Eleventh in a Series of Essays by Sheila Kuehl on the 2008 California State Budget: The "Trailer" Bills

In child support collection activities, it extended the suspension of the 5% incentive payment for local child support collections as well as extending the suspension of health coverage incentive payments. Still trying to put a working automation system in place (after decades), it transferred all the duties of the Franchise Tax Board to the Department of Child Support Services. This responsibility has been tossed back and forth for years.

The trailer bill delayed implementation of provisions relating to the disclosure of personal information between adoptees and their biological siblings until 2010 and made a number of changes to the laws relating to independent adoptions, including fees for investigations.

It authorized, for the first time in several year, the annual cost-of-living adjustment for the Supplemental Security Income (SSI) program for 2008-09 and extended the operation of the SSI advocacy program for aged, blind and disabled legal immigrants to July of 2011. Generally, we were able to keep down the worst bleeding of funds from the poor and disabled but they are still receiving the same amounts as in previous years, even as the cost of food and all other basic necessities continue to rise.

The General Government Trailer Bill

A few provisions in this trailer bill required various departments to "report" or "review" energy efficiency mandates or green building mandates but created no new programs. The bill also created the Occupational Safety and Health Fund to fund inspections and consultations, to be funded annually from a new assessment on Workers' Compensation premiums. It also authorized the State Public Works Board to issue $277 million in bonds, notes or certificates to begin to develop an integrated financial management system for the state.

In the area of teacher's retirement, the bill made a number of changes to the State Teachers' Retirement System, such that payments may only be made subject to funding available, and reduced general fund payments into the fund by 66 million in the first year and increasing amounts thereafter. It also eliminated a rural health care program.

In one of the most important sections of the bill, it established a process to "improve" compliance by local redevelopment agencies in passing through a portion of their revenues to schools under existing laws. The process will ferret out failures to make these payments to schools all the way back to 2003 and projects a resulting savings to the general fund of around $98 million.

Unfortunately, the bill also reduced the credits given by the state for farmers who keep their farms as open land instead of developing them into housing. This innovative program, called the Williamson Act, helped preserve many acres of open space for the state. The trailer bill also required electronic payment of estimated taxes for those who owe payments of $20,000 or more in each increment.

In the area of budget reform, given the number of issues in the budget, this trailer bill authorizes the Director of the Department of Finance to make mid-year reductions in state operations, suspend cost-of-living adjustments or rate increases throughout the budget, or, in the case of the declaration of a fiscal emergency, suspend increases until the Legislature sends another bill. This provision gives a great deal of power to Finance, outside of legislative oversight, but also requires a vote of the people.

The Health Trailer Bill

To remind you, trailer bills are substantive amendments to current statutes made necessary by various line item provisions in the budget. There are two kinds: general bills about a subject, such as the health trailer bill. The other sort of trailer bill concerns an individual issue and is often presented in order to get the necessary votes at the end. All are detailed below.

Before the health trailer bill was taken up for a vote on the floor of the Senate, three amendments were presented by three Republican Senators. The first amendment would have deleted any funding that might have enabled abortions. The second would have required any woman seeking an abortion to have an ultrasound and mandate that she see it, as well as receive information about the development of her fetus. The third included all the language of the parental notification initiative, now on the ballot for the third time. None of these amendments passed and the health trailer bill was taken up as presented, and adopted.

The bill required more information as to the ways in which fees are calculated for licensing and certification in the various parts of the healthcare industry, and emphasized the need for consistency in surveys on licensing, as well as complaint procedures across the state. It allowed the state to contract for blood factor products from pharmacies, which is now the case under Medi-Cal, under the Children's Services Program and the Genetically Handicapped Persons Program. It modified the CA discount pharmacy drug program so up to 25% of the drug rebate amounts would be used to fund program costs and make the program self-financing. (see my later essay on those things the Governor blue-penciled out of the budget).

The trailer bill also decreased by 5% the rates paid to health, dental and vision plans participating in the Healthy Families Program, and increased the premiums paid by low-income families by $3 per child per month (the range will be $12-36 per month per child for the very poorest and $17-51 per month per child for those earning more than 200% of poverty....still pretty poor). The bill capped the amount paid under the healthy families program for dental services at $1,500 per year.

