State Budget FY 2020-21
In the midst of the coronavirus pandemic with its associated challenges of plummeting revenues and legislating remotely, the Legislature was largely focused in June on passing a State Budget before the June 15 constitutional deadline. While successful in meeting that goal, the budget bill did not reflect a finalized deal between the Administration and the Legislature. More negotiations were required for the passage of a main "compromise" budget bill and its related budget trailer bills. Subsequently, on June 26, the Legislature passed the 2020-21 Budget Act, bringing a temporary completion to a budget process that was entirely upended by the onset of the pandemic. After declaring a "Budget Emergency" on June 25, 2020 to allow the state to draw from its Rainy Day fund, on June 29, 2020, as expected, Governor Newsom signed the Budget Act (AB 89).
Given the ongoing nature of the pandemic, the delay in tax receipts due to the extended filing deadline, and continued uncertainty about whether any additional federal relief funding will be provided to the state, it is likely that the Governor and Legislature will reconsider aspects of this budget during the fiscal year. (Notably for counties, action was deferred on the issues of Department of Juvenile Justice realignment and the vaping tax.) In all, the approved $202 billion budget avoids cuts to health care and social service programs while bridging a $54.3 billion pandemic-driven deficit. A full State Budget Summary is available here: http://www.ebudget.ca.gov/FullBudgetSummary.pdf
While county budget priorities shifted significantly between January and June, ultimately counties were successful in achieving positive outcomes on several high priority issues, many directly in response to the pandemic. Key county funding in the State Budget includes:
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$1 billion as a Realignment "backfill" to help prevent devastating cuts that would occur to safety net programs due to declining Realignment revenues;
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$1.289 billion from the Coronavirus Relief Fund to help pay for the costs of responding to the COVID-19 pandemic;
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$100 million for the increased costs of the November election and the new requirements in response to the pandemic;
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$900 million for various homelessness efforts for counties, cities, and continuums of care from both federal funds and state General Fund.
The budget agreement addresses the State’s $54.3 billion deficit through a combination of cuts, fund deferrals, and temporary revenue increases (see details below). Overall, the State Budget that was approved by the Legislature rejects most of the programmatic cuts that were contained in the Governor’s May Revise. The Budget does contain the Governor’s “trigger up” structure of cuts but adopts many of the Legislature’s proposals for addressing the shortfall. The Budget does not contain the proposed May Revise cuts to education and community colleges, but instead defers billions in education funding to future budget years. The Budget also rejects $2.2 billion in cuts that were proposed in the May Revise for health and human services programs, including programs for seniors.
According to the Governor's Press Office, the Budget was balanced essentially through the following steps:
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Reserves: The Budget draws down $8.8 billion in reserves from the Rainy Day Fund ($7.8 billion), the Safety Net Reserves ($450 million), and all funds in the Public School System Stabilization Account.
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Triggers: The Budget includes $11.1 billion in reductions and deferrals that will be restored if at least $14 billion in federal funds are received by October 15. If the state receives a lesser amount between $2 billion and $14 billion, the reductions and deferrals will be partially restored.
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Federal Funds: The Budget reflects $10.1 billion in federal funds that provide General Fund relief--including $8.1 billion that have already been received.
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Revenues: The Budget generates $4.4 billion in new revenues for FY 20-21 by temporarily suspending the use of net operating losses and temporarily limiting to $5 million the amount of business incentive credits a taxpayer can use in any given tax year.
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Borrowing/Transfers/Deferrals: The Budget includes $9.3 billion in special fund borrowing and transfers, as well as other deferrals for K-14 schools. (Approximately $900 million in additional special fund borrowing is associated with the reductions to employee compensation and is contained in the trigger.)
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Cancelled Expansions, Updated Assumptions and Other Solutions: The remaining $10.6 billion of solutions includes: a. Cancelling multiple program expansions and anticipating increased government efficiencies; b. Higher ongoing revenues above the May Revision forecast; c. Lower health and human services caseload costs than the May Revise estimate.
