November 6, 2008

Governor's Press Conference on Special Session Proposals

Following is a summary of key points discussed at the Governor’s Press Conference today:

Close the current year gap:

--$11.2 revenue shortfall.

--Cut $4.5 billion from programs including education, health care, prisons, and others.

--Raise $4.4 billion in revenue through a temporary 1.5% sales tax increase (per the Governor’s previous proposal) and other revenues.

Economic Stimulus Package:

--Get infrastructure bond money out fast to “put people to work and keep people in their houses.”

--Governor mentioned water bond, transportation bond, transit projects, and hospitals, but he did not mention school facilities bonds.

--Seek state legislative approval for temporary exemption to CEQA for specific “groups of projects” similar to the 1994 CEQA temporary exemption for bridge retrofits.

--The state will continue following its green standards, so no environmental harm will be done if certain parts of CEQA are temporarily suspended for certain projects.

--The state will seek similar exemption from federal environmental laws.

--Expedite permit and plan review process for hospitals.

--Clarify and reform labor laws, e.g. more flexibility in work schedules.

--Besides the economic stimulus package we need to deal with the mortgage crisis and state unemployment insurance fund crisis.

Q/A Session

--In response to a question about being able to get two-thirds vote of the Legislature the Governor said two things have changed. First, the election is over and to some legislators “getting elected is more important than doing what’s right.” And we are in a different world now than before the election. We have seen a huge shift in the economy and the stock market.

--The State will run out of cash in February/March.

--The State will pay the debt service on bonds, even if we run out of cash to pay other debts. The State Constitution places bond debt service payment second, only behind a portion of money going to schools, and the state will not default on its debt service obligations

--The mid-year cuts will be disruptive to schools, but “you can’t exempt schools.”

--Every $1 billion in bonds creates 18,000 new jobs, according to the California Business Round Table.

--State employees may be furloughed for one day per month without pay.

--The VLF was an illegal tax and even if it could be re-instated it would hurt the economy too much, further decreasing car sales.

--The Governor’s proposed increase of $12 in the motor vehicle fee is not the same as the VLF.

Click here for the Governor's Special Session Proposals

~Dave Walrath

dwalrath@m-w-h.com