Both houses failed to approve these measures and now are scheduled for floor sessions tomorrow morning. Members also have been asked to clear their schedules for the weekend.
Although specific budget and trailer bill language is generally not available, we have provided below a list of bills and general content description.
Of particular importance to counties, State Controller John Chiang announced today that, starting July 2, his office would be issuing registered warrants, or IOUs, if immediate budget and cash solutions are not approved by the Legislature and the Governor. The State Controller’s Office has determined that the magnitude of the cash shortfall is so large that simply delaying payments as it did in February will not cover the gap. The option to pursue Revenue Anticipation Warrants (RAWs) was eliminated when Governor Schwarzenegger rescinded the authority for the Controller to do so earlier this month.
Regular payments will continue for K-12 schools, UC, CSU, and community colleges; debt service on general obligation bonds; payments to CalPERS and CalSTRS; state, legislative, and court employees’ salaries; IHSS services; Medi-Cal associated payments; and child support services payments.
IOUs will be issued for the following payments:
- Cal Grants
- SSI/SSP grants
- CalWORKS grants
- County administration of social services programs
- Developmentally disabled centers
- Local assistance payments for mental health services
- Local assistance payments for alcohol and drug treatment services
- Judicial branch
- State and small business vendors
- Personal income tax and corporate tax income refunds
The warrants will carry an interest rate set by the Pooled Money Investment Board (PMIB). The Controller has requested an emergency PMIB meeting on July 2 to set the rate and that rate adoption will become effective immediately. The warrants will have a maturity date of October 1, 2009.
The State Controller’s Office website has resources and information to provide answers to the many questions that this recent announcement has provoked.
It is important to note that the 2009-10 state budget already includes deferred payments to counties for most social services payments expected in July and August 2009. IOUs will only be issued for those payments that are currently scheduled to be made during those months.
In terms of impacts to counties, it appears that registered warrants are a preferable option to delaying payments outright. There is at least the potential that banks or other lenders will cash these warrants in anticipation of receiving the interest earnings when the warrants mature. CSAC is communicating with the State Controller’s Office to determine if and when banks are willing to accept the IOUs.
Counties also should know that Government Code section 29822 authorizes local agencies to issue registered warrants. Counties may wish to consider this option if the budget impasse becomes protracted and local cashflow issues ensue.
We appear to be in “hurry up and wait” mode, as we move closer to the July 1 deadline. There are no indications as to who will blink first, but we will do our best to provide you with the most up-to-date information available. Look for more news Thursday on the Legislature’s action…
List of Bills – Revisions to 2009–10 State Budget
SB 62/AB 180 Changes to 2009–10
SB 64/AB 182 2008-09 Education/Higher Ed
SB 65/AB 183 2009-10 Education/Higher Ed
SB 67/AB 185 Human Services
SB 68/AB 186 Health
SB 69/AB 187 Developmental Disabilities
SB 70/AB 188 General Government
SB 72/AB 190 Transportation
SB 73/AB 191 Resources
SB 74/AB 197 Cash Management/Deferrals
SB 75/AB 193 Revenue
SB 76/AB 194 Revenue
SB 77/AB 195 Parks
SB 78/AB 195 Emergency Response Initiative
SB 79/AB 197 Corrections/Judiciary
SB 80/AB 198 Redevelopment Agencies
SB 81/AB 199 Realignment
SB 82/AB 200 Cash Management
SB 83/AB 201 Driver’s License/Motor Vehicle Account Fee
AB 14XXX Other Corrections reforms
California State Association of Counties