As predicted when the Legislature convened in January 2010, there would be no easy solutions to balancing a budget that was ravaged by recession, hit by dwindling tax revenues, and coupled with greater demands for spending. Enacting the State’s spending plan has become a contentious battle between the Republicans and Democrats making it almost impossible to forge compromises on tax increases, spending cuts, borrowing, IOUs and band-aid fixes. When Governor Schwarzenegger signed the revised 2009 Budget Act in July 2009, the anticipated budget deficit for FY 2010-11 was $6.9 billion. However, when the Governor issued his proposed $82.9 billion spending plan in January 2010, the deficit had grown to $19.9 billion. The budget gap included a $6.6 billion (then-)current budget year shortfall, $12.3 billion projected shortfall for FY 2010-11 and a reserve of $1 billion. Schwarzenegger then declared a fiscal emergency and called a special session to address the current year shortfall.  

The Governor’s budget called for no new taxes and spending reductions that included deep cuts to health and human service programs, including the elimination of CalWORKs and IHSS, a permanent pay cut for state employees, reductions in K-14 education spending, and reductions to corrections spending. Other provisions included a transfer of financial responsibility for specified children’s programs from the state to counties. The Governor argued that counties could pay for the additional responsibilities with savings achieved from other program reductions.  

Senate and Assembly Democrats rejected the Governor’s January budget and the May Revision, proposed their own versions, and held informational budget hearings. Budget talks stalled as the Democrats proclaimed they were done cutting, Republicans would not raise another tax, and the Governor stated he would not sign any spending plan that did not include pension and budget reforms. When the Controller announced the State could cover its obligations through July, the Constitutional deadline to enact a spending plan came and went becoming the latest budget to be enacted in state history.  
  
On the last day of the legislative session, both houses took up the Republican and Democratic versions of a budget solution. Those proposals were discussed and debated for about two hours with no real hint as to the urgency of the situation. No agreement between the parties was reached and the Legislature returned to the business of disposing of the hundreds of bills that remained to be dealt with by midnight of August 31. On October 1, the legislative leaders and the Governor announced they had reached a budget deal. It took another week, until the early morning hours of October 8, 2010 to finally craft a deal in the Legislature.  
  
WATER AND DELTA LEGISLATION in 2010  
  
In addition to the legislative proposals from the 2010 legislative session discussed below, County staff and its advocate, Cathy Christian of Nielsen Merksamer, continued to remain active on behalf of the County on water and Delta-related legislation. Ms. Christian participated in and helped plan the bi-weekly calls with the Delta County Coalition and worked with County staff and federal lobbyists on numerous issues related to protecting the County’s stake and its leadership position in the Delta. Ms. Christian coordinated with other Delta County lobbyists on administrative issues so that the DCC is well-informed as the individual counties work with the Delta Stewardship Council, the Delta Protection Commission and the Delta Conservancy.  
  
TRANSPORTATION in 2010  
  
There was virtually no state legislative activity on transportation this year aside from budget-related issues. All of the significant non-budget transportation bills were left to die in committee, due to the legislative leadership’s desire to focus its activity on the budget. Therefore the County did not have an opportunity to work towards most of the transportation goals in the 2010 State Platform.   
  
Early in the session, it appeared Senator DeSaulnier might reintroduce his County-sponsored bill from 2008 that would provide more flexibility in the eligible uses for revenue from traffic impact fees on new development. He had introduced the bill for the County in 2008 and it passed committees but was killed near the end of the session by a homebuilders group from Orange County. However, Senator DeSaulnier decided not to reintroduce the bill this year after the Senate President placed limits on the number of bills that senators could introduce.  
  
California State Association of Counties (CSAC), however, has voted to make the item part of its legislative platform for 2011. The proposal is to allow traffic mitigation fee revenue to be used for any type of transportation improvements that are needed to mitigate the impacts of a development, including pedestrian, bikeway, and public transit improvements. Current law limits the use of the revenue just to improvements to “major thoroughfares” and bridges.   
  
As previously mentioned, the only transportation-related legislative activity in Sacramento in 2010 had to do with certain aspects of transportation funding, as part of the budget resolution. The budget agreement for FY 2010-11 included a complicated “swap” in which the state sales tax on gasoline was eliminated and replaced with an increased statewide gas tax to make up the difference. Essentially, the Fuel Tax Swap, adopted in February and March 2010, replaced the Proposition 42 funds with an increase in the gas tax (17.3 cents per gallon, equal to $2.5 billion), starting July 2010, and an adjustment in the diesel sales and excise taxes that would fund transit, beginning July 2011. The purpose of the swap was to give the State more ability to divert or borrow transportation funds and use them for other purposes, such as reducing the State budget deficit. (Gas tax revenue did not have the Constitutional protection from diversion that the State sales tax did). The swap was to be revenue neutral--at least in the short term.  
  
