STATE BUDGET UPDATE: WORSE AND WORSER

On Thursday, what is known in the State Capitol as the “May Revise” of the State Budget was released. Despite the fact that we were told the state budget was fixed several months ago and all we had to do was pass a few propositions to “right the ship,” California is once again in the worst fiscal situation we have ever seen. With five days remaining to the Special Election called for in that last budget deal, Governor Schwarzenegger has released two budget scenarios that show, in the “best case scenario,” the state being $16B short of its current obligations. If the propositions fail on Tuesday, that figure mushrooms to at least $21B.

Both budget scenarios contain drastic cuts and measures to deal with the problem. Ranging from health and human services cuts, and education cuts, and deferred maintenance on public buildings, to some more drastic measures like releasing thousands of undocumented prisoners.

Reaction so far from Legislators has ranged from support for the cuts to muted-shock. One former chair of the Budget Committee stated that, “We aren’t crying wolf this time.” However, many advocacy groups who receive tax dollars, are already working to protect their share of state funding.

See video of the Governor’s press conference and read the proposals here.

STATE’S LARGEST BUSINESS GROUP SUPPORTS 1A-1F

The California Chamber of Commerce (CalChamber) Board of Directors took a support position on Propositions 1A – 1F. “Together, these measures will help California get back on track with short and long-term solutions to solve the current budget deficit and help avoid a similar crisis in the future,” said Allan Zaremberg, President and CEO. According to the CalChamber, Propositions 1A-1F will restrict state spending in the future, force the state to put money into a rainy day account for future economic downturns, modernize the lottery so the state can get more revenue from it, transfer unspent funds in several special accounts so the money can be used now, require that schools and community colleges get paid back amounts recently cut from their budgets when the economy improves and prohibit elected officials from getting salary increases when the state has a deficit. Click here to read the CalChamber voter guide. BOMA California is a proud member of the California Chamber of Commerce.

Here are summaries of each proposition, taken from the Secretary of State’s Voter Guide.

PROPOSITION 1A

Proposition 1A increases size of state “rainy day” fund from 5% to 12.5% of the General Fund. A portion of the annual deposits into that fund would be dedicated to savings for future economic downturns, and the remainder would be available to fund education, infrastructure, and debt repayment, or for use in a declared emergency. Requires additional revenue above historic trends to be deposited into state “rainy day” fund, limiting spending.

PROPOSITION 1B

Proposition 1B requires supplemental payments to local school districts and community colleges to address recent budget cuts. Annual payments begin in 2011–12. Payments are funded from the state’s Budget Stabilization Fund until the total amount has been paid. Payments to local school districts will be allocated in proportion to average daily attendance and may be used for classroom instruction, textbooks and other local educational programs.

PROPOSITION 1C

Proposition 1C allows the state lottery to be modernized to improve its performance with increased payouts, improved marketing, and effective management. Requires the state to maintain ownership of the lottery and authorizes additional accountability measures. Protects funding levels for schools currently provided by lottery revenues. Increased lottery revenues will be used to address the current budget deficit and reduce the need for additional tax increases and cuts to state programs.

PROPOSITION 1D

Proposition 1D provides more than $600 million to protect children’s programs in difficult economic times. Redirects existing tobacco tax money to protect health and human services for children, including services for at-risk families, services for children with disabilities, and services for foster children. Temporarily allows the redirection of existing money to fund health and human service programs for children 5 years old and under. Ensures counties retain funding for local priorities. Helps balance state budget.

PROPOSITION 1E

Proposition 1E amends Mental Health Services Act (Proposition 63 of 2004) to transfer funds, for a two-year period, from mental health programs under that act to pay for mental health services for children and young adults provided through the Early and Periodic Screening, Diagnosis, and Treatment Program. Provides more than $225 million in flexible funding for mental health programs. Helps balance state budget during this difficult economic time.

PROPOSITION 1F

Proposition 1F encourages balanced state budgets by preventing elected Members of the Legislature and statewide constitutional officers, including the Governor, from receiving pay raises in years when the state is running a deficit. Directs the Director of Finance to determine whether a given year is a deficit year. Prevents the Citizens Compensation Commission from increasing elected officials’ salaries in years when the state Special Fund for Economic Uncertainties is in the negative by an amount equal to or greater than one percent of the General Fund.

CALIFORNIA COMMERCIAL REAL ESTATE SUMMIT 2009 -- RESERVE YOUR PLACE NOW

The California Commercial Real Estate Summit (CCRES) will be held in Sacramento on June 9 & 10, 2009. This event is the one time of year that industry leaders converge on California's Capitol to discuss with policymakers issues impacting commercial real estate. The summit will give you an opportunity to meet industry leaders from across the nation, high-level staff from Governor Schwarzenegger's Administration, and California State Legislators.

For hotel accommodations, please contact the Hyatt Regency directly, 1-800-233-1234, and ask for the "CBPA" block of rooms. Deadline for Room Reservations is May 19, 2009.

The Commercial Real Estate Summit is organized by California Business Properties Association (CBPA) which is the recognized voice of all aspects of the commercial retail industrial real estate industry in California and is the designated legislative advocate for: International Council of Shopping Centers (ICSC), the California Chapters of the Commercial Real Estate Developers Association (NAIOP), Building Owners and Managers Association of California (BOMA Cal), Retail Industry Leaders Association (RILA), Institute of Real Estate Management (IREM), California Downtown Association (CDA), Commercial Real Estate Women (CREW), the Association of Commercial Real Estate – Southern California (ACRE) and the Certified Commercial Investment Members Institute (CCIM).

Click here for all the details.

BOMA CALIFORNIA 2009 CALENDAR

JUNE 2009

June 9-10—
CALIFORNIA COMMERCIAL REAL ESTATE SUMMIT (CCRES)
Sacramento

NOTE: The CCRES is also known as "BOMA California Legislative Day." Members are encouraged to participate in this two day event by clicking the link above to register. CBPA events are industrywide events open to all members.

June 10—
BOMA CALIFORNIA BOARD MEETING
Following the California Commercial Real Estate Summit (CCRES) Events
Hyatt Regency, Sacramento
2:00 p.m. - 5:00 p.m.

 June 28-30—
BOMA INTERNATIONAL ANNUAL CONFERENCE
Philadelphia, PA

NOVEMBER 2009

November 5—
BOMA CA BOARD MEETING & ELECTION OF 2010 OFFICERS
Meritage Hotel, Napa, CA
11:00 a.m. - 3:00 p.m.

 November 5-6—
COMMERCIAL REAL ESTATE STRATEGIC ISSUES CONFERENCE
Meritage Hotel, Napa, CA