2012 Legislative Session – The 2012 Legislative year has begun in earnest with the consideration of two-year bills by January 31st. Bill introduction deadline was last Friday, February 24th, with nearly 2000 bills introduced. We have referred the bills that we think may be of interest to you so please read the reports and let us know your thoughts on the bills. Policy hearing will start in late March/early April and the Budget Sub Committees will begin their hearing process starting in about two weeks.

Some dates to note as this is the second year of the two-year session – January 13th is the last day for policy committees to hear bills from the first year of the session. January 31st is the last day for the floors of each house to pass bills from the first year of the session. February 24th is the last day for bills to be introduced for this session. Expect to see lots of new amendments as bills try to meet these January deadlines and lots of activity in these first few months of the session.

Budget – Unfortunately revenues continue to fall behind budget projections – roughly $750 million short for FY 2011/12. If these revenue shortfalls continue till the end of the calendar year, the Governor will be faced with the decision to implement the first round of trigger cuts, $100 million from higher education. The trigger cuts were a component of the final budget deal – if actual revenues did not match budget projections, then a series of automatic cuts would begin starting in January. Those trigger cuts are not popular with the Legislature. Legislative Leadership had tried to modify the trigger cuts at the end of the legislative session, but the bill sent to the Governor was almost immediately vetoed (and was strongly opposed by the State Treasurer since it would require changes to disclosure statements for the upcoming State bond sale). Currently the Legislature isn’t scheduled to return to Sacramento until after the New Year holiday, January 4th. If the threat of implementing the trigger cuts is real, we believe that it is highly likely that the Legislature will return in December to look at alternatives to the trigger cuts.

Budget – Yes, the budget was passed back in mid-summer, but the ramifications of the over-all dealing are still lingering. The largest component of the Governor’s realignment proposal, shifting low-level offenders from State prisons to local jails, will be beginning October 1st, and of course, the revenues passed along with the program from the State are not sufficient to cover all local costs. Additionally, as reported in the news, the rosy revenue projects adopted with the final budget package have not been coming to fruition- this means that the trigger cuts incorporated into the final budget deal will more than likely be triggered. The legislature had passed in the final week of the legislative session a modification to the budget package/trigger cuts, requiring the Governor to notify the legislature before any trigger cuts are enacted. Concerns were raised by the State Treasurer with this legislation because it complicated the pending fall bond sale – the Treasurer had to go back and amend the bond prospectus to disclose the possiblity of changes being made to the trigger cuts (one of the few aspects of the summer budget deal that the bond rating agencies/Wall Street/Investors liked). Much like the first budget proposal passed by the Legislature in early summer, the Governor did not waste time and immediately vetoed the proposal to change the trigger cuts. Ultimately, it is very likely that the Legislature will return from the fall break early in order to re-look at the budget and try and avert some of the larger trigger cuts to education. Finally, we anticipate at least three lawsuits to be filed against the budget deal (redevelopment, shifting of city funding to counties for prisoner realignment, and education reductions likely to occur due to trigger cuts later this fall). So in conclusion, not only is the Governor/Legislature facing revenue short-falls due to unrealistic budget projections, but the likelihood of additional funding being taken off the table due to litigation is likely as well – as always, fun times in Sacramento as it relates to the State budget.

The Senate failed to pass the Speakers bill on eliminating the City of Vernon, so it remains to be seen how this may effect Senate bills in the Assembly and then vice-versa. Additionally, although we have a seasoned Governor in office it remains to be seen where he may end up on some of the policy issues that will be sent down to him in the final weeks of the legislative session.

The budget revenues have not materialized, as expected, and it appears as though the trigger cuts will need to take place. It isn’t clear if the legislature will return sometime during the fall break to deal with some budget issues or not, but like in previous years this budget has fallen apart just as quickly.

The Legislature still has not been able to come to agreement on a budget solution. It appears that he Legislature will revisit the budget once the Governor releases his May Revision (May 16th) to the January Budget proposal. With the lack of agreement on a tax solution, the Legislature will need to grapple with a solution that addresses the budget gap through additional cuts to programs.

The Legislature is meeting numerous deadlines during the month of May with policy committee deadlines, fiscal committee deadlines and June 3rd is the House of Origin deadline where bills need to pass their original house of introduction in order to continue to move through the legislative process.

The Governor and Legislature continued to grapple with efforts to tray and solve the more than $25 billion budget deficit ($8.2 billion current year and a $17.2 billion budget year shortfalls). In mid-March the Legislature voted on a portion of the budget, essentially passing the cuts-only portions of the Governor’s budget proposal. The legislature was unable to secure a 2/3 vote on the tax increases or the constitutional protections that are part of the broader realignment proposal. The mood in the legislature has become very contentious between the two parties. The final deadline for placing an item before the voters in June appeared to be March 31st 9for a June 28th election).

For now the Governor has signed the cuts portion of the budget and it appears as though a May-revise will come out in mid-May and the legislature continues to operate like Rome isn’t burning. We haven’t heard when IOU’s will need to be sent out or when the cash crunch will really occur for the state, but it is bound to happen – it always does.

The legislative budget committees have begun meeting and taking action on the Governor’s budget proposals – the Legislative Budget Conference Committee is meeting and attempting to develop a final budget package. There has been lots of activity from the various interest groups that are impacted by the cuts or shifts proposed with in the budget proposal. Everyone from redevelopent agencies, seniors, and school advocates have been lobbying the legislators to not cut their programs. It remains to be seen, with the political pressure being brought to bear on the legislators, what the final budget package will look like and if there are enough votes to pass it (whether a majority to pass the budget or two-thirds required to place a measure on the ballot).

Over 2300 bills (934 Sentate and 1389 Assembly) were introduced in the first year of the 2011/2012 legislative session. That works out to just overe 19 bills per legislator, or roughly the max per legislator (40 bills is the limit per member for the entire 2011/2012 session).

In addition, we have reviewed all 2300 bill proposals and have referred those measures that we think may impact your interests.

The Legislature reconvened on January 3rd for the start of the new two-year, 2011/2012, legislative session. Bill introduction have been happening slowly and we have been reviewing and referring legislation of interest. In terms of up coming deadlines, January 21st was the deadline for submitting bill language to the California Legislative Counsel and February 18th is the deadline for the introduction of all new legislation. We will provide a more detailed report in February outlining various introduced bills that may be of interest.