May 10, 2016
Area(s) of Interest: Advocacy
CMA Capitol Insight is a biweekly column by veteran journalist Anthony York, reporting on the inner workings of the state Legislature.
Budget Battles Begin
For the last several years, the California budget has essentially been a non-story. Prop. 25, passed in 2010, changed the legislative vote requirement to pass a budget from two-thirds to a simple majority. In 2012, as the economy continued its incremental crawl out of the great recession, voters passed Prop. 30, which hiked the state’s upper-income tax brackets, providing state coffers with billions more in revenue to help patch the budget holes of the previous decade.
This week, Gov. Jerry Brown will release his revised budget plan, and for the first time in years, revenues are expected to be lower than the projections made by the Department of Finance back in January. Cash counters expect revenues to be about $1 billion less than state officials anticipated at the beginning of this year. While cash is still above the previous budget year’s levels, the missing of revenue targets will color the budget discussions for the next six weeks.
The money in the state’s budget reserve fund is expected to be more than enough to cover the shortfall and meet the spending priorities outlined by the governor in January. But many Democrats want to see a more robust restoration of the safety net, and will be asking the governor to agree to spend more. The cash numbers will serve the governor’s purposes well, allowing him to point to the ledger while echoing calls for restraint.
Both houses are looking at an elimination of the Maximum Family Grant, a law that limits the number of children per family who are eligible to receive a cash welfare award from the state. Democrats argue that the law hurts larger families that are struggling economically, and say the notion that such a cap would somehow be a financial incentive to limit the size of poor families is nonsense.
Some Democrats, led by Assembly Speaker Anthony Rendon, are looking toward public savings from the Affordable Care Act to provide money for increased welfare grants. The reduction in the number of uninsured has led to less money flowing from the state to counties to pay for those who do not have health insurance.
Another key issue will be access to child care, which has been a priority for both Senate Leader Kevin de León and the Assembly in recent years. Gov. Brown has been reluctant to offer broad expansions in state money for child care slots. Access to care has been impacted somewhat by minimum wage hikes, which have driven up the cost of care – putting more pressure on working families and creating additional financial burdens for the state to pay for existing child-care programs.
The governor’s May Revision, which will be released on Friday, is the unofficial beginning of budget season. The Maximum Family Grant and child care access are two of the potential flashpoints as Democratic leaders begin to position themselves for talks with the administration.
Before focusing on the budget, Brown signed five tobacco-related bills last week, raising the state smoking age to 21 and extending existing state tobacco regulations to electronic cigarette products. The bills were passed weeks ago, but were delayed to preempt any attempt by tobacco companies to referend the measures in a way that could have interfered with other statewide initiative efforts.
The ball is now in tobacco’s court, as Brown and legislators who backed the bills have called the industry’s bluff.
Another showdown is coming this fall, as the proponents of a new $2 tobacco tax prepare to hand in their signed petitions to county election officials in the coming days. The initiative, which like the bills signed last week is supported by the California Medical Association, is expected to qualify for the November ballot, setting up a multi-million dollar ballot-box battle.
The tobacco feud is one of a handful of blockbuster measures headed to the ballot. Proponents of all measures must hand in their petitions this month if they want to be assured a spot on the November ballot.
Also coming up are the June ballot and some of the legislative contests, which are generating six-figure donations and pitting business-friendly Democrats against those backed by environmental groups. This intra-party struggle is coming to a head after a number of high-profile, contentious legislative battles. The results of these races will shape the new legislative class, and could have broad implications on Gov. Brown’s final two years in office.