Included within the budget agreement is federal funding to help address the impacts of the COVID-19 pandemic. The Budget reflects estimated spending of $5.7 billion directly to the COVID-19 pandemic. Specifically, the budget contains $500 million in Coronavirus Relief Funds for cities, which will be allocated as $225 million for cities with populations above 300,000 and $275 million for cities with populations below 300,000. The Department of Finance will be working quickly to disperse these funds, as federal law requires the funds to be expended by the end of the calendar year or else the funding will revert to the federal government. The Budget also contains a $716 million reserve within the "Special Fund for Economic Uncertainties" so the state can respond quickly to the changing conditions of the pandemic.
In addition, the Department of Housing and Community Development is receiving $550 million in CARES Act funding to help secure shelter for homeless individuals who are at risk for contracting COVID-19. Specifically, the funding can be used for acquisition, or acquisition and rehabilitation, of motels, hotels, or hostels; master leasing of properties; acquisition of other sites and assets; and the relocation costs for individuals who are being displaced as a result of rehabilitation of existing units.
An additional $300 million from the State’s General Fund is provided to local governments to address homelessness, building on the state’s investments of recent years. This funding will be distributed in the form of Round 2 of the Homeless Housing Assistance Prevention (HHAP) program as follows: $90 million to Continuums of Care; $130 million to cities with populations over 300,000; and, $80 million to counties.
Full details on these and numerous other provisions can be found in CSAC's summary of the adopted budget.
The Assembly Floor Analysis of the Budget Act is Attachment A.
The text of the Governor's Budget Emergency proclamation can be found here: https://www.gov.ca.gov/wp-content/uploads/2020/06/6.25.2020-Budget-SOE-Proclamation.pdf
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Legislation
Aside from passing a state budget, the Legislature was also actively considering legislation in June to meet various legislative deadlines. June 5 was the last day for policy committees to report non-fiscal bills to the floor, and June 19 was the last day for fiscal committees to hear and report bills to the floor. June 22-26 was dedicated to floor session only for the Senate, and the Assembly was told to return to Sacramento in order to pass the budget. June 25 was also the deadline for the Legislature to pass a measure in time to qualify for the November ballot.
Below were the scheduled deadlines for the Legislature, prior to learning of 5 positive COVID-19 cases in the Assembly:
July 13 – Legislature reconvenes from Summer Recess
July 31 – Last day for policy committees to hear and report fiscal bills to fiscal committees
August 7 – Last day for policy committees to meet and report bills
August 17-31 – Floor session only
August 21 – Last day to amend bills on the floor
August 31 – Last day for each house to pass bills
The state Senate was scheduled to return to work on July 13. However, the Senate has officially notified offices that it will not return next week, and a fixed date for returning has not been offered. The Legislature is scheduled to end its biennial session on August 31, although an extension or special session may be needed. Clearly, the longer the Legislature remains on recess, the less time there is to pass bills before the session ends.
Plenty of major issues remain for the Legislature, including rent relief measures, housing bills, and a raft of newly introduced criminal justice related bills. According to POLITICO, here are some of the key ones:
Policing:
AB 1022 by Assemblymember Chris Holden (D-Pasadena) would augment the penalties for excessive use force — most critically by creating a three-strikes-and-you’re-out rule that would disqualify people from being peace officers if they have used excessive force or failed to intercede to prevent it three times. It would require officers to report when a fellow officer uses excessive force and attempt to intercede to stop it — and if they “willfully” fail to, they would be considered principals in that crime.
It would also launch a website where citizens can file complaints and search for public records of peace officers by name.
SB 731 by Sen. Steven Bradford (D-Gardena) would disqualify people from serving as peace officers if they’ve been convicted of crimes like falsification of records, bribery, or perjury. It would allow the Commission on Peace Officer Standards and Training to revoke certification for violations like excessive force, sexual assault, unprofessional conduct or making a false arrest. California Attorney General Xavier Becerra called earlier this year for legislation empowering POST to decertify officers who have committed serious misconduct.
AB 1196 by Assemblymember Mike Gipson (D-Carson) would prohibit law enforcement from subduing suspects using carotid restraints or choke holds. Newsom has called for a prohibition on carotid restraints and numerous California law enforcement agencies have banned them in recent weeks
Protest management:
AB 1652 by Assemblymember Buffy Wicks (D-Oakland) would regulate how law enforcement manages protests to cover tactics like “kettling” or “corralling” protesters, require law enforcement to identify themselves as such, and prohibit use of force on members of the press covering demonstrations — with violators facing mandatory suspension. It would downgrade the penalty for unlawful assembly. Gov. Gavin Newsom has called for a uniform state standard for managing protests.
