State Budget
Governor Newsom's FY 2020-21 State Budget proposal of a $222.2 billion was released January 10, 2020: http://www.ebudget.ca.gov/FullBudgetSummary.pdf.A summary of the State Budget proposal from the County's state legislative advocates is Attachment A.
The Senate and Assembly Budget Committees held their first hearings to discuss the Governor's proposed budget for FY 2020-21 the week of January 20, 2020. These are the first round of hearings. The Budget Committees will hold a number of hearings on specific topics in the Budget until May, when the Governor will release his May Revise budget proposal.
According to CSAC staff, the focus of these hearings consistently came back to housing and homelessness. Assembly Member Phil Ting, the Chair of the Budget Committee, applauded funding to expand affordable housing, while also addressing the current homeless crisis. The Governor’s proposal includes a new Access to Housing and Services Fund, with an initial state investment of $750 million. The fund will pay rent for individuals facing homelessness, support new dwelling units, and help stabilize board and care facilities and homes. Republicans drilled the Administration’s witnesses on fiscal responsibility and what they see as increased bureaucracy.
For each budget release, CSAC staff provides a Budget Action Bulletin to summarize the most important programs and accounts to counties. Several of the proposals in the January Budget warrant close attention from counties, including:
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A $12.5 billion investment over five years for climate resilience, partially funded by a proposed climate bond, to fund initiatives related to forest health, Community Power Resiliency (formerly PSPS), home hardening, and a climate revolving fund that would provide low- interest loans for waste diversion, low-carbon transportation, and sustainable agriculture.
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A reduction in probation term lengths for both felony and misdemeanants to two years, matched with an investment in more intensive supervision and services for misdemeanant probationers.
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$695 million, growing to $1.4 billion in the out-years, for preventative health care, over a third of which will be aimed at the unsheltered homeless population.
Last week, the Urban Counties of California joined a number of county-affiliated associations to communicate to Governor Newsom a shared commitment to working on solutions to the state's homeless crisis, including those outlined by the Governor's Council of Regional Homeless Advisors. The letter to the Governor outlines a number of concerns about the Council's recommendation to include a constitutional mandate to address homelessness but reiterates a willingness to participate in dialogue with state and local government partners and stakeholders.
Trailer Bill Language Deadline
As part of the annual state budget process, the Department of Finance is subject to a February 1 deadline to provide the Legislature with proposed statutory language – called trailer bill language (TBL) – necessary to carry out the provisions associated with the various elements in the Governor’s spending plan. TBL for the 2020-21 budget will be posted here; typically it is grouped by subject matter area.
The TBL will provide greater insight into the specific approach the Administration is proposing on various budget items. As for next steps, the Senate and Assembly budget subcommittees will begin meeting in late February to consider the Governor’s budget proposals and take public testimony. As a reminder, the budget subcommittees and their respective jurisdictions are as follows:
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Senate Budget and Fiscal Review Subcommittees |
Assembly Budget Subcommittees |
No. 1 – Education
No. 2 – Resources, Environmental Protection, Energy, and Transportation
No. 3 – Health and Human Services
No. 4 – State Administration and General Government
No. 5 – Corrections, Public Safety, and the Judiciary |
No. 1 – Health and Human Services
No. 2 – Education Finance
No. 3 – Resources and Transportation
No. 4 – State Administration
No. 5 – Public Safety
No. 6 – Budget Process, Oversight and Program Evaluation
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LAO: Overview of the Governor’s Budget
On the heels of the release of the Governor’s budget, the Legislative Analyst’s Office (LAO) has published its annual report: “Overview of the Governor’s Budget.” In it, the LAO outlines its analysis of the Governor’s proposal, with a focus on sharing recommendations for the Legislature to consider during its budget deliberations. Some highlights of the report:
Addressing Reserve Amounts: The Governor’s proposed budget does not continue previous years’ practice of bolstering budget reserves beyond what’s required by the Constitution. To nobody’s surprise, the LAO recommends that the Legislature consider whether it is satisfied with the Governor’s proposed reserve level or whether it would prefer a higher level.
Spending the Surplus: The LAO notes that the Governor had an estimated $5.9 billion surplus to allocate in the budget. Of that amount, though, the LAO indicates that 95 percent of the Governor’s proposals (out of an estimated 140 proposals) are relatively small, less than $100 million in 2020-21. The LAO suggests the Legislature consider if it would rather dedicate more resources to a smaller number of priorities.
Managing Risk: Again, the LAO cautions that state’s rosy budget picture is subject to considerable risk. In the short-term, federal decisions about health care financing; on the horizon, some indications that the economy may be slowing down.
Growing the Operating Surplus: A healthy operating surplus also guards against the impact of budget shortfalls. However, the LAO notes the Governor’s proposed budget has small operating reserves for the three-year forecast period, which, combined with the decision to forego additional deposits into the Rainy Day Fund, makes for a risky approach. The LAO recommends maintaining a positive operating balance in its own multi-year budget plans.
State Legislation
Two-Year Bills' Early Session Deadline
The deadline for two-year bills passed on January 31, 2020. Bills introduced in 2019 that did not pass out of their house of origin were required to be considered and moved to the second house by the end of the month. (February 21, 2020 is the deadline for new bills to be introduced.) One of the two-year bills that was watched closely by local government was SB 50 (Weiner).
Senator Scott Wiener brought his high-profile, controversial housing production bill – SB 50 – up for a vote on the Senate Floor on January 29– a vote made possible by Pro tem Toni Atkins who pulled the bill from the Senate Appropriations Committee where it faced a likely defeat. Despite that effort, the bill failed to garner a majority vote and the measure died on an 18-15 vote with six members abstaining. The Senate debated the bill for close to three hours yesterday, and members from both sides of the aisle stood up in support and opposition to the bill. Senators Ben Hueso and Nancy Skinner sided with the author and pressed their colleagues to consider the bill as a work in progress but worthy of moving forward through the legislative process so additional refinements could be made. Senators Hertzberg and Stern also voiced support in concept for the measure but ultimately voted no based on the fact that the bill did not offer resolution to significant concerns with SB 50 (including mandatory upzoning in high fire severity zones where development should not likely occur).
Senator Wiener was granted reconsideration at the end of the vote, but the bill failed to get the votes when it was brought up for a second time. At the conclusion of the debate/vote, the Pro tem addressed the chamber, congratulating the body for a meaningful effort, but committing to bring a housing production bill to a successful conclusion during the 2020 session. Governor Newsom also provided comment, stating that, “…if this falls short, we are not giving up. We are going to continue to work aggressively to address production in this state.” Senator Wiener has commented publicly that he is prepared to reintroduce legislation and has two housing placeholder bills at the ready.
Other bills of interest to Contra Costa County are included in Attachment B.
Attachment C are the Draft Policy Priorities and Major Policy Issues for 2020 from the California State Association of Counties (CSAC). These draft priorities will be voted on by the CSAC Board of Directors at their February 13, 2020 meeting.
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