Budget signed by Governor

Governor Jerry Brown signed into law the Budget Act of 2013-14, which includes not just the budget but a number of policy changes to enable the new budget, on June 27, in plenty of time to take effect July 1, as required by law.

Also taking effect July 1 is the Governor’s ambitious reorganization plan.

With both houses of the California Legislature and the Governor’s Office firmly controlled by Democrats, the on-time signing of the budget is anti-climactic as Democrats wouldn’t dare allow internecine warfare to bubble to the surface and ruin the good thing they have going. So with the passage of Proposition 25 in 2010 which eliminated the 2/3 vote requirement for the budget, gone are at least 4 decades of budget stalemates and hostage-taking tactics that routinely protracted budget deals until as late as October.

This year’s edition highlights education funding reform, health care service expansion, and the effort to reduce debt.

The final language in the budget related to Proposition 39 funds ended up in SB 73 . This bill was gutted and amended on June 13 from a generic spot bill to contain language related to Prop 39, and by June 15 had passed both houses with no further changes or public hearing whatsoever, and was on its way to the Governor for signature.

This practice of passing “Budget Trailer Bills” in this manner has long been a cancer on democracy, and has gotten worse with the Democratic supermajority.

The Proposition 39 funding, which has been previously covered in this publication, is a done deal. From the Budget Summary: Proposition 39 Implementation —The Budget allocates $381 million Proposition 98 General Fund to K‑12 local education agencies to support energy efficiency projects approved by the California Energy Commission. Of this amount, 85 percent will be distributed based on ADA and 15 percent will be distributed based on free and reduced‑price meal eligibility. The Budget establishes minimum grant levels of $15,000 and $50,000 for small and exceptionally small local education agencies and allows these agencies to receive an advance on a future grant allocation. The Budget will provide other local education agencies the greater of $100,000 or their weighted distribution amount. The Budget provides $28 million for interest‑free revolving loans to assist eligible energy projects at schools and community colleges. Additionally, the Budget appropriates $3 million to the California Workforce Investment Board to develop and implement a competitive grant program for eligible workforce training organizations that prepare disadvantaged youth or veterans for employment in energy related fields.

The Energy Commission has a long history of successfully managing energy efficiency loan programs, and of working with school districts. If anyone is capable of making this program work effectively, it would be them. But these minimum grant amounts, and advances combined with a nearly complete lack of accountability by the school districts will make this challenging, and the Energy Commission should be wished luck.

With regard to the proceeds from auctions of greenhouse gas allowances, the Budget Act indeed loans the money to the General Fund, flying in the face of the Governor’s self-congratulation on reducing the “Wall of Debt” caused by such practices in the past. It’s a safe bet that sparks flew over this issue behind the scenes, as these funds are legally required to be used for greenhouse gas reduction, and certainly not for General Fund augmentation. The loan mechanism perhaps skirts this legal technicality. The ARB was well coached at all levels of the organization to put up nary a public whimper.

On the same day that the budget took effect, the Governor’s reorganization plan also took effect.

The Little Hoover Commission says this is the most ambitious reorganization plan of the 36 they have reviewed since 1968. To the unaided eye the Schwarzenegger plan ( California Performance Review ) was clearly more ambitious, but Brown’s plan was just as clearly more skillfully managed to a successful conclusion, whereas Schwarzenegger’s plan stirred up a buzz saw of opposition.

Brown’s plan focuses on the Agency level, consolidating 12 Agencies into 10. In California government, “Agencies” are led by Secretaries of the Governor’s Cabinet. The actual Agency staff organization is quite small, a few tens of employees, but all of the state departments report to an Agency. While departments can be tens of thousands of employees and have generally focused missions, in order to provide the Governor a feasible span of control, departments are grouped into agencies, and so will necessarily have a certain disparate nature. Each Governor sees different ways of associating these functions, and that presents the Governor with one mechanism for exerting influence.

Every dime that is spent in state government has a constituency (that’s why the expenditure is there) and supporters come out of the woodwork if their issue is threatened by budget cuts, or reorganizations that may subvert its purpose. They build up protections for their programs by requiring approvals and various other procedural maneuvers.

This reorganization highlights a major difference between Jerry Brown and his predecessor Arnold Schwarzenegger. Schwarzenegger’s plan was grandiose, but stirred up a beehive while Jerry Brown’s plan was more modest in its objectives, and pragmatically worked through the approval process to become the “most ambitious” according to the Little Hoover Commission.

The plan will affect five Agencies: Business, Transportation, and Housing; State and Consumer Services; Technology; Emergency Management; and the Volunteer Program. The various functions will be rejiggered into three new agencies: Government Operations; Business and Consumer Services; and Transportation.

None of the boards, commissions, departments or functions tracked by COG are expected to be affected by this reorganization.

So the new budget with increased revenues that begin to erase debts and restore various program funding, combined with the biggest reorganization since 1968 will result in little effect on distributed generation businesses. Two large potential sources of funds for energy projects have not met expectations: One will be spent inefficiently, making much less money available for actual energy projects, and the other will be back in some future year with interest. It could be worse.

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Budget signed by Governor

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