According to the overview, the conference version of the budget “carefully balances the need for additional public investment in child care, education, health care and other programs, with the necessity of maintaining the state’s fiscal stability through increased reserves and debt reduction.” These priorities include actions that will:

• “Benefit educational programs from pre-school through college, through:
  • “Investments of significant resources in early childhood education that will expand capacity, increase rates for services, and ensure a sound budgetary footing for the childcare program.
  • “Increased resources for K-12 education directed to the implementation of the Local Control Funding Formula, and more funds for educator training and adult education.
  • “Additional resources and improvements for the state’s higher education programs and segments by adopting greater support services, increasing enrollment slots for California residents, and CalGrant expansions.
• “Improve California’s health care system by increasing Medi-Cal provider rates, restoring most optional Medi-Cal benefits, and adding funding for specific specialized programs.
• “Provide resources for a new state Earned Income Tax Credit, consistent with the governor’s plan, which will provide a limited refundable tax credit for very low-income, wage-earning families.”

As detailed above, the Legislature’s version of the budget allocates total General Fund expenditures of $117.5 billion for 2015-16, which is about $2.2 billion more than Governor Jerry Brown’s May Revise. The budget includes total reserves of $5.7 billion, which includes $4.2 billion in the Prop. 2 “rainy day fund” and $1.5 billion in the regular budget reserve.

According to a prepared statement from the Assembly Democratic Caucus, the conference version of the budget “adds another $700 million over what the governor proposed for schools”:

• “Increases Prop. 98 funding for 2015-16 by $8.2 billion more than was provided in 2014-15 budget.
• “Expands Early Education funding by an ongoing amount of $577 million. In the budget year, the total cost will be $409 million, this includes:
  • “$148 million for preschool and quality rating activities within Proposition 98.
  • “$261 million for child care and preschool programs outside of Prop. 98.”

California community colleges and state universities will also receive increased funding:

• “Increases funding for the CSU by $107 million, an increase of $70 million over the May Revision. This increase will grow to about $150 million over the next few years, allowing CSU to increase enrollment and speed graduation times.
• “Provides $25 million increase for the UC, but makes the funds contingent upon UC increasing enrollment of California students by 5,000 over the next two years, capping enrollments of out of state students and only using state financial aid for in state students.
• “Increases the Cal Grant B stipend by $150, increases the number of Competitive Cal Grants awards by 16,000, eliminates the planned cut to Cal Grants for non-profit colleges, and funds the Middle Class Scholarship to cut tuition by 20 percent for CSU and UC students in the 2015-16 year.
• “Provides major increase for Community Colleges including a $38 million Cal Grant B increase for Community College Students.”

Regarding health care, the new budget will restore 5 percent of the “AB97 Medi-Cal rates cut for dental care immediately and the rest of Medi-Cal services on April 1, 2016.” In addition, funding has been allocated toward Medi-Cal services for children, regardless of immigration status. Previously optional Medi-Cal benefits have been restored, and Developmental Disability Services rates are increased by 5 percent for targeted services and 2.5 percent for all other services.

Senate President pro Tempore Kevin de León, D-Los Angeles, said in a prepared statement:

“Our legislative budget is on time, balanced, and great news for schools. Our budget includes $5.7 billion in reserves, about $1 billion more than the governor’s May Revision reserves, and an additional $760 million in debt payment, along with targeted investments to ensure economic growth and the well-being of our residents. This budget increases access to higher education for California students, adds childcare options for working families, creates an earned-income tax credit for working people, and provides help for Californians dealing with the drought.”

Despite the fanfare, Senate Republican Leader Bob Huff, R-San Dimas, urged caution in a release earlier this week:

“This budget deal negotiated by the legislative Democrats uses revenues projections that are higher than the governor’s May revenue projection by $3.2 billion. This is a risky move. I am afraid legislative Democrats want to spend money that may not exist and that once again will push our state into budget deficits down the road.

 

“Senate Republicans continue to press for a responsible, balanced budget. However, the ball is in the hands of the majority party in the Legislature, the Democrats. They can join the governor and Senate Republicans to continue to rebuild the Golden State’s financial health or they can continue to spend money we do not have, which ultimately would put our state financial outlook at risk.”

Both houses will vote on legislation reflecting the committee’s decisions, Senate Bill 69 and Assembly Bill 93, on Monday, June 15.

By Katy Grimes

Democratic Leaders in the Legislature have figured out a clever way to bypass the legislative committee process, in order to ensure the results they want. This latest legislative trickery and rule manipulation created quite a stir at the state Capitol Thursday.

Earlier in the week, without warning, the Assembly Banking and Finance Committee, chaired by Assemblyman Mike Eng, D-Monterey Park, dropped three bills off the schedule. But these weren’t just any bills, they were the bills which make up the mortgage reform “Homeowner Bill of Rights” package, sponsored by Democratic Attorney General Kamala Harris.

