July 20, 2009
Budget Agreement Reached
At 6:45 this evening, Governor Schwarzenegger and the Legislative leadership emerged from a 3+ hour closed session and announced that they had reached an agreement on how to close the $26.3 billion budget gap. Details of the agreement remain sketchy as the leaders have embargoed details until they meet with their respective caucuses. What follows has been pieced together from various news reports and tweets.
The local government piece is made up of three areas:
- Redevelopment: $1.7 billion RDA Hit ($1.350 billion in FY 2009-10) and ($350 in 2010-11). City of Industry RDA securitization proposal is included, locals allowed to opt in for up to 40 years! If it works and generates $3 billion for the state (believe trigger date is December 1, 2009), then HUTA and Prop 1A are not triggered.
- Taking of $1.7 billion in gas taxes over a two year period. The HUTA bill will be a majority vote special session bill, which means it will not take effect for 90 days after the conclusion of the special session.
- Suspension of Proposition 1A and borrowing of $2 billion from local government. Some additional tightening was added to Proposition 1A securitization language, including increasing repayment priority but it is not clear that this will be sufficient to enable securitization of this hit.
Some detailed cuts: $6 billion K-14 education; $3 billion higher education; $1.3 billion in state worker furloughs; $1.2 billion from corrections; $1.3 billion in Medi-Cal; $528 million from CalWORKS; $211 million from IHSS through new background checks and fingerprinting requirements for IHSS providers and recipients. no cuts to provider salaries.; $226 million in healthy families cuts; no early release of prisoners ; scored savings include $1 billion for sale of state insurance fund, and $100 million for new offshore oil drilling in Santa Barbara County. No word on eligibility determination.
Of course, CSAC will work to analyze all materials as they become available to provide a detailed analysis of the budget and its impacts on California’s counties. It is expected that both houses will begin voting on these measures no later than Thursday. Look for a Budget Action Bulletin later this week.
Know as well that CSAC is working with the County Counsels, outside counsel, the League of California Cities and others to review the legal aspects of several of the budget solutions, especially the issues around the RDA extensions and the raiding of local government gas taxes.
California State Association of Counties
1100 K Street, Suite 101
Sacramento, CA 95814
(916) 327-7500 x506
(916) 441-5507 - Fax