State Budget Update June 29, 2009

From: Skinner, Erik
To: SO2CBO@LISTSERV
Subject: Budget Update--June 29, 2009

Dear Colleagues:

There is an old Sacramento saying that it takes an extreme summer heat spell to bring about a state budget deal. So far, our recent string of 100 degree-plus days is not showing results.

Last night the State Assembly passed a series of budget-related bills intended to address the state’s $24 billion budget shortfall. Put forward by Democratic leaders, the bills for the most part reflected the Conference Committee version of the budget (the community college portions were identical). The major change in the package was a restructuring of several revenue proposals designed to allow for passage on a simple majority vote. Specifically, the proposals were recrafted to mirror an approach taken by Legislative Democrats in December in which fees were substituted for taxes in order to render the tax changes “revenue-neutral.” The State Legislative Counsel contends that such a maneuver allows the changes to be enacted on a simple majority vote. Legislative Republicans contend that the approach is unconstitutional and threaten to challenge the maneuver in court. The Governor vetoed the set of bills in December and has threatened to veto the new versions as well.

Earlier today the Senate passed the package of bills approved by the Assembly last night. Normally the bills would have gone directly to the Governor for his signature or veto. However Senator Steinberg seemed to indicate that the Senate would hold onto the bills for the time being in order to “sort out some differences with the Assembly.” It is not unusual for the Legislature to hold onto bills in order to work out technical issues or to impact the timing of a negotiation. We are attempting to get clarification on the status of these bills.

Late this afternoon, the Senate took up the current-year portions of the Conference Committee budget package which includes over $3 billion in current-year cuts and deferrals. These same bills were approved by the Assembly last week on bipartisan votes only to be rejected by the Senate. The bills require a two-thirds vote due to the need for immediate implementation. The bills were brought back to the Senate in a last ditch effort to achieve current-year savings before the end of the fiscal year. For the community colleges the current-year package includes $85 million in cuts and $115 million in funding deferrals.

At this time, the bills have been placed “on call” in the Senate awaiting final vote tallies. Based on the current vote count, the measures would fail due to lack of Republican votes. However, Senate leader Darrell Steinberg is meeting with Republican leadership in an attempt to broker an agreement. The Senate is scheduled to return at 6:00 p.m.

More updates to follow.

Regards,

Erik Skinner

Vice Chancellor for Fiscal Policy
California Community Colleges,
Chancellor's Office
1102 Q Street
Sacramento, CA  95811-6549
eskinner@cccco.edu