SACRAMENTO, CALIF (CDCAN) - With an enormous budget shortfall of about $18 billion that remains to be closed, legislative Democrats, who control both the State Senate and Assembly, adjourned today the special budget session that the Governor called in January to make nearly $9 billion in spending cuts and other reductions that he wanted to begin taking effect in the current State budget year that ends June 30. The budget hole could grow larger depending on whether or not the Governor signs or vetoes the remaining special session budget bills on his desk.

Legislative Democrats Say They Sent Governor $4 Billion In Budget Solutions

Legislative Democrats in both houses, while not rejecting yet any of the Governor proposals made in January for sweeping cuts, instead delayed action on nearly all of the Governor’s proposed spending cuts except for continuing a 3% reduction in payments for most regional center providers and for regional center operations into the 2010-2011 State budget year.

No other cuts were made in the special budget session to any other health and human service programs – though the Governor proposed sweeping reductions impacting In-Home Supportive Services, Healthy Families, SSI/SSP individual grants, adult day health centers, Medi-Cal and other services and programs.

Legislative Democrats opted instead to send the Governor a package of bills – with the final two bills passed today dealing with federal taxation and solar thermal powerplants, that Democrats said contained over $4 billion in solutions to reduce the deficit through fund shifts, delays in implementation or startup of certain programs, continuing the 3% additional cut to regional centers that coordinate community-based services to over 240,000 children and adults with developmental disabilities, and implement a complicated swapping of tax and fees that by-passed the need for 2/3rds vote in both houses.

All of the Governor’s proposed major spending cuts however remain on the table and technically still alive. With a budget shortfall that is likely still close to $18 billion projected by June 30, 2011 (the end of the 2010-2011 State Budget year that begins July 1) – a figure that could grow larger if the Governor vetoes some or all of the remaining special session budget bills sent to him still on his desk – advocates, budget analysts and lawmakers from both parties warn of big spending cuts that are likely to come later.

No Action Yet By Governor On Crucial Transit Related Bills

Meanwhile, as of late Thursday evening, the Governor has not yet taken action on the last round of bills sent to him Monday and today, including two bills dealing with a complicated gas tax swap that including funding for local transit agencies who say the legislation is crucial in helping to close their own budget holes.

Local transit officials, paratransit agencies, advocates for people with disabilities, the blind, mental health needs, seniors and low income workers and families are closely watching the outcome of those two bills because it could mean the difference of the level of sweeping cuts that local public transit agencies will be forced to make to close their budget deficits – cuts that could have major impact also to local paratransit and other accessible transportation services.

The Governor has 12 days from the date he received the bills – March 8th at 4:30 PM, to sign or veto the bills. That deadline would be at the end of the day on March 19th,

Focus Shifts To Regular Budget Subcommittee Process

Attention will now focus on budget subcommittee hearings in the upcoming weeks through mid-May scheduled in both houses that will review the Governor’s proposals for the 2010-2011 State Budget year that begins July 1. [See CDCAN Reports covering schedule of budget hearings]

Final action on the Governor’s proposals – including those he wanted passed as part of the special session that included massive cuts to health and human services – will not likely be taken until late May or June, after the Governor releases his revisions to his proposed 2010-2011 State Budget.

Governor Vetoes Bill That Democrats Say Contain Nearly $2.2 Billion In Budget Solutions

As previously reported, the Governor on Monday (March 8th) vetoed ABx8 2 (the “x8” stands for the 8th special session, and the number “2” is the bill number) that legislative Democrats said contained nearly $2.2 billion of the over $4 billion of budget solutions. The Governor, in his veto message, said the bill only delayed implementation of several programs and made no serious spending cuts.

Democratic Legislative Leaders Criticize Governor’s Veto

In a statement, Senate President Pro Tem Darrell Steinberg (Democrat - Sacramento) criticized the Governor’s veto of ABx8 2 saying that “It’s baffling the Governor would veto $2.1 billion in real budget solutions which were part of his own proposed package. Of the $2.1 billion, approximately $1.8 billion were identical to the Governor’s proposal.