Ostensibly, this bill package would reform California’s mortgage and real estate crisis.

However, after the Harris bill package dropped off the Assembly committee schedule, a related bill, AB 278 by Assemblyman Jerry Hill, D-San Mateo, popped up on the Senate floor Thursday, and was shoved through to passage, with only support from Democrats.

AB 278 is just a shill-bill dealing with unlicensed real estate agents. But it is being used fto trigger the necessary procedures required to create a Democratic-controlled conference committee to manage the outcome of the Attorney General’s bills.

Supporters of the conference committee option said that, because the Harris bill package was complex, the conference committee would provide lawmakers the opportunity to deal with the major policy changes.

But others are outraged and say that creating the legislative conference committee will allow the bill package to bypass the entire committee policy and finance process, as well as avoid scrutiny by the public.

Homeowners Bill of Rights

Harris is pushing lawmakers to pass the Homeowners Bill of Rights, patterned after President Barack Obama’s legislation of the same name. The legislation is supposed to protect homeowners facing foreclosure.

But bankers have objections.

Small banks and local credit unions did not cause the mortgage crisis — investment bankers did.

But that’s not stopping lawmakers from punishing all bankers, regardless of the ramifications.

A $25 billion national settlement agreement reached in February, struck among the Department of Justice, the Department of Housing and Urban Development, 49 state attorneys general and the country’s five largest mortgage loan servicers: Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Wells Fargo & Company and Ally Financial Inc., according to Forbes.

The five biggest U.S. banks agreed to the deal, which would impose a ban on all banks from filing a foreclosure notice when a homeowner is in the middle of the loan modification process.

The national ban expires in three years, but Harris is pushing for California to keep the ban in place permanently.

Critics say that the bill package in the California Legislature may actually pave the way for more lawsuits, and slow any recent improvements in the already slow-to-recover housing market. With economists predicting another mortgage meltdown, the American economy could be in for an economic hurricane.

Opponents also say that the legislation would create expensive, new lending obligations, which would likely result in a much higher cost to borrow money, which could be an additional blow to the housing market.

However, instead of allowing Harris to defend her bills in the committee hearing, legislators bowed to pressure from above, and pulled the bills from the committee calendar.

Talk around the Capitol after the hearing episode was that the order to pull the bills came from the highest office in the state, and referred to a feud between Gov. Jerry Brown and Harris. But this has not been confirmed.

In the right corner…

Thursday’s maneuver did not go down without a fight. Sen. Sam Blakeslee, R-San Luis Obispo, urged Senators to oppose AB 278, and reminded colleagues that the Legislature had recently passed dozens of spot bills, weakening the legislative process. “This is not the historical norm,” Blakeslee said.

Spot bills are empty bills which do not yet contain language, but will be used at the end of the legislative session to pass laws legislators couldn’t get passed through the traditional committee process.

Blakeslee said that in the past, only the state’s 2010 water bond, the 2004 workers compensation reform, and electricity deregulation had been dealt with in conference committee, and only after already being vetted using the standard committee process.

A conference committee is traditionally used to work out the differences which committees could not.

“We are speaking about a bill on real estate,” Blakeslee said.

Blakeslee explained that by avoiding the usual and legal committee process, the public would never hear the policy and financial debate surrounding the bills. He expressed his irritation that the Senate Banking and Finance committee, of which Blakeslee is the vice chairman, would never have a chance to weigh in on the bills.

“There’s not precedence in the use of the conference committee,” Blakeslee said. “I am standing in defense of the majority party. It raises serious questions about to what lengths this body will go to jam through legislation without the types of processes we have historically used.”

“These are regular policy issues. “We should not pervert our process to produce the desired outcome,” Blakeslee said.

“And to the minority party, do not surrender your constitutional power,” Blakeslee added.

Leadership weighs in

“To have hearings on policy is right,” said Senate Minority Leader Bob Huff, R-Diamond Bar. “To obfuscate is not.” Huff pointed out that the Senate Joint Rules require that all bills, other than budget bills, must be heard by policy committees of each house.

“We form a conference committee to find a meeting of the minds,” Huff said. “Without normal transparency, major policy issues here will be decided on in some smoke-filled back room. Trampling on the rules is a slippery slope.”

“Read your rules,” Senate President Pro Tem Darrell Steinberg, D-Sacramento replied. “Read your Senate rules. Because we pride ourselves on following the rules, and in this instance we have done so.”

“We’re not trying to hide anything,” said Sen. Juan Vargas, D-San Diego. “Important things can be done in the conference committee.”

Capitol staffers explained that the conference committee members, appointed by Assembly Speaker John A. Pérez, and Senate President Pro Tem Darrell Steinberg, will consist of six members in total, made up of one Republican and two Democrats from each house. Committee appointments will be announced next week.