Leg. Update 11.18.03
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Date:    November 18, 2003

From:  Tim Fitzharris, Ph.D.          Bulletin
       Legislative Advocate

Schwarzenegger Sworn in as Californias 38th Governor

On Monday, Arnold Schwarzenegger took the oath of office on the west steps
of the Capitol.  In his acceptance speech, he vowed to remember all of the
people - not just those who voted for him in the Recall election - and to
throw out the partisan bitterness and to humble the special interests
(which are impeding economic progress).  All eyes - even international
ones - were on California as the Golden States new governor traded his
Hollywood celebrity for political leadership.
I have an immigrants optimism that I have learned in citizenship class is
true: The system does work, he said.  Our founding fathers knew that the
fate of the union was in their hands, just as the fate of California is in
our hands.

Governor Wastes No Time, Takes Action
The Action Figure Governor lived up to his movie persona and delivered on
his campaign promise by signing an executive order repealing the
controversial Vehicle License Fee (VLF) within minutes of inauguration.  His
order (Executive Order S-1-03) (1) rescinds the Finance letter of June 20,
2003, which reinstated the VLF and eliminated the offset from the General
Fund, (2) orders the DMV to reinstate the offset as soon as it is
administratively feasible to do so, and (3) directs the DMV to refund
taxpayers all overpayments of fees already paid.
As welcome as the repeal might be to vehicle owners, the action creates a $4
billion hole in the current years Budget solution.  Worse, local
government is currently being allocated most of the dollars raised by the
higher fee.  Local officials are already nervous about whether the dollars,
which generally go to support law enforcement and fire services, will be
back-filled by the State Legislature.  We cant raise taxes, said David
Janssen, Los Angeles Countys chief administrative officer, so our only
option is to cut services. It would have a devastating effect on Los
Angeles County, primarily on public safety, parks and libraries.
Leaders of the Democratic-controlled Legislature said they had seen no plan
for back-filling and warned that they would resist cutting other state
services to come up with the $4 billion now lost.  Some Democrats are
gearing up to again push for taxes on the wealthy, tobacco and sales - as
they did last year.

Legislature Called into Extraordinary Session(s)
The Governors next action was to call the Legislature into Extraordinary
Session, actually, three of them, side-by-side.  The first is to be a
session to consider and act upon:
1. Legislation relative to placing before the voters in the election to be

held March 2, 2004, a general obligation bond to repay, restructure and
finance Californias budget deficit recovery
2. A Constitutional amendment to be placed before the voters in the election
to be held March 2, 2004, a limit on government spending to prevent a future
budget deficit, establish a reserve fund, and vest extraordinary powers in
the Governor and Director of Finance in times of fiscal emergency
3. Legislation relative to funding the offset of the motor vehicle license
fee from the General Fund
The second is to be a session to reform Californias workers compensation
system.  The third is to be a session to repeal SB 60 (Cedillo) which
authorizes illegal aliens to obtain drivers licenses in the state.
This afternoon, both houses convened the extraordinary sessions.  However,
acrimony began almost immediately with Republicans demanding immediate
action and Democrats insisting on a more deliberative process.  This,
following more partisan statements by the Governor at the Chamber of
Commerce luncheon and Senate Pro Tem John Burton (D-San Francisco) at a
Tuesday morning press conference.  Schwarzenegger told his audience that
they need to be prepared to fund independent initiatives to get the reforms
wanted.  Burton, when asked where the Legislature would find the money to
reimburse cities and counties as the Governor has promised, said, He aint
getting it from me.  We dont have the money.  Thats a problem between
him and local government.

Tomorrow, the Budget Committee will convene, probably hearing first from
Legislative Analyst Elizabeth Hill, who will reiterate her analysis of the
States fiscal condition released last week (See CDPI Bulletin of November
14, 2003).  The Department of Finance will probably also present its version
of the economic crisis.
The Assemblys Insurance and Transportation committees have scheduled
meetings to begin discussing the issues.

A Bond to Get Us Out of Fiscal Bondage?
As indicated earlier, the Governor is asking the Legislature to consider
placing before the voters in the election to be held March 2, 2004, a
general obligation bond to repay, restructure, and finance Californias
budget deficit recovery.  It is generally understood that he wants to limit
the bond to $15 billion (the $10+ billion for the deficit that Analyst Hill
identified and the new $4+ billion VFL hole).  It is rumored that he is
thinking of a 15-year pay-off, rather than a 30-year obligation.  He would
apparently resist anyones temptation to add more to the bond and, of
course, the companion spending limit must accompany it.
The Legislature, however, may not be anxious to approve the March bond
strategy.  Conservative Republicans may resist the bond, even a temporary
revenue hike to make ends meet.  Democrats, too, have expressed reluctance
to sign off on borrowing that pushes the solution into the future.
Legislative action needed by December 5th in order to place a bond on the
March 2004 ballot.  Watch that date to see if political bitterness has been
replaced by amity.

Away, You Damn Regulations
Finally, the Governor issued an order (Executive Order S-2-03) suspending 85
packages of regulations still pending from the Davis administration, and
called for a review of Davis handling of all regulations, going back to
1999.  The order says:
    Subject to any exceptions the Director of the Department Finance allows
for emergency or other situations relating to health and safety, request,
pursuant to the California Administrative Procedure Act, (State departments
shall immediately) return any proposed regulation, including emergency
regulations, for final adoption, amendment, or repeal or other processing by
the Office of Administrative Law (OAL) for further review for a period not
to exceed 180 days
    Subject to the exceptions described in paragraph (a) above, (State
departments shall immediately) cease processing, pursuant to the California
Administrative Procedure Act, any proposed regulatory action, including
emergency regulations, for further review for a period not to exceed 180
The plan is to reassess the regulatory impact of any proposed regulation for
adoption, amendment or repeal on California businesses.  It effects all
regulations currently in process and those in effect since 1999.  An
advisory body, consisting of no more than five persons knowledgeable in
regulatory matters, will to advise the Governor on how the regulatory
process can be improved in California.
The Executive Order puts in doubt the RMR reforms currently being
implemented by emergency regulation.  Interestingly, public testimony was
taken on those permanent regulations today.  It is not clear now whether
these regulations - current or permanent - can be enforced.  If not, do
provider payments at the old RMR levels have to be reimbursed back to
October 1st?

CTAs Universal Preschool Initiative Filed
As reported previously in the November 7th CDPI Bulletin, the California
Teachers Association and Rob Reiner propose a new ballot initiative to fund
voluntary preschool, class size reductions, and teacher salary/benefits
improvements.  The initiative - which will be known as the Improving
Classroom Education Act - was filed with the Attorney General on November
The initiative would raise approximately $5 billion annually by increasing
the tax rate on commercial property by .55 percent.
Perhaps of most interest to the readers of this newsletter, the preschool
portion ($1.5 billion annually) calls for the funds to be for salaries and
benefits for certificated, permit and classified employees.  All programs
are to be staffed by employees of school districts of county offices of
education.  Teachers shall maintain pupil ratios of 20:1 and there shall be
a minimum of 180 minutes/day for 175 school days.
School districts shall operate facilities within their districts.  After
July 2011, districts may only contract with providers with whom they have
contracted during the six year phase-in period.

The text of the new CTA/Reiner initiative may be found at the Child
Develpment Policy Institute web site at:

If you do not have adobe reader to download the full text of the CTA
Initiative, you should first go to the CDPI web page at:

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