SB 629 by Sens. Mike McGuire (D-Healdsburg), Jerry Hill (D-San Mateo) and Bob Hertzberg (D-Van Nuys) would make it a misdemeanor for peace officers to assault or obstruct members of the press who are gathering information. Reporters would be shielded from penalties for failing to disperse or violating curfews, and if they are detained they could speak to a supervisory official.
AB 66 by Assemblymembers Lorena Gonzalez (D-San Diego), Ash Kalra (D-San Jose) and Cristina Garcia (D-Bell Gardens) would bar law enforcement from deploying "kinetic energy projectiles or chemical weapons" to disperse protests — a designation that applies to rubber bullets and tear gas and pepper spray. Newsom and others have lambasted law enforcement for using force to suppress demonstrations.
Public records:
SB 776 by Sen. Nancy Skinner (D-Berkeley) would make every use-of-force incident subject to public disclosure, restrict the use of attorney-client privilege to limit disclosure, require law enforcement agencies to retain records of complaints and allow disclosure of records even if an officer has resigned before an investigation ends or if a complaint alleging sexual assault or dishonesty has not yet been sustained by an investigation.
AB 1314 by Assemblymember Kevin McCarty (D-Sacramento) would require law enforcement agencies to publicly post how much money they’re spending on use-of-force settlements and judgments.
Other related bills:
SB 203 by Bradford would tighten rules for interrogations of minors by requiring that 16- and 17-year-olds consult with legal counsel before interrogations and allowing courts to consider if they that didn’t happen — expanding protections that currently only apply to those who are 15 or younger. The bill’s language notes, “Youth under 18 years of age have a lesser ability than adults to comprehend the meaning of their rights and the consequences of waiving those rights.”
SB 369 by Hertzberg and Bradford would create a new California Reentry Commission in the Health and Human Services Agency to work on offenders’ safe reentry into society from prison or jail — including by examining the effect on reentry of Covid-19, which has eviscerated job opportunities.
The housing related bills of note include the following:
SB 1120 (Atkins) Tentative Maps, a bill that would, among other things, require a proposed housing development containing 2 residential units to be considered ministerially, without discretionary review or hearing. This measure would build off the ADU law that allows for at least three units per parcel to further encourage development in single-family neighborhoods by creating a ministerial approval process for duplexes and lot splits that meet local zoning, environmental and tenant displacement standards.
SB 995 (Atkins, Wiener, Caballero, Rubio) Jobs and Economic Improvement through Environmental Leadership, a bill authorizes CEQA compliance streamlining by requiring judicial action within 270 days of the filing of the certified record of proceeding with the court. The bill would also revise and recast the labor-related requirements for projects undertaken by public agencies and projects undertaken by private entities.
SB 902 (Wiener): Housing Development: Density. This bill would authorize a local government to pass an ordinance to zone any parcel for up to 10 units of residential density per parcel, at a height specified by the local government in the ordinance, if the parcel is located in a transit-rich area, a jobs-rich area, or an urban infill site, as defined.
SB 1085 (Skinner) Density Bonus Law. Housing for Lower-income Students. This measure would require a county or city to grant additional incentives or concessions for a project that contains a specified percentage of units for moderate income rental housing and lower income student housing developments. (The League of Cities has an "Oppose Unless Amended" position on this bill.)
SB 1385 (Caballero) Local Planning. Housing in Commercial Zones. This measure, the Neighborhood Homes Act, would deem a housing development project, as defined, an authorized use on a neighborhood lot zoned for office or retail commercial use under an agency's zoning code or general plan. The measure would require the density for a housing development under these provisions to meet or exceed the density deemed appropriate to accommodate housing for lower income households according to the type of local jurisdiction, including a density of at least 20 units per acre for a suburban jurisdiction.
The list of bills the County is actively monitoring and/or advocating is Attachment B. |