Volume 3, Issue 2, (January 24, 2000)
In This Issue:
Governor Davis Releases Proposed 2000-01 State Budget
Legislative Analyst Forecasts Rise in Budget Surplus
Davis Announces Opposition to Transportation Plan
Battle Over Water and Development Renewed
Assembly Approves Handgun Measure
Legislature Acts Quickly on Smog Impact Fee Refund Bill
Republicans Propose Legislation Establishing Structure of Support for Unwanted Babies
Mandatory Arbitration in HMO Lawsuits Challenged
Alzheimer's Disease Training for Caregivers Proposed
Lifetime Parole Proposed for Child Molesters
Bill Proposes Tuition for Veterans
Senate Race Heads for Run-off Election
Governor Davis Releases Proposed 2000-01 State Budget
Governor Davis has released his proposed state budget for the 2000-01 fiscal year to the State Legislature. The 2000-01 budget forecast has significantly improved since the enactment of the 1999-00 budget, and the Governor's budget is predicated upon a $3 billion surplus in revenues (compared to current year spending). However, shortly after the release of the Governor's proposed budget, independent Legislative Analyst Elizabeth Hill announced an anticipated $6 billion surplus in anticipated revenues over spending – $3 billion more than predicted in the Davis proposed budget.
The $85.1 billion spending plan reflects an increase of 3.7 percent increase from current year spending. Revenues include $68.2 billion in General Fund revenues, with more than $16 billion in additional special fund revenues. A $1.2 billion reserve, or 1.8 percent of the total budget, will be held for emergencies and contingencies.
Once again, the Governor's budget focuses primarily on education, with increases in spending on initiatives aimed at student achievement, teacher recruitment, and training and new technology.
K-12 education will account for 40 cents of every General Fund dollar expenditure. Education, public safety, and health and human services will account for nearly 88.3 percent of the state's General Fund expenditures.
Key Budget Proposals
Education:
Higher education spending includes:
Health Care/Long-term Care:
• $10 million to aid in housing severely mentally ill homeless people
• $93 million in spending and $47 million in tax credits for initiatives to improve senior care
Tax Relief:
$167 million in tax relief (includes the $47 million long-term care credit). Increases in net operating loss deductions, expansion of research and development credit, and a one-time $100 million tax credit for land donations is proposed.
There are several key one-time commitments proposed, including:
Spending Plan Outline:
The following provides a spending plan outline of $88.2 billion, including $85.1 billion in anticipated revenue spending coupled with $3 billion expenditure of bond funds:
Anticipated Income from Revenue Sources:
The following outlines anticipated revenues from taxes and fees. Special Fund revenues are designated for a specific purpose and may not be used for other expenditures. Additional funding sources, beyond general and special fund revenues, include bond revenues.
(Dollars in Millions)
| General Fund | Special Fund | |
| Personal Income Tax | $36,319 | |
| Sales Tax | $21,396 | $2,352 |
| Bank and Corporation Tax | $6,236 | |
| Highway Users Taxes | $3,172 | |
| Motor Vehicle Fees | $28 | $5,199 |
| Insurance Tax | $1,304 | |
| Estate Taxes | $984 | |
| Liquor Tax | $273 | |
| Tobacco Taxes | $137 | $1,137 |
| Horseracing Fees | $1 | $33 |
| Other | $1,559 | $4,118 |
| Total | $68,237 | $16,011 |
Legislative Analyst Forecasts Rise in Budget Surplus
Legislative Analyst Elizabeth Hill, the Legislature's nonpartisan fiscal analyst, announced that California's budget surplus is $3 billion greater than anticipated. Governor Davis released his budget with an anticipated $6 billion surplus in revenues to be collected over the next 18 months, of which half would be spent on one-time expenditures.
Democratic legislative leaders have suggested using the additional surplus on mental health, local school districts, health care, housing and the homeless. Republican leaders suggest spending $1 billion on transportation, as well as cutting college fees and cutting taxes.
Davis Announces Opposition to Transportation Plan
Governor Davis publicly announced his opposition to a plan to allow local governments to more easily extend the life of transportation taxes. Senate Constitutional Amendment 3 by Senate President Pro Tempore John Burton (D-San Francisco) would allow local governments with transportation sales taxes to extend the life of those taxes for up to 20 years with a majority vote of the people, instead of a 2/3 vote.
Davis indicated he would offer his own plan within the next few months, but has not announced what would be included in his plan.
Transportation sales taxes are used for local transportation projects, including highway improvements, bus service, rail service and other congestion management programs.
Burton has criticized the Governor for speaking against SCA 3 without first meeting with him to discuss transportation funding. He sited the need for $20 billion for local transportation projects, much of which will be lost without the ability to lower the required vote to extend transportation sales taxes. The $20 billion local funding source accounts for only a portion of the estimated $100 billion need for transportation funding in California over the next ten years.
Battle Over Water and Development Renewed
The Assembly Local Government Committee approved a bill that ties future development to water reliability with a 5 to 1 vote. Assembly Bill 1219 by Assemblymember Sheila Kuehl (D-San Francisco) would require cities and counties to demonstrate that sufficient water supplies are available to supply new housing developments and existing residential, business and agricultural customers. Prior to approving the measure, however, the Committee weakened the bill by eliminating such a requirement for drought years.
An unusual alliance of farmers and environmentalists have joined together in support of the bill while developers and realtors oppose the bill while calling for construction of more dams and reservoirs to meet the demands of continued development.
Assembly Approves Handgun Measure
The state Assembly has approved an Assembly bill that would require any person who buys a handgun to demonstrate to the dealer that he or she knows how to use the handgun.
