BILL ANALYSIS
AJR 23
Page 1
Date of Hearing: January 11, 2010
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Pedro Nava, Chair
AJR 23 (De Leon) - As Amended: September 3, 2009
SUBJECT : Economic crisis.
SUMMARY : Urges the Congress of the United States and the
federal administration to work with the Governor and Legislature
of California to provide federal loan guarantees, flexibility
with respect to certain programs, and certain funding levels for
vital programs.
EXISTING LAW establishes the Emergency Economic Stabilization
Act of 2008 (HR 1424) on October 3rd, 2008 (EESA), authorizing
the Treasury Department to establish the Troubled Assets Relief
Program (TARP).
FISCAL EFFECT : None
COMMENTS : According to the author this resolution is necessary
because, " California has been grappling with the worst fiscal
crisis since the Great Depression, and making billions of
dollars in budget cuts to education and health and human
services, the federal government has been spending hundreds of
billions of dollars to rescue the banking industry, auto
manufactures, and other private sector companies." The author
goes on to state, "California currently receives less than 80
cents for every dollar we send to support the federal government
and we can no longer afford to be such a "donor state" as our
state revenues have dropped nearly 30% over the last 20 years
and the state's economy struggles to recover from the global
financial market meltdown."
Specifically, this resolution urges Congress and the federal
administration to work with the Governor and Legislature of
California to provide federal loan guarantees to help make
necessary short-term borrowing more affordable to California
taxpayers, provide the state with more flexibility to accelerate
the drawdown of federal benefits and matching grants, provide
more flexibility for the state in meeting its maintenance of
effort requirements, and provide funding levels for vital
programs that fully recognize the unique and devastating
circumstances facing this state during the economic crisis.
AJR 23
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This resolution is necessary to recognize California's current
economic crisis, leading the nation with a high unemployment
rate, high foreclosure rates and falling property values. While
the resolution specifically is not asking for a California
bailout, the resolution uses TARP as an example of why
California should receive more funding since the federal
government was quick to bailout the private industry.
This country continues to face the worst financial crisis since
the great depression. California is facing a $21 billon
shortfall through June, 2011. Additional help from the federal
government could help stave off more cuts and eliminating
important health and welfare programs. A point of frustration
remains with the fact that the state sends more tax dollars to
Washington D.C. then it receives in return. California is
considered a donor state because California taxpayers receive
less federal funding per dollar of federal taxes paid than the
average state. In 2005, California taxpayers received only 78
cents in federal expenditures for every dollar in federal taxes.
In 1995, by contrast, California taxpayers were receiving 94
cents in federal expenditures for each tax dollar. On top of a
massive budget deficit, according to the United State Department
of Labor, California, as of November, 2009, has a 12.3%
unemployment rate. California has one of the highest
unemployment rates in the nation.
Foreclosure filings continue and property values continue to
fall. The latest statistics show as of November 2009, one in
417 households in the country had received a foreclosure filing.
California still ranks number three for having the most
foreclosures with 1 in every 180 households in foreclosure.
Of the $700 billion established under TARP, California banks
received $27,639,910,000. The federal government distributed
this money with the hopes of increased lending activity which
would then provide more liquidity. Instead of increased
lending, the media has continuously portrayed banks distributing
excessive bonuses and making lavish expenditures while more
Californians continue to lose their home and lose their jobs.
As one of the largest economies in the world, improving
California's fiscal crisis would not only help the people in
California but would help the nation come out of this economic
recession quicker. Governor Arnold Schwarzenegger recently
stated in his State of the State address that California is not
AJR 23
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asking for a bailout but federal fairness. This resolution
seems to get to the heart of what California needs from the
federal government which is more funding and flexibility.
AMENDMENTS: The committee is proposing amendments to this
resolution. The amendments do not alter the intent of the
resolution but streamline and clarify the author's intent. A
mock-up of the amendments are attached to the analysis.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Kathleen O'Malley / B. & F. / (916)
319-3081