BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SJR 3| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SJR 3 Author: Knight (R) Amended: As introduced Vote: 21 WITHOUT REFERENCE TO COMMITTEE OR FILE SUBJECT : Sequestration SOURCE : Author DIGEST : This resolution urges the President and Congress of the United States to avert federal spending cuts known as sequestration to, among other reasons, protect the California and national economies. ANALYSIS : This resolution makes the following legislative findings: 1.The impact of a $1.2 trillion across-the-board, forced federal spending cuts proposed under sequestration will have serious and deleterious effects on our local, regional, state, and national economies, and jeopardize hundreds of thousands of high-wage, high-skill aerospace and other defense-related jobs, nondefense jobs, and critical social service programs in education, housing, health care, and other human service programs throughout the nation. 2.The sequestration spending cuts to over 1,000 government programs would shrink defense and nondefense discretionary CONTINUED SJR 3 Page 2 spending and be devastating to the California and national economies. 3.Due to our unique combination of geography, cutting edge technological industries, and manufacturing capabilities, California is second in the United States for federal defense spending and provides vital services to our brave men and women serving in uniform around the world, and a cut to the defense budget would dramatically reduce the provision of those services and risk the safety of our troops. 4.Over 2.14 million jobs are projected to be lost in the United States, including 225,464 jobs lost in California, if the sequestration cuts are triggered. 5.An estimated $215 billion reduction in the nation's gross domestic product, including an almost $23 billion reduction in California's gross state product are projected, if the sequestration cuts are triggered. 6.A long-term, bipartisan compromise that averts sequestration will protect the California and national economies and provide a balanced and thoughtful budget solution. Background The Budget Control Act of 2011 (BCA) established a 12-member Joint Select Committee on Deficit Reduction (or "super committee") charged with reducing the deficit by an additional $1.2-$1.5 trillion over ten years. The BCA also included a sequestration hammer should the super committee fail, a provision intended to "force" the super committee to act. Despite the threat of sequestration, the super committee failed. Announcing its inability to reach an agreement on November 21, 2011, the members of the bipartisan committee stated that "after months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline." SJR 3 Page 3 Therefore, as established in the BCA, sequestration was triggered when the super committee failed to reach an agreement. Sequestration generates automatic cuts for each of nine years, fiscal years 2013-21, totaling $1.2 trillion. Sequestration was originally scheduled to take effect on January 2, 2013. However, it was delayed for two months, until March 1, 2013, by the deal struck on New Year's Eve, called the American Taxpayer Relief Act of 2012. Now, without Congressional action to prevent sequestration, the first round of cuts will take place on March 1, 2013. The 2013 cuts apply to "discretionary" spending and are divided between reductions to defense ($500 billion) and non-defense ($700 billion). FISCAL EFFECT : Fiscal Com.: No JA:nl 2/22/13 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END ****