Basic proficiency in loading and unloading the gun, knowledge of how to operate safety devices and how to determine whether or not the gun is loaded would be a criteria in purchasing a handgun under Assembly Bill 863 by Assemblyman Mike Honda (D-San Jose). A prospective buyer who fails to demonstrate the basic handgun knowledge must be instructed by the gun dealer on these basic safety techniques.
The measure was approved with a 54 to 11 vote and advances to the Senate. A measure to require licensure of handgun owners and registration of their firearms was defeated in the Assembly on the same day.
Legislature Acts Quickly on Smog Impact Fee Refund Bill
The owners of nearly 1.7 million vehicles may receive a refund of $300 for smog fees illegally assessed by the state on out-of-state vehicles brought into and registered in California since 1990, under a recent ruling by the state's Third District Court of Appeal that the fees were unconstitutional. The fee was imposed as the Legislature and then-Governor Wilson grappled with a multi-billion dollar budget deficit in the early 1990's.
Following the ruling, several bills have been introduced to implement a smog impact fee refund.
Assembly Bill 1702 by Assemblyman Tom McClintock (R-Simi Valley) will be heard in the Assembly Transportation committee in the coming weeks. AB 1702 will appropriate $767 million to send refund checks, including the fee plus interest, to individuals who paid the fee. Refunds due to vehicle owners who paid the fee but cannot be found will be placed in an escrow account.
Assemblyman Alan Lowenthal (D-Long Beach) has introduced AB 809 to require the Department of Motor Vehicles to search its records to identify those who paid the smog impact fee on or after October 1, 1990 and to refund the fees with interest.
Senator Betty Karnette (D-Long Beach) has also introduced legislation to return the fees, plus interest. Her Senate Bill 1325 would require the state to notify potential claimants and require them to file claims with the state, including information regarding when and where they paid the fee.
Karnette has also amended Senate Bill 215 to transfer $665 million from the state's general fund to pay for the smog impact fee refunds.
Governor Davis has announced his support for the refunds, and has asked officials at the Department of Motor Vehicles and the Business, Transportation and Housing Agency to make recommendations on how to coordinate the refunds.
Republicans Propose Legislation Establishing Structure of Support for Unwanted Babies
Senator Jim Brulte (R-Rancho Cucamonga) and Assemblyman Ken Maddox (R-Garden Grove) have introduced legislation to allow mothers to legally abandon unwanted newborns without threat of prosecution. Assembly Bill 1764 by Maddox and SB 1368 by Brulte would allow mothers to leave unwanted babies who are 30 days or younger at police or fire stations, social welfare offices, child protective agencies or county hospital emergency rooms.
The bills have been introduced on the heels of several recent stories of the discovery of abandon newborn infants in California and around the nation. In 1998, 105 infants were abandoned with 33 of them (30 percent) found dead. Social workers, public safety employees, and supporters and opponents of abortion rights have praised the legislation.
Mandatory Arbitration in HMO Lawsuits Challenged
Assemblywoman Sheila Kuehl (D-Santa Monica) has introduced legislation that would prevent health maintenance organizations from forcing their customers into arbitration. Assembly Bill 1751 would allow customers to pursue jury trials rather than be forced to deal with medical disputes through arbitration, which often leads to smaller potential awards.
Kuehl introduced the bill following actions taken by several HMOs following the enactment of Senate Bill 21 last year, which gave patients the right to sue their HMOs for punitive damages for failing to provide medically necessary treatment. Since that law was enacted, Kuehl says HMOs have included mandatory arbitration clauses in the contracts in order to limit the size of awards to patients.
Consumer advocates support the bill, arguing mandatory arbitration clauses force customers to give up their right to a jury trial, and that arbiters are often selected by the HMO company, not the consumer. HMO advocates oppose the bill, suggesting consumers can choose to sign up with an HMO that does not include a mandatory arbitration clause in the contract.
Alzheimer's Disease Training for Caregivers Proposed
Assemblywoman Gloria Romero (D-Los Angeles) has introduced Assembly Bill 1753 to provide for the training and credentialing of residential caregivers that care for elderly persons who have Alzheimer's Disease.
The bill would require the Department of Aging to establish an Alzheimer's training and credentialing program that establishes minimum training requirements for staff at any residential care facility for the elderly that promotes or offers specialized care for residents with dementia, including Alzheimer's disease and related disorders.
Facilities that specialize in such care would be required to meet minimum staff training requirements under the proposed legislation.
Lifetime Parole Proposed for Child Molesters
Senate Republican Leader Ross Johnson (R-Irvine) has introduced legislation that would authorize a parole authority to impose lifetime parole on persons who are convicted of a sex offense against a child under the age of 14 years. The measure would allow the authority to release the sex offender from the lifetime parole on a showing of good cause.
Bill Proposes Tuition for Veterans
Assemblywoman Audie Bock (I-Oakland) has introduced Assembly Bill 1739 to enact the California G.I. Bill of Rights Act. Funds would be appropriated to provide grants to eligible veterans to help cover the costs of tuition and books at the University of California, the California State University, or at a California community college.
Senate Race Heads for Run-off Election
Assemblywoman Nell Soto (D-Pomona) has upset Republican leaders who had hoped to capture the Senate seat vacated by now-Congressman Joe Baca (D-San Bernardino). Soto captured 48 percent of the vote on January 11th, missing a majority 50 percent of the vote by just two points, forcing Soto into a run-off against Republican real estate broker Rob Guzman from Fontana.
The run-off election will coincide with the state's March 7th primary election.
Democrats currently enjoy a stronghold on legislative seats in the Senate, with 24 Democratic seats compared to 15 Republican seats. Should Soto win the run-off election, the Democratic majority will climb once again to 25. The 32nd Senate District has been a fairly conservative district, although Democrats have held the seat for 25 years. The demographics of the district have changed in recent years, with registered Latino voters increasing to 30 percent of registered voters.