However, two statewide propositions approved by voters in November 2010 call the viability of the swap into question. One is Proposition 22, which protected all local revenues from diversion by the State. This seems to defeat the purpose of the swap, since the gas tax funds are no longer “divertable”, based on the protection provided by Prop. 22. (Prop. 22 also prohibited the State from using any of the excise tax or Prop. 42 funds from aiding the State general fund. This causes a portion of the Fuel Tax Swap revenues that had been earmarked for Prop. 1B and other bond debt service to no longer be available for this purpose, creating an $800 million “hole” in the State general fund.) The other proposition approved in November 2010 is Proposition 26, which requires that all fee increases be subject to the same two-thirds majority vote requirement as taxes. Since the gas tax-for-sales tax swap was not approved by a two-thirds majority vote, the courts may need to decide whether it can stand in light of Prop. 26. Proposition 26 also requires any new tax adopted in 2010, such as the Fuel Tax Swap, to be re-enacted in 2011, or expire; this threatens the new 17.3 cents per gallon ($2.5 billion).   
  
For the County and other local jurisdictions, this has placed uncertainty over how and when the State will resume its traditional monthly distribution of transportation funds to cities and counties. These funds are known as “HUTA” (Highway Users Tax Account) funds. The County’s transportation advocates, Smith Watts Co., are part of a working group/coalition that has convened to deal with the issue in Sacramento.  
  
Finally, the last Governor proposed in December to offset the General Fund threat by instead using Truck Weight Fees to fund Proposition 1B and other bond debt service. The coalition has taken the posture that on the Weight Fee issue, this is supportable as it simply is in line with the agreement in the Fuel Tax Swap to prop up Proposition 1B with some transportation resources. But, the coalition wants rapid action on a re-enactment of the Fuel Tax Swap components adopted in 2010, as we do not want to lose the $2.5 billion.   
  
REVIEW OF LEGISLATIVE ACTIVITY BY THE COUNTY  
  
The County Board of Supervisors took positions on 16 bills in 2010. Of the 11 bills the County supported that went to the Governor, 7 were signed into law. In addition, the County participated in the Delta Counties Coalition, monitoring 91 bills that impacted the Sacramento-San Joaquin Delta and water policy, and monitored approximately 67 measures to ensure they were not amended to negatively impact the County. (See Attachment B for additional information.)  
  

  
Each year, the Board of Supervisors adopts a State Legislative Platform that establishes priorities and policy positions with regard to potential State legislation and regulation. The State Legislative Platform includes County-sponsored bill proposals; legislative and regulatory priorities for the year; and policy issues that provide direction and guidance for identification of bills which would affect the services, programs or finances of Contra Costa County. The proposed 2011 State Legislative Platform is included as Attachment C.   
  
Notable changes from the 2010 State Legislative Platform include the following:  
  
1. The County-Sponsored Billshave been amended to move last year's bill proposal concerning all-mail ballots for special elections to the Policy Positionssection (where a "Support" position is recommended) and add a bill related to Public Safety Retirement, Tier C, to extend that legislation by removing the sunset date of December 31, 2011. The prior year legislative proposal regarding the Subdivision Map Act Amendment for Pedestrian, Bicycle, Transit and Traffic Calming Facilities is recommended to be retained, with the expectation that assistance from Senator DeSaulnier and CSAC will help move the bill forward in the 2011 legislative session.  
  
2. The Legislative/Regulatory Advocacy Prioritieshave been amended to remove Transportation Funding, although it remains an issue that will be monitored and engaged in, as needed. The Redevelopment Agency Revenue issue has been amended to reflect the concern regarding the Governor's proposed elimination of redevelopment agencies.  
  
3. The Policy Positionshave been amendment as follows:  
  
a. As previous mentioned, a position has been added to Elections Issuesto support legislation that would add provisions to the state Elections Code that would allow special elections to fill a vacancy in a congressional or legislative district to be conducted by all mailed ballots at the county’s discretion. (p. 7)  
  
b. A position has been added to Emergency Preparedness/Responseto support legislation requiring the creation of emergency rock stockpiles suitable for levee repair throughout the Delta, enabling increasingly efficient and less costly prevention of levee breaks and enhancement of initial response capabilities. (p. 7)  
  
c. A position in Health Care Issueshas been amended to address to implementation of the 2010 Medi-Cal waiver. (p. 12)  
  
d. A position has been added to Human Services Issuesto support efforts to restore funding in the amount of $80 Million for the Child Welfare Services Program that was line-item vetoed by Governor Schwarzenegger in the State’s FY 2009-10 and FY 2010-11 budgets.  
  
e. Illegal Dumping of Wasteis retitled "Waste Management," and a policy position is added to support legislation that establishes producer responsibility for management of their products at the end of their useful life. An additional policy is added to support efforts to increase the development of markets for recycled materials. Finally, the section is moved to conform with its new alphabetic ordering in the document. (p. 23)  
  
f. Levee Issues, Delta Issues has been revised to reflect the top five priorities for the year: 1. Short-term Actions to be implemented immediately; 2. Conveyance: Through-Delta and Isolated Conveyance; 3. The Delta Ecosystem; 4. Governance; 5. Levee Restoration. (p. 19)  
  
g. Transportation Issueshas been amended to replace a policy supporting increased transportation funding and protection of current funding sources with a position that supports increased flexibility in the use of transportation funds, such as the proposed amendment the Subdivision Map Act to allow the use of off-site transportation impact fees to fund pedestrian, bicycle transit and traffic calming facilities necessitated by new development. (p. 21)