Category: State

2017-2018 California State Budget

6/7/2017

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The 2017-2018 proposed annual California Budget, introduced by Government Brown, in January of 2017, was recently revised this May after taking into consideration tax collection from January to April (see our Newsletter for details).
Consistent with the last several years as the California economy has recovered from the 2007-2010 economic recession, the California annual budget proposal has once again is expanding government spending. While the January annual budget proposal initially entailed a $5.8 billion reduction in revenue from last year, since the growth of the stock market in January, revenue is now projected $2.5 billion higher than the 2016 budget. This 2017-2018 annual budget proposal entails a total General Fund Expenditure of $124.01 billion, an increase of $1.2 billion from 2016-2017, and an estimated total General Fund Revenue of $125.9 billion, an increase from last years General Fund Revenue of $118.5 billion.
This additional spending in 2017-2018 is expected to address issues in the State's water system, increase money for K-12 Education, sustain county fiscal health, bring back child care, fund the increase of the minimum wage to $11 an hour in 2018, expand Medi-Cal to cover preventive dental benefits and expand health coverage to include the millions of Californians covered by the Affordable Care Act, as well as undocumented children. If passed by the Legislature and signed into law by Governor Brown will include for the first time California will offer Earned Income Tax Credit for the poorest, employed families in California.
Despite the proposed increased spending and an improved economic outlook from past years, Governor Brown has emphasized fiscal constraint in this year’s budgeting process. He wants to channel $1.7 billion from The State General Fund Revenue into the Budget Stabilization Account/”Rainy Day” Fund, in anticipation of potential economic recession. Experts consider this year’s budget to be one of most fiscally conservative and constrained budgets since 2012. Conservative spending is expected to not only counteract potential economic recession, but is considered by many to be preparation for the potential defunding of health care spending by the federal government under the Trump Administration.
Specifically, State expenditures in areas of Business, Consumer Service and Housing (-22%), Labor and Workforce Development (-58%), Natural Resources (-5%), Environmental Protection (-5.6%), Government Operations (-58%) and Health and Human Services (-2.9)% will be smaller than last year, while K-12 Education (+5.4%), Transportation (+7.1%) and Statewide Expenditures (+170.2%) have seen budgetary increases from last year. The largest increase in State spending for 2017-2018 will come from a $2.7 billion increase in K-12 Education, while the largest decrease in State spending will result from a loss of $1.04 billion in government operations.

For details and more information please see our Newsletter, as well as the following link:

http://www.ebudget.ca.gov/budget/2017-18MR/#/BudgetSummary

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Relevance of Senate Bill 562: The Healthy California Act

5/31/2017

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One of the most intently discussed policy issues at both the federal and state level is health care. On the federal level, President Trump is seeking to rapidly repeal the Patient Protection and Affordable Care Act signed into law by former President Obama that greatly expanded health care access for many Americans. The California legislature is making a great deal of noise with its most recent health care bill proposal, Senate Bill 562, also known as the Healthy California Act.
SB 562, authored by California Senators Lara and Atkins, calls for a single payer health care system in California; one that would provide comprehensive medical care coverage for all 39 million of California residents, thus eliminating private health insurance costs in California, and placing the responsibility of health insurance in the hands of the California government.
This bill would eliminate private insurance co-pays and deductibles and likely gain its funding from increased taxes- it recently passed its first major legislative test moving through the Senate Health Committee with a vote of 5-2. and passed through the Senate Appropriations Committee where the cost of legislation was determined. The $300 + billion dollar price tag did not detour the Democratic controlled committee from approving the bill on a 5-2 vote. The cost of the legislation is double the state budget.
There is a great deal of excitement and grassroots momentum surrounding the Healthy California Act, it has received major backing from the California Nurses Association, the California Teachers Association and the California Labor Federation, but there remains major questions about its fundamental reliance upon increased taxes. Critics, such as Governor Brown, question not only whether voters will embrace more tax hikes (having recently approved the largest gas hike in state history, see our previous Newsletter for details), but whether such a plan would balloon through the state budget of $124 billion, pointing to the budgetary flaws of previous, failed single-payer health care proposals in states such as Vermont and California.
Despite questions regarding SB 562’s budget and funding, the Santa Cruz City Council has recently declared its full support for the Healthy California Act, issuing a resolution of Support on May 9, 2017.
While there are still major legislative obstacles, if this bill is passed it would have enormous economic implications. California’s health care system relies upon roughly $230 billion in spending per year, and the burden of funding a single-payer health care system would likely fall upon taxpayers. SB 562 has faced intense opposition from private insurance companies, as well as the California Chamber of Commerce, who identify this health care proposal not only as expensive and unsustainable, but as a job killer that would hurt business by eliminating private insurance companies and penalizing employers and employees alike with further tax hikes. The California Chamber argues that this proposed new tax burden will not only hurt consumers and businesses already located in California, but will discourage businesses from establishing themselves in California, and will further cause job loss, as businesses will be forced to ease their increased financial burden with layoffs.
While there is both intense support for, and opposition against SB 562, much remains unknown, as the authors of the bill have yet to present a specific budget proposal for the bill, and there is plenty of room for amendments and changes as it moves towards legislative review.
We will keep you updated with further details as this bill continues to the Senate Appropriations Committee. Santa Cruz Area Chamber has not taken a position on this legislation.

