in the KNOW

May 17, 2014

Gov. Brown Releases Budget Revision

With costs $2 billion higher than expected this year, Governor Jerry Brown urged “restraint and prudence” in releasing his revised budget plan this week, called the May Revise. State costs are higher due to a million more Californians being added to Medi-Cal, among other expenses.

Governor Brown said, “The May Revision is good news for California. It shows that California can provide health care to many more people, while at the same time paying its debts and shoring up the long-troubled teachers’ retirement system.”

The governor resisted calls from Democrat legislators to put more funding into social programs. Brown said, “We must recognize we’ve done a lot already and we haven’t paid for what we’ve done.”

For the most part, Governor Brown’s budget does not make major changes at the California Department of Food and Agriculture (CDFA).

However, the May Revise does include an increase of over $3 million to ensure all 16 of CDFA’s border stations are staffed year-round. The border stations are the first line of defense to protect California agriculture from invasive species through the inspection of commodities transported in vehicles entering the state.

On another issue, during a call this week with Ag Council and others, CDFA Secretary Karen Ross said she continues to work on funding for the state animal labs to ensure protection of animal health. She is working with the Department of Finance and members of the Legislature on this matter.

As background, CDFA State Veterinarian Dr. Annette Jones attended an Ag Council Dairy Committee meeting earlier this year to discuss the dire need for this funding given the ongoing threats to animal health, and Ag Council has been working to help secure more funds to support the animal labs.

The May Revise contains $141 million in one-time drought-related expenditures reflecting increased state costs for: emergency response, firefighting, drought monitoring, assessment of groundwater conditions, expediting water transfers, enforcement of drought-related water rights and water curtailment actions, water conservation at state facilities, food assistance and other activities.

Rainy Day Fund
This week, the Legislature approved a measure with bipartisan support to place a new Rainy Day Fund on the November ballot. The Rainy Day Fund, a key element of the governor’s budget, sets aside 1.5 percent of state general fund revenue annually to pay down debt and the plan also diverts spikes in capital gains taxes into the fund. After the governor signs the Rainy Day Fund measure, the proposal must gain approval by voters on the November ballot.

The Legislature is now undertaking the task of finalizing the state budget. It must be approved by June 15, per the California constitution.

Read more about the May Revise in the governor’s press release HERE.

Employers Hiring Labor Contractors are Targeted under AB 1897

Ag Council and many others in the ag and business community continue to oppose AB 1897 by Assemblymember Roger Hernandez (D-West Covina). The measure establishes civil liability for employers that obtain workers from third party labor contractors.

Under AB 1897, an employer would share all civil legal responsibility and liability with a labor contractor for the payment of wages, the failure to report employer contributions, worker contributions and personal income tax withholdings, as well as the failure to obtain valid coverage for workers’ compensation.

AB 1897 would discourage the use of labor contractors because it mandates that a company insure wages, workers’ compensation and occupational health and safety requirements of another employer’s workers. In addition, AB 1897 would lead to increases in litigation against those who use contractors as part of their business.

The measure is pending consideration in the Assembly Committee on Appropriations where Ag Council continues to oppose the bill.

Food Labeling Measure Pending in Committee

This week, the bill to require labeling of genetically engineered food in California, SB 1381 authored by Senator Noreen Evans (D-Santa Rosa), was placed on suspense in the Senate Appropriations Committee, and it will be further considered at a later date.

SB 1381 is on the suspense file because the Appropriations Committee determined there are significant costs to the state government if SB 1381 is signed into law. Specifically, committee staff stated in an analysis that SB 1381 would cost the state $1.1 million in its initial year of implementation and $850,000 in ongoing state costs to enforce the measure’s labeling requirements on manufacturers, distributors and retailers.

Ag Council and other opponents are now working to keep SB 1381 on the suspense file. Bills on the suspense file are considered at a hearing after the state budget is developed.

In addition to the state fiscal concerns being raised with the Appropriations Committee, Ag Council and others oppose the bill because it increases food costs for consumers, expands liability, and is not grounded in science.

Click HERE to view the opposition letter from Ag Council and a large coalition of other groups.

Agreement Reached on Bill to Reassess Business Properties under Prop 13

This week, changes were agreed upon in a bill addressing the manner in which commercial properties are reassessed under Proposition 13 when the property changes hands. Proposition 13, approved by voters in 1978, established a formula to limit property tax increases.

The amendments to the bill, AB 2372 by Assemblymember Tom Ammiano (D-San Francisco), would allow a commercial property’s value to be reassessed when 90 percent of that property changes ownership in a three-year period. The amendment does not include incremental changes like the buying and selling of stock. Under current law, property is reassessed to market value when a single buyer acquires at least 50 percent ownership in a single transaction.

The author originally wanted a split roll system where business property would be removed from the tax limits in Proposition 13. Business groups strongly opposed such a move and that view led to a long-term dispute with liberal groups who support a split roll. The amendment this week is a compromise between the various factions.

AB 2372 is now awaiting consideration in the Assembly Committee on Appropriations.