TO: CLA MEMBERS, SYSTEMS, NETWORK
CONTACTS
FROM: Mike Dillon, CLA
Lobbyist
Christina DiCaro, CLA
Lobbyist
RE: News From the
Capitol
LAO REVENUE FORECAST
COULD MEAN “TRIGGER CUTS”
Today the State’s
respected non-partisan Legislative Analyst released his
highly
anticipated revenue forecast that will be used to evaluate whether
or
not the so-called “Budget Trigger” will be pulled in the New
Year. As you will
recall from our previous memos to the field,
the “Budget Trigger,” AB 121
(statutes of 2011) was created
during the 2011 Budget negotiations to serve as
a balancing
mechanism should $4 billion in anticipated state revenues
not
materialize. (The trigger was also seen as a way to assure
bond holders and
investors that California was taking a serious
approach to solving its chronic
Budget challenges.) The trigger
is comprised of two different “Tiers” and cuts
to programs
delineated in those tiers would be imposed if revenues
lagged.
What is at stake – and now very much at risk – for
public libraries is close
to $16 million in state library
funding that could be completely eliminated
should the “Tier 1
trigger” be pulled by the Governor.
Under the
AB 121 legislation: “No later than December 15, 2011, the
Director
of Finance shall forecast General Fund revenues for the
2011-12 fiscal year
and shall determine whether that revenue
forecast or the Legislative Analyst’s
November 2011 General Fund
forecast is higher. The Director of Finance shall
notify the
Joint Legislative Budget Committee of the determination and
the
amount of the higher forecast. If the higher revenue
forecast determined
pursuant to subdivision (a) projects General
Fund revenues for the 2011-12
fiscal year of less than
$87,452,500,000, the Director of Finance shall do all
of the
following on or after January 1, 2011…” What then follows is a list
of
the items that could be cut effective January 1, including
all remaining state
funding for library services – thus
eliminating all funding for the CLSA, PLF,
and literacy
programs. Federal funds would also be seriously at
risk.
As you can imagine, the Legislative
Analyst’s Office forecast (and the soon-
to-be revealed
Department of Finance’s forecast) is a complex assessment
using
factors such as wages, dividends, auto sales, mortgage
rates, housing permits,
inflation, unemployment, personal
income, and Capital gains. In the LAO’s
report released today,
they note that the “economic recovery has been slower
than
expected” and they project “continuation of this slow, arduous
recovery,
with California’s unemployment rate remaining above 10
percent through mid
2014 and above 8 percent through the end of
2017.” The Analyst expects
revenues to be approximately $3
billion short of the anticipated $4 billion
figure associated
with the trigger, and compounded by an additional
revenue
shortfall of $10 billion for Budget year 2012-13 (mostly
due to K-14 education
guarantees and repaying the $2 billion in
property taxes borrowed from local
government in 2009) – leaving
the state “with a year-end deficit of about $13
billion, absent
any additional budgetary corrections.” The LAO also assumes
that
the state will be unable to capture savings in areas previously
scored
for savings such as in Medi-Cal and redevelopment
(currently being litigated)
and in departmental
efficiencies.
Thus, the LAO assumes that all
“Tier One” reductions (public libraries, UC and
CSU budgets, In
Home Support Services, preschool funding,
developmental
services, etc. totaling about $600 million) would
be enacted, and then 3/4ths
of the “Tier Two” cuts would be
implemented, which would require K-12 schools
to make reductions
in school bus transportation, shorten the school year, as
well
as a reduction to the community colleges budget. The LAO then
adds:
“The ultimate magnitude of the trigger
cuts will be determined by the
administration after it compares
our revenue forecast with its December
forecast. The higher of
the two forecasts will be used to determine the level
of
reductions. (The administration may implement less than the maximum
amount
of trigger cuts. Our forecast, however, assumes the
maximum amount of trigger
cuts based on our forecasted revenue
levels.)”
Any
Hope?
On October 27, we had a lengthy meeting
with the Director of the Department of
Finance, Ana Matosantos
to plead our case, asking her and the Governor to
“save
libraries from the trigger.” We explained to her in great detail
the
critical need to maintaining the funding for the CLSA,
literacy program, and
PLF. Subsequent to that meeting, we have
also been meeting with key staff for
the leadership and Budget
Committees, inquiring as to the options before the
Governor and
Legislature. We discussed the particulars in some length at
our
presentation in Pasadena last Friday at the CLA Conference,
but it is
important to note that while the “trigger” could be
pulled, there may also be
some alternatives that could be
explored between the Governor and the
leadership. We will be
working very hard to ensure that library funding is a
part of
those discussions and we will keep you updated as talks
progress.
Certainly revenue increases are also not off the
table, with the LAO’s report
suggesting: “Given the potential
consequences from the types of expenditure
reductions discussed
above, the Legislature will also want to consider
revenue
increases. For instance, the Governor has stated his
desire to have certain
increases in as yet unspecified taxes on
the November 2012 ballot. We would
recommend the Legislature
continue to review tax expenditure programs and
reconsider
various proposals….”
Write the
Governor
Please take a moment today to write
the Governor and request that he spare
public libraries from the
“trigger.” Please cite examples of what the
elimination of the
CLSA, the literacy program, and the PLF would mean to
your
library. He will need to receive hundreds of letters as
soon as possible for
it to have the desired impact. Thank you
for your help.
The Honorable Edmund G. Brown,
Jr.
Governor, State of California
State Capitol,
Room 1173
Sacramento, CA.
95814
Or fax your letter to the Governor: (916)
558-3160.
For additional information on how to
cc’ your letters to the legislative
leadership, please visit the
CLA website (
cla-net.org) and click on our
November 8th
memo.
Carol
Simmons
Executive Director
California Library
Association
2471 Flores Street
San Mateo, CA
94403
650-376-0886
650-539-2341
(fax)
csimmons@cla-net.orgwww.cla-net.org
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