For more information please see the following links:

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The Road Repair and Accountability Act of 2017

5/8/2017

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On April 6th 2017, the California legislature passed the Road Repair and Accountability Act of 2017 (Senate Bill 1), the largest gas tax in state history. This bill was just signed into law by Governor Brown on April 28th.
This bill will raise the base gasoline excise tax by 12 cents per gallon, will increase the diesel and biodiesel tax by 20 cents, and will impose annual vehicle licensing fees. The combination of these taxes and fees will provide the state roughly $5 billion a year in transportation funding, and $52 billion over the next 10 years.
While the passing of Senate Bill 1 is considered a huge win for the Democrats in Sacramento, it did not come easily, as highly controversial last minute deals with hesitant Democrats and Republicans resulted in roughly $1 billion being set aside for projects in areas of Riverside and Modesto.
With Santa Cruz County having already approved Measure D in December of 2016, which authorized a half cent sales tax that will raise an estimated $17 million per year for local transportation funding, Senate Bill 1 will offer Santa Cruz County an additional $6 million per year, making available an additional $23 million in annual funding for road repair and transportation projects in Santa Cruz County.
In addition, in response to concerns that the new funds will not be spent solely upon transportation as intended, Senate Bill 1 contains a proposed 2018 constitutional amendment that will guarantee that all of the $5 billion a year, will be used only for transportation repair and projects.
From Senate Bill 1, which will begin in November of 2017, the City of Santa Cruz can expect to receive $1.48 million annually, whereas Watsonville will receive $1.21 million, Scots Valley $278,000 and Capitola $232,000.

Relevance: This bill is of great relevance to California’s infrastructure and economy as a whole, and addresses recent concerns in Santa Cruz County regarding the need for greater funding for roads and transportation. While this tax increase can be criticized as an increased financial burden for Santa Cruz residents who have already approved a gas tax in November and are struggling with the extremely expensive nature of California living, one can also argue that increased funding for transportation infrastructure and projects will not only put many people to work, but will also strengthen Santa Cruz’s local economy, as safe and efficient travel is a core aspect of economic growth. Furthermore, this additional funding may also play a role in supporting the City’s energy efficiency goals, as this bill allocates funding for sustainable and energy efficient transportation, setting aside an annual $100 million to promote increased travel by walking or bicycling, as well as $25 million for sustainable communities grant applications. Furthermore, this bill will also heavily invest in strengthening public transit, an essential aspect of sustainable travel. Many also see this increase in transportation funding as highly timely, in light of one of California’s wettest winters, which caused an estimated $20 million in road damage in Santa Cruz County, forcing both the City and County to declare a state of emergency.

To read more about the relevance of this bill please see our Chamber Newsletter for more details:
http://web.santacruzchamber.org/news/newsarticledisplay.aspx?ArticleID=1528
To see the specific details on the allocation of the projected funding please visit the following link:
http://www.sacbee.com/news/politics-government/capitol-alert/article147437054.html
For more information please see the following links:

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2017-2018 California State Budget

Relevance of Senate Bill 562: The Healthy California Act

The Road Repair and Accountability Act of 2017

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