He keeps saying he wants cuts, but when we give him $2.1 billion in cuts, he won’t take it.”

Steinberg Hopes Governor Will Sign Crucial Transit Funding Bills

Steinberg meanwhile hoped that Schwarzenegger would sign the remaining special session budget bills sent to him, including a gas tax swap bills that local transit agencies say are crucial in helping to close their budget shortfalls.

“While the Governor has signed legislation ensuring California has adequate cash to pay its bills this fiscal year, he still has a chance to make a significant dent in our state’s budget deficit by signing the gas tax swap bill and other job creation bills we have already sent or plan to send by Thursday. These bills will create at least 40,100 jobs in California and will help expedite the recovery of our economy,” Steinberg said.

Assembly Speaker John Perez (Democrat – Los Angeles) also issued saying that "the Legislature acted responsibly and proactively to impose spending restrictions on the 2010-2011 budget bill. While the Governor's veto is unfortunate, the $2.2 billion in identified savings in [ABx8 2] will still be reflected and achieved in the budget that the Legislature will pass later this Spring or early Summer."

Senate Republican Leader Hammers Democrats For Ending Special Session Without Major Cuts – Calls Democrats “Irresponsible”

Senate Republican Leader Dennis Hollingsworth (Republican – Murrieta) hammered legislative Democrats for ending the special budget session without making major cuts in spending, saying in a statement that “five years ago, the people placed into the Constitution the requirement that the Legislature, upon the declaration by the governor, stop all other work in order to address a fiscal crisis. We’re definitely in a fiscal crisis, and the governor two months ago proposed spending reductions and solutions to the current budget that amounted to more than $8.9 billion. Yet, today the Democrats closed down the emergency session to deal with that crisis after only finding about $60 million in programmatic spending reductions, and less than a third of the solutions needed.”

Hollingsworth roundly criticized legislative Democrats for ending the special session today without making major spending cuts, saying that their “…action today, after papering over the deficit, adding more gimmicks, and continuing to spend more than we have, and then closing the emergency session the people demanded at the ballot box as the most efficient way to get the Legislature to concentrate on the deficit, is extremely irresponsible.”

He said that “It’s time the Democrat majority gets serious about fixing the spending problem and getting California back on track by removing the obstacles to job creation that will get Californians more jobs and the increase of revenues that will go along with that.”

Democratic Leaders Announce Budget and Legislative Reform Package

Meanwhile, with the special budget session over both Democratic legislative leaders and representatives of California Forward, a public interest “good government” group. announced a major package of reforms that they said would “improve government effectiveness in California, stabilize state finances, increase accountability and enhance public oversight of government operations”.

For the past seven months, the Legislature held a series of hearings by the Senate and Assembly Select Committees on Improving State Government on proposals to reform the State budget and legislative processes, chaired by Sen. Mark DeSaulnier (Democrat -Concord) and Assemblymember Mike Feuer (Democrat - Los Angeles). Legislative Democratic leaders said that the reform package announced today resulted from melding the work done by the Senate and Assembly Select Committees on Improving State Government and California Forward.

Steinberg and Perez said that the next step would be for the Assembly and State Senate to amend the reforms proposed by California Forward into constitutional amendments, to be heard in coming months in committee hearings. Additionally, the two Democratic leaders said that the Legislature will undertake a series of institutional reforms to improve oversight, prioritize key issues and promote bipartisanship.

“California Forward has presented a unique opportunity to begin changing our system,” Senate President Pro Tem Steinberg said. “We will fix what we can on our own and work to put constitutional change on the ballot as soon as possible.”

“As I said when I was sworn-in, this needs to be a year of real and meaningful reform,” Assembly Speaker Pérez said. “That’s why I am pleased to join my colleagues and the leadership of California Forward to advance a set of proposed solutions that help make our government more accountable and effective.”

