to balance the great positives of early settlement through mediation without sacrificing the rights of parties to have access to the courts if that is needed or chosen.
Monning is acutely aware that state resources and state support for the courts is an enormous challenge given the colossal deficits in 2009 and for the near future. Mediation and pre-filing ADR is one strategy to ensure that parties have access to justice such that those cases that can be settled to parties’ satisfaction, free up court resources for those that need to go before a judge. Monning has introduced two bills relating to ADR: AB 1 which permits teachers to select conflict resolution training including negotiation and mediation, as part of their professional development and AB 1090 which codifies the holding in the 2004 appellate case, Azteca Construction which states that arbitrator’s disclosure requirements cannot be waived. Both bills have passed their first house.
CDRC looks forward to working with Assemblymember Monning and his colleagues on ADR issues as they come up throughout the legislative session. It is a unique situation to have someone in the Legislature who identifies as a member of the ADR profession and who has chosen to guide his life based on the principles of conflict resolution. It is clear after a short time, that Bill Monning embodies the future of ADR in the state of California.
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FEBRUARY 2009
Budget Update Based on Passage of the State Budget Covering the Period February 19, 2009-June 30, 2010
Overview
The Legislature has approved and the Governor has signed an unprecedented 17-month budget to address the $41.6 billion deficit the state is currently facing. The problem still present is that revenues from the big three tax sources (income, sales and bank and corporation) are continuing to decline; May 19th special election actions are required to approve redirecting monies from the state lottery funds for two years, along with the redirection of children’s health care funds and mental health care funds from Propositions 10 and 63, respectively; and when the April 15th tax revenues are totalled in May, the state may have another significant shortfall even if the voters approve the borrowing schemes. Should the voters say no to some or all of the ballot issues, the state will face a very serious situation immediately.
Key Details
This was a rather gruesome budget process, with three Republican votes needed in each house to join unanimous Democrats to pass the budget bills. The grueling process resulted in late night floor sessions; press conferences; closed door meetings; the dumping of the Senate Republican Leader, and heavy doses of frustration, anger, and exhaustion. In the end, Republican Senator Abel Maldonado joined Senators Dave Cogdill and Roy Ashburn to provide the votes needed to pass the budget package out of the Senate. Senator Maldonado’s affirmative vote, however, relied on a number of changes and additions to the budget package, including a ballot measures calling for an open primary (to be on the 2010 ballot) and a ban on legislative pay increases when the state budget is in deficit (to be on the May 19th ballot). Senator Maldonado also demanded that the proposed 12 cent gasoline tax increase be removed from consideration.
Delays and Deferrals
The plan does include some deferrals of payments to counties for transportation.
Transportation Deferrals
For February, March, and April 2009, a suspension of the monthly transfers of fuel excise tax allocations to cities and counties. Payments will resume in May 2009, and deferrals will be repaid in May 2009. Counties with populations under 40,000 are exempt.
Most March Medi-Cal Provider Payments Will Be Delayed Until April 2009
Chapter 4, Statutes of 2009 (SB 3x 8), authorizes DHCS to hold Medi-Cal payments for one month prior to June 30, 2009 (see text from the law below). The Administration plans to exercise this authority to defer March 2009 payments to April of 2009 for institutional providers and Medi-Cal managed care plans (March is a particularly troubling month for cash purposes). This deferral was proposed in the Governor's Budget and included in the cash package shared and discussed with each of your offices during budget negotiations. Small and rural hospitals will be exempt from this hold. In addition, providers paid with solely federal funds (public hospitals and Local Education Agencies) will be exempt.
Payments will be released on a weekly basis in April. In other words, the first payment in March will be paid in the first week of April, the second payment in March will be paid in the second week of April, and so on. The total fund impact is roughly $1.4 billion ($700 million General Fund), including a fee-for service payment impact of $880 million ($440 million GF) and managed care impact of $520 million ($260 million GF). This action will not impact the federal stimulus requirements for prompt payment of nursing facilities, as these new requirements do not go into effect until June 2009.
Chapter 4, Statutes of 2009 (SB 3x 8), authorizes DHCS to hold Medi-Cal payments for one month prior to June 30, 2009 (see text from the law below). The Administration plans to exercise this authority to defer March 2009 payments to April of 2009 for institutional providers and Medi-Cal managed care plans (March is a particularly troubling month for cash purposes). This deferral was proposed in the Governor's Budget and included in the cash package shared and discussed with each of your offices during budget negotiations. Small and rural hospitals will be exempt from this hold. In addition, providers paid with solely federal funds (public hospitals and Local Education Agencies) will be exempt.
