Budget Deal After weeks of seemingly endless political drama, the legislature finally passed a State Budget early Thursday morning. As the last hold-out, Republican Senator Abel Maldonado from Santa Maria, wielded an extraordinary degree of leverage over the process. In order to secure his deciding vote, Maldonado single-handedly negotiated the following last minute concessions in the final budget package:
- Elimination of the proposed 12-cent additional gas tax, which was estimated to have brought in $2.062 billion through June 2010.
- The proposed 5% percent surtax on income taxes was replaced by a 0.25 percent boost in each income-tax bracket. This increases the state's highest income tax rate from 9.3 percent to 9.55 percent (actually 10.55 percent for millionaires with the Proposition 63 mental-health tax). The new formula raises about $400 million more in income taxes than the previous proposal.
- The rest of the lost gas-tax revenues will be replaced by federal stimulus money and $600 million to $700 million in Schwarzenegger line-item vetoes.
- Less borrowing/transferring of Proposition 10 tobacco tax monies.
- Elimination of horse racing tax floor – continuous appropriations for state fairs.
- Passage of SCA 4 (Maldonado), if approved in the June 2010 election, would state that the top 2 vote-getters (regardless of party) would advance to the general election.
- Passage of SCA 8 (Maldonado), if approved in the June 2010 Election, prohibits legislators from receiving pay raises if the State Budget is in a deficit
- Passage of SB 6 (Maldonado), a technical companion measure to implement SCA 4 if it’s passed by the electorate.
This unprecedented 18 month budget package encompassing spending reductions, revenue increases, economic stimulus and government efficiency measures was integrated into the current State Budget and next fiscal year’s (July 1, 2009 to June 30, 2010) will be hailed as a bipartisan solution to California’s $42 billion budget deficit. However, the ballgame is far from over. In a few short months, the Governor will issue his annual May Revise. The Revise updates 2008 tax revenues and other economic data which are the basis for all of the assumptions and projections that formed the foundation of the budget deal. Given the volatility of the current economic environment, everything contained in the newly enacted budget could be right back on the negotiating table very soon. Stay tuned!
Agricultural Budget Items There were two issues of direct interest to agriculture that were part of the budget debate in recent weeks. The first is $34 million in Williamson Act subvention funds, had originally been eliminated in the Governor’s initial budget proposal. Fortunately, due to the strong opposition to the proposed cut, full funding was restored. Additionally, the Carl Moyer program, which provides grants to provide engine upgrades to reduce air pollution from farm equipment, was expanded to include additional equipment upgrade mandated by state law. Unfortunately, the ability of farmers to take advantage of the expansion will be directly tied to the amount of funds available.
Legislative Update The lengthy stalemate over state budget literally brought everything to a grinding halt in the capitol over the last seven days. Committee hearings were postponed, interminable caucus meeting held and state senators have been locked down. Therefore, only a few bills of interest were introduced in recent days:
Hazardous Materials - AB 256 (Bill Berryhill) Exempts farmers from implementing a business plan for emergency response to hazardous material releases if the only hazardous materials that the farm are small amounts of oils or fertilizers, or small amounts of other hazardous materials as specified that are onsite for less than 10 days at a time.
Citrus Inspection - AB 281 (De Leon) Authorizes the Department of Food & Agriculture, upon the recommendation of the California Citrus Advisory Committee, to develop a communications program for the purpose of informing producers and handlers of the requirements of the inspection program.
Milk Inspection - SB 168 (Maldonado) This is a “spot bill,” which will be amended at a later date with new language relating to the inspection, sampling and analyzing of milk products.
Farmers Markets - SB 173 (Florez) Extends until January 1, 2013, the current authority of the Secretary of Food & Agriculture or the county commissioner to impose civil penalties on individuals who commit unlawful acts relating to the operation of certified farmers’ markets.
Pomegranate Juice - SB 190 (Wright) Specifies that pomegranate juice is misbranded if the label does not meet the percentage juice declaration requirements set forth in federal regulations.
Annual Meeting It's not too late! Don't forget to register for our upcoming Annual Meeting. Just visit our Annual Meeting page at http://www.agcouncil.org/annualmeeting, or call us for details at (916) 443-4887. We hope to see you there!
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