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LEGISLATION COMMITTEE

Meeting Date:	10/25/2016
Subject: 2015-16 End of Session Report
Submitted For:	LEGISLATION COMMITTEE
Department:	County Administrator
Referral No.:	2016-12
Referral Name:	End of Session Report
Presenter:	L. DeLaney and Cathy Christian	Contact:

Information

Referral History:

At the conclusion of the legislative session, staff provides the Legislation Committee with a summary report of advocacy activity at the state level. The County's legislative advocate, Cathy Christian of Nielsen Merksamer, provides an update on top-priority bills and final outcomes of the 2016 year (Attachment A).

Also included is the CSAC Legislative Achievements Report (Attachment B) and CSAC's final FY 2016-17 State Budget Actions (Attachment C).

Referral Update:

The final stage of the 2015-16 session has come to a close. The Legislature adjourned on August 31, and the Governor had until September 30 to sign or veto bills that made it to his desk. As this is the end of a two-year legislative session, bills that failed passage in both houses of the Legislature now would have to be reintroduced in the upcoming 2016-17 legislative session.

Key achievements and end-of-session legislative highlights of importance to counties include:

• Managed Care Organization (MCO) Fix: In March, the Governor and Legislature reached agreement on an important MCO fix that remained elusive in 2015. The MCO tax is important as it provides implementation funding for the Coordinated Care Initiative (CCI) pilot program in seven counties. Counties support the CCI to ensure better care coordination for high-risk, high-cost residents who are dually eligible for both Medicare and Medicaid. The CCI is also tied in an important way to the counties’ role in the In-Home Supportive Services (IHSS) program, as the continuation of the CCI is required to preserve the county IHSS Maintenance of Effort (MOE) under 1991 Realignment. The IHSS MOE sets county IHSS costs at 2012 levels with a 3.5 percent annual inflator. Further, if the CCI succeeds in the initial seven counties, the eventual plan is to transition collective bargaining for IHSS workers from each county to the state—however there are no set timelines for this phase to occur. This fix prevented the collapse of the CCI, maintains the county IHSS MOE and continues the support of transferring collective bargaining from counties to the state in the CCI counties and potentially the remaining 51 counties in the future.

• $2 Billion Bond for Homelessness: Mental Health Services Act (MHSA) revenues will be used to support the issuance of $2 billion in revenue bonds for homelessness for the mentally ill. Senate pro Tem Kevin de León’s “No Place Like Home” proposal (AB 1618 and AB 1628) will result in a local grant program for permanent supportive housing for those who are chronically homeless and living with mental illness. An advisory group of county staff will be established that will assist the state in implementation.

• Cap and Trade Revenues: One of the last compromises reached between the Legislature and the Governor was a deal on the expenditure of the 40 percent of unallocated cap and trade revenues, totaling $900 million in funds dedicated to a variety of programs to reduce greenhouse gas (GHG) emissions, while placing $462 million in a reserve account for future years. While the plan is a bit of a mixed bag for counties, $140 million is dedicated to a new local climate program aimed at reducing GHG emissions from variety of different sectors in disadvantaged and other communities. In addition, the plan allocates $40 million to programs that increase waste diversion and help reduce methane emissions from our landfills. The deal also allocates $135 million to the Transit and Intercity Rail Program consistent with the goal that cap and trade dollars be invested towards transportation programs.

• Mandatory Union Orientation: AB 2835 (Cooper) would have required public agency and school employers to allow union representatives to participate in new employee orientations for 30 minutes during the first half of that orientation. AB 2835 was moved to the Senate Inactive File on the last day of the 2015-2016 session and did not move to the Governor for action.

• Elections Funding and Reform: Positive movement was made on the elections front with great attention being given to the unpredictable changes brought by the presidential race and dozens of statewide ballot initiatives. This included securing over $16 million in funding this April for county elections administration to manage the unprecedented surge in voter registration and primary election anticipated turnout. Legislation seeking to help counties manage costly special elections through a vote-by-mail option (AB 2686) was signed by the Governor as well.

• Traffic Amnesty: Senator Bob Hertzberg introduced SB 881 early in the Legislative session to extend the 2015-16 Traffic Amnesty Program and remove all ability for counties to suspend California Driver’s Licenses for individuals who fail to pay traffic fines. SB 881 was amended to only clarify existing timeframes within the current traffic amnesty program. The measure specifically requires the courts to process applications in a timely manner and requires all applications prior to March 2017 be processed for the traffic amnesty program. SB 881 was signed into law.

More Work to Be Done: There were a number of significant issues of importance to counties that unfortunately failed to receive the high two-thirds vote threshold necessary for passage. Those include an elusive transportation funding package, compromise on a “use by right housing” proposal in order to access $400 million in state general fund revenue for affordable housing, and a Proposition 218 amendment to allow local governments to impose fees for storm water and flood control costs. The special session called by the Governor to tackle transportation funding shortfalls for the state and local systems remains open until November 30th. A broad coalition will continue working through the interim recess to push for a compromise and solution to transportation funding.

State Budget: The 2016-17 budget totaled $122.5 billion, and despite forecasts for a shaky economic future, the overall budget package was not detrimental to counties and even included several priorities. The main budget deal was signed in June, with additional major proposals not coming through until September, including the “No Place Like Home” housing program and cap and trade auction revenue allocations. The Governor’s statutory language to streamline the approval of certain housing projects that include affordable units, known as the “by-right” proposal, left $400 million on the table and was not resolved by the time of adjournment. 2016-17 Budget Act highlights for counties included:

$2 billion state bond authority financed by Mental Health Services Act funds for the new “No Place Like Home” program providing permanent housing to homeless persons living with mental illness.
$11 million to assist in the removal and disposal of dead trees in high hazard zones.
$10 million in State Responsibility Area Fire Prevention Fund grants, including $5 million in grants to local governments specific to tree mortality and tree removal and $5 million for general fire prevention.
$270 million for jail construction grants.
$25 million in grants for hard-to-site criminal justice facilities to cities and counties.
$127.3 million for foster care group home reform.
$30 million to support local jurisdictions using the California Disaster Assistance Act Program for tree mortality and other disasters.
$644,000 for Payment in Lieu of Taxes (PILT).
$2.5 million for Williamson Act.
Nearly $400,000 in state backfill for counties with insufficient ERAF.

Early indications of an anticipated economic downturn tempered some legislative requests and focused the final overall budget plan on greater long-term savings. The first month of state revenues under the new budget showed a dip in all of the “big three” revenue resources (personal income tax, corporate tax, and sales tax) compared to estimates.The overall budget package also reflects both the Governor’s efforts to restrain ongoing commitments and create stronger reserves as well as the Legislature’s priorities to assist the most vulnerable and invest in critical support services and education. Ongoing commitments that the Legislature sought included funding child care and pre-school rate increases that will grow to over $500 million annually.

Recommendation(s)/Next Step(s):

ACCEPT the End of Session reports and provide direction to staff, as needed.

Attachments
Attachment A: Nielsen Merksamer Report
Attachment B: CSAC Advocacy Achievements
Attachment C: CSAC Final 2016?17 Budget Package Bulletin