Payments will be released on a weekly basis in April. In other words, the first payment in March will be paid in the first week of April, the second payment in March will be paid in the second week of April, and so on. The total fund impact is roughly $1.4 billion ($700 million General Fund), including a fee-for service payment impact of $880 million ($440 million GF) and managed care impact of $520 million ($260 million GF). This action will not impact the federal stimulus requirements for prompt payment of nursing facilities, as these new requirements do not go into effect until June 2009.
Tax Package
The proposal to increase the gas tax by 12 cents was removed from the package at Senator Maldonado’s request.
Personal Income Tax
The personal income tax provisions of the budget package were modified at the end of the process. What was once an up to five percent surcharge on personal income tax liability became a 0.25 percent increase in each personal income tax bracket. If the state receives at least $10 billion in federal stimulus money, the increase drops to 0.125 percent. According to press reports, this proposal raises about $400 million more than the previous proposal.
Vehicle License Fee (VLF)
The Legislature voted to increase the VLF rate from 0.65 percent to 1.15 percent; 0.15 percent of that is dedicated to local public safety programs. The remaining 0.35 percent of the increase will be deposited into the General Fund. The budget also imposes a 0.65 percent rate on commercial vehicles weighing less than 10,000 lbs. The higher rates would take effect on May 19 and last until July 1, 2011. If the spending cap measure passes at the May 19 special election, then the increase would last two additional years.
Sales and Use Tax
Under the budget deal, the state's portion of the sales and use taxes would increase by one percent, beginning on April 1, 2009 and lasting until July 1, 2011. If the spending cap measure does not passes at the May 19 special election, then the increase would last one additional year.
The higher sales tax rate, one cent per year for either two or five years, will increase Proposition 42 revenues by at least $500 million over two years.
Single Sales Factor Apportionment Change
Also included in the budget’s tax package were provisions allowing most multi-state businesses to elect to apportion income to California using only their percentage of sales in California as an alternative to using the current apportionment methodology, which averages a business' proportion of sales, property, and payroll in California (with the sales factor double-weighted). This provision will go into effect starting January 1, 2011 and is permanent. This change will reduce California taxes for firms with significant employment and property in the state, but most of whose sales are outside the state. The estimated annual revenue loss will be approximately $700 million, eventually growing to $1.5 billion.
An irrevocable annual election must be made under this new provision. Sales are defined with numerous provisions and includes “all sales of a combined reporting group regardless of whether the member is subject to state tax.” The provision applies to any apportioning taxpayer, except those listed in Rev & Tax Code Sec. 25128(b), which includes businesses that derive more than 50% of their gross receipts from agriculture, extractive businesses, savings and loans, and banks, which use the standard three-factor apportionment formula. Gross receipts are defined, as well as the term “treasury function.” There is also language that “no inference” shall be drawn on this language for tax years prior to 2011. There is also language that appears to move California from the Joyce method to the Finnegan method of determining nexus. This provision includes “clarification” on the following issues:
-Economic Nexus – amends the California Revenue & Taxation Code Sec. 23101 to specify that companies operating in CA or making sales in CA are doing business in CA and subject to CA tax, with certain de minimus exemptions.
-Gross Receipts Term – includes all gross amounts received for goods or services or for use of property to produce business include, except purely financial corporate transactions.
-Treatment of Unitary Groups – requires the sales factor to include all sales of a unitary group (i.e., the Finnegan rule) and includes sales of the group that are not subject to apportioning to any other state (known as the “throwback rule”).
-Sales of services – the budget language changes the rule that the location at which the service is performed is used in the calculation of the sales factor (such as those providing accounting, engineering or other services) and for the sale of intangible property.
Special Election Scheduled for May 19
The Legislature appropriated $10 million to the Secretary of State for the purposes of a special election, which can go up by another $5 million if necessary to cover costs.
The Legislature specified that the following measures will appear on the May 19 ballot:
-Proposition 1A – Rainy day fund
-Proposition 1B – School money
-Proposition 1C – Lottery “modernization”
-Proposition 1D* – Proposition 10 (cigarette taxes for child health) modification
-Proposition 1E* – Proposition 63 (mental health) modification
-Proposition 1F – Legislative Pay
Spending Cap/Rainy Day Fund
One of the measures on the May 19 ballot combines the ideas of a “rainy day” fund and a spending cap. Each year, the Controller would deposit three percent of General Fund revenues into the rainy day fund. Spending would be limited to the trend of revenues over the previous 10 years; revenues above that trend would go to the rainy day fund. The spending cap could accommodate tax increases. The rainy day fund would be considered “full” when it equals 12.5 percent of revenues. When the rainy day fund is full, revenues above the 10 year trend line could be used for a variety of specific onetime purposes, which the law puts in priority order. Those priorities are as follows:
- First, to pay down obligated payments to local government relating to Proposition 1A and Proposition 42 and bond debt.