The constitutional amendments will include the following elements of the California Forward proposal:

· Reducing the vote threshold for passing a budget to a simple majority vote.

· Raising revenues would still require a 2/3 majority vote.

· Requiring legislators to forfeit pay and per diem if a budget is not passed on time.

· Giving authority to the Governor to reduce spending in the Budget Act if the Legislature does not pass a measure to address a fiscal emergency.

· Requiring the Governor to include longer-term budget forecasts.

· Limiting the use of “one-time” revenue for one-time purposes.

· Establishing performance standards for state programs that are periodically reviewed.

· Requiring a 2/3 vote threshold for fees that replace taxes.

· Requiring lawmakers to identify funding sources for bills that cost the state at least $25 million per year.

Legislative reforms include:

· Institutionalizing oversight of the executive branch as one of the Legislature’s most important ongoing duties.

· Requiring committee chairs to prioritize a small list of issues and report them to leadership.

· Revamp the process to evaluate the effectiveness of boards and commissions referred to as “Sunset Review”.

· Reducing by 1/3 the number of bills members may carry and allow an exception of up to 2 bills to bipartisan-authored measures.

The parts of the reform package dealing with approving the budget and changing other constitutional requirements, face a difficult road ahead if the two Democratic leaders are hoping the measures are placed on the ballot by the Legislature that would mean voters could consider the package in the November 2010 general election. To do that however requires 2/3rds vote in both houses – meaning Republican votes would be needed, something that appears unlikely given the strong opposition announced also today by the two legislative Republican leaders.

Legislative Democrats could also place the reform package on the ballot through petition – but that process is both costly and time consuming and would not qualify in time for the November ballot.

Legislative Republican Leader Oppose Reform Measures Saying It Will Weaken Taxpayer Protections

Legislative Republican leaders in both houses said they were strongly opposed to the reform measures, with Senate Republican Leader Hollingsworth saying that the package as it stands would weaken taxpayer protections.

"The Democrats again are simply trying to take away the protections the people put into the constitution, so they can raise taxes and spend more. Rather than real reforms that would get California back on track, or provide more jobs, the Democrats are reverting to form: tax more, spend more," Hollingsworth said in a statement today.

Senate Republicans said that the reform proposal unveiled by the two Democratic leaders would lower the vote requirement to a simple majority for both the passage of budget spending and raising local taxes, which they claim “is a direct attack on the protections of Propositions 13 and 218 that California voters have repeatedly supported over the last 30-years.”

Assembly Republican Leader Martin Garrick (Republican – Carlsbad, 74th Assembly District) said that the reform package “…would weaken long-standing taxpayer protections. One of their most contentious proposals would do away with the two-thirds vote requirement for passing budgets and replace it with a majority vote threshold.”

Garrick said Assembly Republicans would oppose the reform package, saying that "While there are parts of this proposal that might take legislative reforms a small step forward, as a whole it would send California taxpayers three steps back. Assembly Republicans will not support efforts by California Forward and legislative Democrats to weaken or eliminate taxpayer protections requiring two-thirds votes for budgets, tax increases or trailer bills."

Garrick warned that "Legislative proposals that need Republican support to place initiatives on the ballot that would undermine long standing taxpayer protections are dead on arrival. Measures seeking to change existing law and increase sales taxes by a slim majority of local voters will not receive Republican support."

Garrick did applaud some of the reforms put forward, saying that "while California Forward may have some ideas on reforming the legislative process that merit discussion, many of them could be adopted by leadership with a memo and wouldn't require any legislation. We agree for example that there should be limits on the number of bills each member can introduce each year, and that more time in committees should be devoted to oversight of agencies and performance reviews. Unfortunately, any worthy legislative process reform proposals are vastly overshadowed by far-reaching proposals to do away with long standing taxpayer protections."

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