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State Budget Update #21 (6/20/2003)
Bipartisan Budget Plan Would Cut CCC by $210 Million and Hike Fees

This week, a bipartisan group of legislators released the work product from several months of meetings, hoping to provide a structure for a final budget agreement. While the group at one time boasted thirteen members, the final proposal was signed by only two, Joe Canciamilla (D-Pittsburg) and Keith Richman (R-Northridge).

The plan would approve about two-thirds of the Governor’s tax package and make deep reductions to close the gap and minimize the structural budget deficit. For community colleges, the plan would cut $210 million and increase student fees to $26 per unit, capturing the fee revenue in the state’s General Fund.

While the plan was dismissed by some observers as “dead on arrival,” several legislators said privately late this week that it was the closest to the final budget plan of the many proposals made. "It's the only plan that has one vote from each party," Assemblywoman Lois Wolk (D-Davis) told the Sacramento Bee. Wolk was one of the participants in the bipartisan working group, although she declined to put her name on the final work product.

The Governor’s Administration today “pulled the trigger,” tripling the state’s vehicle license fee. If implemented, the fee would provide $3.8 billion in the 2003-04 fiscal year and is a critical part of the budget plan Democrats hope will gain Republican votes. However, the chief budget negotiator for the Assembly Republicans, John Campbell (R-Irvine), promised a legal challenge to the fee increase. Campbell released a nonpartisan Legislative Counsel opinion which asserts that the fee can not be increased without a vote of the Legislature, or until the state actually runs out of cash.

Dimming Hopes for Timely Budget Threaten Campus Operations
As Assembly Democrats planned a statewide “Save California” blitz to pressure Republicans to vote for the state budget, the consensus in Sacramento Friday was that there is almost no chance a budget will be enacted by next Sunday’s end of the current fiscal year. This likelihood could have significant effects on community college districts, which is why community college advocates will converge on Sacramento next Wednesday to push for an on-time budget that is fair to community colleges.

The most significant impact on community colleges could be the suspension of cash payments until a budget is enacted. In each of the past budget impasses, the state Controller has continued to make payments to college districts. However, a court case recently finalized by the California Supreme Court forbids the Controller from following past practice. In a memorandum sent to the Legislature in May, the Controller indicated that payments to community college districts (and certain other agencies) would be unlikely in absence of a budget.

Community colleges generally receive cash payments in the fourth week of each month. The payments vary from month-to-month, ranging from 8% to 12%. In July, districts are expected to receive approximately $192 million under the spending plan pending before the Legislature. In late August, districts would receive a similar amount.

Although the possibility of suspended cash payments would affect districts differently based on summer course offerings and reserve levels, a prolonged impasse would threaten nearly every district’s day-to-day operations. Because local property tax revenue first primarily arrives in December, districts are reliant on the cash payments from the state general fund for normal operations, such as payroll, benefits, utilities and other operational expenses.

There is also the possibility that the budget standoff continues, leading to eventual support of a budget similar to that proposed by Canciamilla and Richman, or an even harsher spending plan. This could lead to a budget for community colleges as disastrous as proposed by the Governor in January. The prospect of a possible recall election in November has thrown off the ability of the even the most experienced Sacramento budget-watchers to predict what will happen. While community college advocates are certainly proud of the progress we have made since January, the uncertainty requires the utmost vigilance and forbids any relaxation of the advocacy effort.

We Need Your Participation on Wednesday!
We encourage all community college advocates to plan on attending the “Keep the Doors Open” lobby day on Wednesday (June 25). The lobbying push is essential to ensure that the budget uncertainties don’t reverse the progress made in our budget efforts. Join us Wednesday at 10:00 a.m. at the Crest Theatre, 1013 K Street in Sacramento. After a one-hour briefing, college advocates will be encouraged to go to the Capitol and “drop by” their legislators office to remind them that we continue to fight to Keep the Doors Open.

Scott Lay
Director, State Budget Issues
Community College League of California