- Second, other one time expenditures, unfunded liabilities (such as pension or other post employment benefits), the rainy day fund, or a one time taxpayer refund.
There are some outs, of course. The Legislature can appropriate money from the fund when the Governor declares an emergency and the forecast revenue for the year would not cover the previous year's expenditures as adjusted for population and inflation. The General Fund can borrow from the rainy day fund if the loan is repaid within the same fiscal year.
If another ballot measure, relating to education funding, passes, then beginning in 2011 half of the transfer to the rainy day fund (or 1.5 percent of General Fund revenues) would instead be used to fund education up to $9.3 billion. Once the $9.3 billion is paid off, that 1.5 percent could be used to pay down bond debt.
Open Primary/Legislative Pay
The Legislature approved a constitutional amendment to be placed before the voters in June 2010 that would create an open primary for congressional and state races in 2012 and beyond. The top two candidates would face off in a general election. While candidates would not participate in partisan primaries, they would continue to be identified with their party affiliation. The Legislature also approved a constitutional amendment banning legislative pay increases when the state budget is in deficit. This measure is slated for the May 19 special election.
WHAT’S BEEN HAPPENING
Diesel Regulations
As part of the budget package the Legislature passed ABX2 8, which relaxes air quality standards for heavy duty construction equipment. The bill requires the Air Resources Board (ARB) to amend specified provisions of its In-Use Off-Road Vehicle Regulation to provide increased compliance flexibility and credits to offset emissions reduction requirements. From years 2011 to 2013, off-road diesel fleets will be required to be retrofitted under the following schedule: 20 percent of the fleet in 2011, 20 percent of the fleet in 2012, and the balance of the fleet by 2013.
Other Specific Transportation Issues
Caltrans would receive about $13 billion in 2009-10 from the Governor, down about 9% for current year expenditures.
-General Fund revenues to Caltrans are up by $400 million (or about 30%), while all other funds are decreasing. The higher general fund expenditures reflect the increase in Proposition 42 sales tax transfers, resulting from the increase in the sales tax rate proposed by the governor. The decrease in bond fund expenditures (Proposition 1B) reflects the Governor’s plans to increase current year bond spending on eight transportation projects, as an economic stimulus.
-The Public Transportation Account, which used to receive gas tax “spillover” revenues will lose $541 million in this budget through transfers to the General fund for home to school and regional center transportation. The public transit districts are not pleased.
-Tribal Gaming Revenues, amounting to $202 million, will be redirected to the General Fund over the next 17 months. The funds will be used to repay outstanding transportation loans. These funds would go to the SHOPP program, and will only be redirected if the state receives federal stimulus funding for transportation.
-Maintenance costs continue to increase, leaving less for rehabilitation.
-Gas tax revenues from the 18 cent rate continue to decrease. Gasoline consumption has declined in CA every year since 2005.
-The Governor has a transportation stimulus package that will fast track eight major projects, exempting them from environmental review; authorizing more design-build procurement; authorizing public-private partnerships for transportation projects; and making additional bond funds available for local transportation needs.
Proposition 1B
Currently, the Proposition 1B programs are well under way, with about one-half of the $20 billion appropriated in 2007-08 and 2008-09 combined. Using bond funds came to a halt in the absence of a budget in the last few weeks, as the state’s cash problems, together with a tight credit market, held up the issuance of bonds.
The Federal Stimulus
It is expected that somewhere in the neighborhood of $3 billion will be forthcoming for state transportation projects in one-time assistance. This is in addition to the $3 billion or so the state receives annually in federal transportation funds. Depending on the level of assistance provided and the restrictions on use, federal stimulus funding could potentially pay for state projects that have been delayed due to insufficient funding. It is likely that the one-time funds will have to be extended within a short period of time, requiring Caltrans to adjust its project delivery projects.
The Legislature may provide direction to the department on the use of federal funds. Two key priority areas: SHOPP projects that are almost ready for construction; and delayed Proposition 1B projects that would be able to use federal funds.
Other Federal stimulus monies will be coming to the state that the Legislature has announced will offset numerous program cuts in education and health care. Additionally there will be monies for green energy efforts focusing on energy efficiency and renewables. Details for the state of CA are being analyzed and on Mar 17, the Senate Utilities, Energy and Communications committee has scheduled a hearing to discuss the federal stimulus package.
The Bottom Line
While the State has adopted a 17 month budget, the leaders in the Legislature and the Governor’s office expect very difficult decisions relating to re-opening the state budget to look for additional savings especially if the special election ballot measures fail in May. So the bottom line is that due to this fiscal crisis, the state of CA is in a perpetual budget process which will require all interests to be actively involved here in Sacramento.