Whereas now, the state is paying Medicare part B (physician and non-hospital services for Medicare recipients, which they must pay for, as a share of costs) premiums for the elderly poor, the bill allowed this to be paid only for those whose share of costs exceeded $500, saving $48.4 million in the budget. The bill also changed the reporting requirement for Medi-Cal eligibility for children. Previously, each family had to report their eligibility once a year. Now they will have to report every six months. In a very cynical assessment, those drafting this provision estimated it would save the state $13.9 million as they believe the provision will ensnare unaware families, who will then drop off the roles.

The bill capped the amount available to each enrollee in the Denti-Cal program at $1,800. It also limited the rates for emergency care for hospitals that are not contracting with Medi-Cal, restored about $90 million of the rate reductions in Medi-Cal payments to providers, pursuant to a court order, and appropriated $24.8 million for physicians providing services in emergency rooms for uncompensated care.

Education Trailer Bill

Most importantly, the trailer bill extended the date by which the state is authorized to sell the EdFUND (student loan program) until January of 2011. It expanded the outreach program for career technical education programs and allowed community colleges to use their financial aid funding for related support services (got to get that money out the door). It appropriated $12.5 million to expand high school partnership academies and gave community colleges a 0.68 percent cost of living increase. The rest of the bill further deferred payments from 2008-09 to 2009-10 to help the current budget.

Resources Trailer Bill

This bill provided grants and loans to short-haul truck owners to help them comply with heavy-duty diesel regulations, required the administration to report every year to the Legislature on how all their departments are approaching greenhouse gas proposals, tightened up reporting by the Public Utilities Commission to the Legislature on off-budget programs and required permit fees for construction along the coast to be allocated by the Legislature to the Coastal Commission, instead of going to them directly.

In a closely watched issue, the bill required the Department of Water Resources to use a limited number of positions to conduct studies for conservation and restoration of the Delta, advancing work under the California Environmental Quality Act and preparing documentation for the Bay-Delta Conservation Plan. The Secretary of Resources had, under orders from the Governor, been exploring an "alternative conveyance" plan to build around the Delta, instead of delivering all water through the Delta. Stay tuned, this issue is not going away.

There were a number of issues related to the recent fires, most of them in other, substantive bills. This bill allowed the State Fire Marshal to bill local governments and private entities for fire and life safety building inspections.

The bill also allowed allocation of some Prop 84 monies, as well as other funds, for the preservation of various species, allowed Prop 1B funds to be given to state agencies, if they qualify, and allowed the Air Resources Board to give grants for zero-emission vehicles and related infrastructure (the so-called "hydrogen highway").

Single Issue Trailer Bills, the Good the Bad and the Ugly

Speaker Bass offered a bill that would have allowed financial assistance to those shooting films in California. It failed.

Assemblymember Fiona Ma offered a bill to use proceeds from the Indian Gaming Special Distribution Fund for local projects to mitigate the impacts of tribal gaming on local governments. It passed.

Other bills that passed: a bill to exempt rural hospitals in Redding and Bakersfield from reductions in Medi-Cal reimbursements, a bill to establish a four year sunset on continued funding for the Center for Advanced Research and Technology (a charter school bill passed at the request of the Assembly Republican leader), a bill requested by the Republican leadership concerning the disposition, exchange or lease of state properties, most of which looked innocuous enough. However, hidden in the bill was a statutory CEQA exemption for certain state land sales, something the Schwarzenegger administration has been trying to get into the law by vetoing bills for the sale of state property that didn't have CEQA exemptions. This was controversial and a very bad idea, but the bill passed.

Another controversial bill that has garnered little publicity was the so-called "Cisco Fix", a bill to exempt a whole swath of employees in the professional computer software industry from overtime compensation requirements. The bill passed, allowing anyone earning more than $75,000 per year and $6,250 a month in these industries to be considered the kind of employee that doesn't get paid overtime. A real sweetheart give to Cisco.

An additional bill to allow electronic billboards to be built at various locations around the state, including near the L.A. convention center, failed.

Next Essay-the Governor's line-item cuts

The Governor has been given the authority to cut entire line items in the budget and he did so with a vengeance. Next essay...what he cut.