BILL ANALYSIS Ó
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Date of Hearing: May 7, 2015
ASSEMBLY COMMITTEE ON BUDGET
Shirley Weber, Chair
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(Grove) - As Amended April 30, 2015
SUBJECT: Legislature: 2-year budget.
SUMMARY: Converts the State to a bi-annual budget process.
Specifically, this bill:
Creates a biannual budget process that would occur the first
year of a Legislative Session.
1) Specifies that, starting in 2019, the legislative
session would be organized in two annual phases, with the
first year being dedicated to the budget and oversight by
committees of the legislature and the second year being
dedicated to all other legislation.
2) Allows that after budget is passed, the Governor could
submit amendments to the budget bill to the Joint
Legislative Budget Committee. The Committee could approve
these changes with a simple majority vote of committee
members. In addition, the Legislature could amend the
budget during the session with a two-thirds vote.
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3) Specifies that the Joint Legislative Budget Committee
be compromised of sixteen members, eight from both houses,
with the membership being proportionate to the
representation of each political party in each house.
4) Restricts the introduction of bills during the first
year of a legislative session to bills related to the
budget and for oversight. During this first year,
legislative committees could issue up to five bills each in
the first year of the biannual session.
5) Makes various changes to the Constitution to implement
a two-year fiscal period, including amending the State
Appropriation Limit and the calculations of Proposition 98
and Proposition 2.
EXISTING LAW: The California Constitution provides that the
Legislature meets in a biennial regular session, commencing with
the first Monday in December in each even-numbered year, when
each house is required to immediately organize, and concluding
at midnight on November 30 of the next even-numbered year. The
California Constitution requires the Governor to submit to the
Legislature a budget for the ensuing fiscal year within the
first 10 days of each calendar year and requires the Legislature
to pass the Budget Bill by midnight on June 15 of each year. The
California Constitution authorizes the Legislature or either
house, by resolution, to provide for the selection of committees
necessary for the conduct of its business.
FISCAL EFFECT: Possible impacts of the measure are discussed
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below.
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COMMENTS: This measure would impose a two-year budget process
and define the Legislature's role during the Legislative
Session. According to the author, "The current budget process
occurs on an annual basis with no formal role for oversight or
long-term fiscal planning."
There are three major changes that would result from this
measure: (1) the State fiscal process would be less responsive
to the dynamic of changing expenditures and revenues; (2) the
Legislature would lose influence over State fiscal matters as
well as the ability to control its own purpose during the
session; and (3) the Administrative Branch of government would
see further increases in power at the expense of the Legislative
Branch.
Reduced Ability to Respond to State Fiscal Matters
Currently, the State refreshes estimates of revenue and
expenditure data twice a year. First, in November, which serves
as the basis for the Governor's budget. The second time is in
May, which provides the foundation for the May Revision.
Historically, at times of economic expansion or recession, there
have been substantial differences in the projections during
these two time periods because of the nature of California's
dynamic economy. During the recent recovery, this has meant
that revenues have increased at a robust pace, but during
downturns the State has seen huge reductions in revenues.
California's major revenue sources - Personal Income Tax, Sales
and Use Taxes and Corporate taxes - all correlate with the
general condition of the economy as a whole. Likewise,
caseloads for health and human services programs grow and shrink
to reflect trends in the larger economy.
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The Department of Finance includes a five-year projection of
revenues and expenditures that provides a rough estimate of
whether the State budget is structurally balanced in the long
run. The Legislative Analyst's Office also includes a
multi-year forecast in the November Budget Outlook publication,
which frames the forthcoming budget process. However, while
these projections are useful for making decisions about spending
decisions in the short run, they are sensitive to economic (i.e.
the dot com boom and crash) and world events (i.e. Great
Recession) that cannot be foreseen when the projections are
first made.
This measure would lock in the budget projections for an entire
year. This would likely put the State on an autopilot course
that would either result in an unexpected surplus or deficit at
the conclusion of the fiscal year. Without the ability to
course-correct, the State would not be able to respond to change
in times of financial uncertainty.
This measure does provide two mechanisms for amending a budget,
which theoretically could be used to change the budget. The
first is the ability for the Governor to amend the budget
through a request to the Joint Legislative Budget Committee,
which could be adopted by a majority of the committee. This
tool would allow for some minor adjustments to the State
spending plan, but because it does not include the ability to
approve budget-related statutes, it would not provide a
mechanism to adjust many of the main drivers of the overall
budget such as the Proposition 98 guarantee estimate, the
benefit levels of health and human service programs, or the
ratification of memoranda of understanding with State labor
unions.
The second mechanism for amending the budget would be through
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the adoption of a bill, with two-thirds of the members voting in
favor. This second tool would re-impose the supermajority
voting threshold on any changes to the budget. Thus, it would
be more difficult for the Legislature the change the budget plan
once it had been established.
Reduction in Legislative Power
This measure would cede existing legislative power to the
executive branch. The Legislature's power to appropriate funds
would only be fully available to the two houses for the first
seven months of the legislative session, while the budget is
being crafted. After that time, the Governor can amend the
spending plan with the agreement of only nine members of the
Legislature, per the new Joint Legislative Budget Committee's
role in this measure. However, the Legislature can only make
changes to the State spending plan if two-thirds of both houses
concur on a bill. This would increase the Administration's
flexibility, while reducing the ability of the legislature to
act.
Outside of the budget process, this measure would impose a
legislative process upon the Legislature in the Constitution in
a manner that is normally contained in the rules of each house.
This approach gives the Legislature little flexibility to
structure its operations, calendar, and focus. Again, this
would reduce the ability of the State to respond to the current
needs of Californians.
REGISTERED SUPPORT / OPPOSITION:
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Support
None on File
Opposition
None on File
Analysis Prepared by:Christian Griffith / BUDGET / 916-319-2099