CAPITOL BEAT
“May Revise is Released”
By Aaron Read & Assoc.
BUDGET
Governor Schwarzenegger released his revised budget proposal on Friday, May 14th. As expected, cuts were severe and there has been substantial backlash to the proposals. As we analyze the details, more information is coming out of the Governor’s office, as well as the Assembly Speaker and the Senate Pro Tem’s offices. Some of the proposals will not directly impact most PORAC members, but the precedent that they set is what is of concern.
The Governor stated when he released his May Revision that no budget would be signed unless it contained pension reform. His definition of “pension reform” now goes beyond rolling back benefits to pre-SB 400 levels, as he proposed in January. His suggestions are now embodied in SB 919 (Hollingsworth), which aims to reduce retirement formulas, increase the age at which employees can receive these benefits and makes changes to retiree healthcare; all of this to be done directly by the Legislature, not at the bargaining table.
SB 919 would only be applicable to state employees. However, as stated earlier, these formulas would likely become the template for all local collective bargaining. SB 919 would provide the following formulas:
Current Proposed in SB 919
|
State Patrol and Civil Service Peace Officers and Firefighters |
3% at age 50 |
2.7% at age 57 with actuarial reductions for ages between 50 and 57 |
|
CSU Peace Officers and Firefighters
|
3% at age 50 |
2.5% at age 57 with actuarial reductions for ages between 50 and 57 |
|
Legislative and Judicial Branch Peace Officers |
3% at age 55 |
2.5% at age 57 with actuarial reductions for ages between 50 and 57 |
|
State Safety |
2.5% at age 55 |
2% at age 62 with actuarial reductions for ages between 50 and 62 |
In addition, the Governor also said he would not sign a budget unless it contained a "rainy-day" fund (i.e. a hard spending cap). Within his plan he did not propose any spending increases and instead made drastic cuts, mainly to health and welfare programs.
LOCAL GOVERNMENT
The Governor has revived from January his plan to save $291.6 million by shifting 15,000 non-violent, non-sex offender, non-serious offenders with sentences of three years or less from prisons to county jails. Most county jails are already at capacity, so this plan essentially means the early release of inmates currently housed at those facilities. In his proposal, the state would pay the counties $11,500 to house each inmate, which is less costly than housing them in state facilities. The previous plan did not include any reimbursement to local government for housing these inmates. In addition to that prisoner shift, the Governor proposed shifting supervision of juvenile parolees to county probation, which his office estimates could result in a $4.6 million savings in 2010-11. The state will provide locals with $15,000 per juvenile parolee.
In 2009, PORAC fought hard to move local law enforcement program funding to the Vehicle License Fee. This funding is set to expire in the 20112012 budget, meaning these programs will then be funded by a continuous appropriation of $502.9 million annually. This money will be used to support law enforcement programs including COPS and Juvenile Justice, the War on Meth, Vertical Prosecution, Booking Fee Reimbursement and Rural Sheriff Assistance.
Furthermore, there is a proposal floating around the legislature to tack on $40 to every red light camera ticket and direct those funds to state coffers. It is not in the Governor’s May Revise, but something the Legislature may include in budget talks.
Now it is up to the Legislature to meet and discuss these proposals, which they will be doing over the next few weeks. The deadline for the Legislature to submit their budget is June 15th. We will continue to monitor the talks and keep you updated as decisions are made.
EMPLOYEE COMPENSATION
Among the Governor’s compensation reduction proposals is one-day-per-month of unpaid leave for state workers in 2010-11. The state would reduce employee pay 4.65 percent each month and employees would receive a credit to take the time off. The credits would have no cash value, so employees couldn't get money for them upon retirement or separation from the state. However, employees would be told to use accumulated unpaid leave time before taking paid leave, according to the Governor's office. The proposal would apply to all state workers regardless of whether they are general fund or special fund employees. This proposal is of serious concern, as it makes further cuts to employee salaries without any discussion at the bargaining table.
The Governor plans to end the current furlough program on June 30th and is continuing to push for his 5/5/5 employee compensation proposal included in his January budget. Within that plan is a 5% increase in employee pension contributions, 5% reduction in all salaries and a 5% reduction in the cost of state workforce payroll by Executive Order, requiring all department directors to reduce their payrolls by 5% before July 2010.
SPEAKER JOHN PEREZ’S RESPONSE
In the wake of these proposals, there has been much talk about what the Legislature is going to do in response. One of the first to come out strong against the proposals was Assembly Speaker John Perez (D- Los Angeles). He has been firm in his position that changes to employee salary and benefits need to be discussed at the bargaining table and not implemented legislatively, and definitely should not be part of budget decisions.
According to Speaker Perez, “This job killing proposal reflects the absolute wrong approach to our budget—as does his habit of insisting that he won’t sign a budget without extraneous, non-budget policy changes. I want to be absolutely clear on this point—the Governor is once again engaging in the kind of Sacramento business as usual approach to politics. We will approve a budget—and only a budget. He can threaten to veto all he wants, but the Assembly will not engage in policy discussions that aren’t related directly to the budget.”