The Sacramento Report
by Debra Carlton
Budget Decisions and Legislative Districts
Each year, California’s elected leaders struggle to keep California on a sound financial track while they simultaneously debate the importance of services and programs demanded or needed by its citizens. Understanding the state’s priorities and the debates and decisions that go into shaping California—the sixth largest economy in the world—is imperative for those groups and individuals who desire to impact the final outcome.
For an organization like the California Apartment Association (CAA), the desire for less regulation on the existing rental-housing industry and the need for additional affordable housing units can only be successful when industry members understand the priorities and struggles of the current administration and state lawmakers.
As one way to understand where the administration and the legislature will focus their attention this year, I have provided an overview of the Governor Schwartzenegger’s State of the State address, which he delivered to legislators and California citizens in January. In his address, he announced his policy direction as well as his plans for California’s budget, which currently faces a $9.1 billion gap between revenues and planned expenditures.
As announced by the governor, his plans for the state’s budget coincide with California voters’ wishes as expressed in their March 2004 approval of Proposition 58. This proposition added, for the first time, a provision in the California Constitution that requires the legislature to pass, and the governor to sign, a balanced budget. Proposition 58 provides that whenever the state’s director of finance advises the governor that California’s spending is at a level that is likely to exceed available revenue, the governor may call a special session of the legislature to address this imbalance. Under Proposition 58, when the governor calls a special session to address a budgetary imbalance, the legislature has 45 days to act. If it fails to do so, it is prohibited from passing any other laws until it addresses the budgetary imbalance.
In line with Proposition 58, the governor has called a special session, through which he will demand a change in the way that government spends its money. Simultaneously, he has asked the legislature to focus on a number of reforms, including a teacher merit system (versus the existing tenure system), reforms for California’s prison system and changes to California’s public employee pension system. These highly controversial, epic reforms received a lukewarm reception by the state legislature and will, no doubt, be strongly opposed by the related unions.
Perhaps one of the demanded reforms that most demonstrates the governor’s political independence and his willingness to impact both major political parties is his call for an independent panel of retired judges—not politicians—to determine California’s legislative and congressional districts. He believes this change will bring about fair, honest district lines that make politicians of both parties accountable to the people. To change the status quo in Sacramento will not be easy, however, and the governor has threatened to take this fight to the people in a special election if the legislature fails to cooperate.
Faced with a $9 billion budget gap, the governor understands that his most immediate and daunting priority comes in reforming the way in which the government spends its money. Among the reforms for the budget announced by Governor Schwarzenegger is a plan to submit legislation to state lawmakers that will cut expenditures across the board when they grow above revenues. Part of the governor’s plan includes a proposal that whenever the state does not have a budget in effect at the beginning of the fiscal year (July 1), the appropriation levels in the previous year’s budget will remain in effect until such time as the legislature and the governor enact a new budget.
So where does housing fit in all of this? In the governor’s remarks, he did focus on housing to the extent that he noted that California’s median home price has reduced the percentage of Californians who can afford to purchase a home. “The state’s lack of housing supply has created inefficient land uses and has forced housing development further from jobs and population centers.” The governor announced that he will seek to reform onerous regulatory and planning laws in order to promote home building and accountability for housing production while requiring less paperwork between local governments and the state. He made the demand that “every local jurisdiction should plan for and be prepared to accommodate their own natural population increase and workforce, and to do so [according to] the most efficient land-use pattern possible, minimizing impacts on valuable habitat and productive farmland.”
In a state where nearly 48 percent of its citizens rent their housing, CAA must ensure that the governor and his administration understand the rental housing industry’s contribution to this state. CAA representatives have, therefore, already participated in early meetings with administrative officials to discuss the development of housing policies.
Profound changes are planned by this governor who is willing to take the risk—to go where so many leaders have refused or feared to go in the past. In his own words to members of the legislature, the governor demanded that they help him “apply the natural innovation and imagination of our people—to government, to education, to transportation, to the improvement of our society.” He has demanded that the members of the legislature not bring him small ideas but bring him “ideas to match our future” and bring him reforms “to equal our problems.” If anyone can force reform of a system that many Californians believe to be broken, this governor may be the one to do so. One thing is for sure, this year will not be business as usual.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. Debra Carlton is the senior vice president of legislative affairs for the California Apartment Association and is CAA's chief lobbyist. Copyright © 2005 by the San Francisco Apartment Magazine. All rights reserved.