As your elected Assemblywoman, I am honored to serve you in Sacramento.

If you have any questions, would like to comment on an article or submit a newsworthy item for our next newsletter, please send me an email or contact my offices.

- Assemblywoman Diane Harkey

http://www.assembly.ca.gov/harkey

Summer is in full-swing and not much has changed with our State's finances. Or has it? As of midnight, June 30th, the end of the State's fiscal year, we had failed to balance our ''unbalanced budget'' and reduce our ''expenses'' to meet the declining revenues. Recall the country western tune as we enter Phase 2.

Still ''talking'' the Governor and Legislature are grappling with a growing budget deficit.  Understand, the $24-26+ Billion number is where we will be in the future IF we continue to spend at the 2/09 budgeted levels.  Therefore, as long as we keep spending at previously projected revenue levels, we will dig deeper and deeper into debt.

We must take action soon, as we are out of cash, our state's credit rating has declined from A- to BBB, and we are issuing IOU's, which are costing you, the taxpayers more in debt expense. And, because personal income tax, our primary source of revenue, continues to decline, rest assured, we will be back again in less than 6 months reassessing our situation and making more revisions. 

We in the State Assembly tried to move a piece of the puzzle forward on June 25th.  We agreed almost unanimously (Republicans and Democrats) to pass a few measures, one that would have saved us $3 billion immediately, and potential savings in future years.  When facing a huge deficit and a decrease in revenues (taxes) we thought it was wise to vote ''yes'' to realigning our Education funding, as we may legally do.  No one wants to reduce Education funding, but Education received over $6B in federal stimulus dollars for the year ended June 30, 2009, so backfill dollars were available.

However, ''all or nothing'' won the day as the Governor and Senate held firm on resolving the entire budget issue. Their position is understandable, as we must agree to reduce spending in many other areas and should implement reforms to soften the blow. Unfortunately, now we may be asked to ''Suspend'' the Proposition 98 Guarantee, which is a tad more difficult politically and could be more expensive.

What is Prop 98?  Proposition 98, the complex Education initiative voters passed to protect education, is key in all budget decisions. First, it mandates that 40% of all General Fund revenues must be directed to K-14 Education. There are 3 tests, but simply stated the ''Guarantee'' is set with the budget each year based on ''projected revenues.'' (The Legislature usually allocates more that the guarantee each year.) The guarantee may be adjusted at certain intervals when and if ''actual revenues'' fall below projections, such as what happened this year.  We had until June 30th to realign the projected level to the actual revenue level.

Here's the catch - Because we did not reduce the base in 2008-09, this year's (2009-10) funding level begins at a higher base.  Additionally, if we ''Suspend'' the Proposition 98 guarantee, we will need to pay it back in future years.  The extra funding could mean that we may need to reduce spending in other categories such as public safety,  health and human services, and college education by a larger amount, and/or borrow more just to balance the ''unbalanced budget'' we put in place for 18 months in February 2009. 

The good news is the Governor and finally ''both sides of the aisle'' seem to be unwilling to raise taxes, but fees may be another matter. Recall, 2/3 majority of the legislature raised taxes in February, and we are still taking in less dollars. That's no way to balance a budget!

So, we expect to be hearing and seeing protests, as well-funded special interest groups amass their troops.  There are no easy choices and we must reduce spending, just as you have had to do personally and in your cities and counties. The reduction number hovers around 15%+ of what we projected for 2008-09. Serious negotiations are underway at the Big 5 level, so keep your fingers crossed for an action report by the end of this week.

California is still #1 in providing some of the best Universities in the world.  Shouldn't we be reaping the employment benefits by keeping the talent in California? In that vein, I am pleased to be a member of the Joint Senate and Assembly Committee on Biotechnology, working with our universities and private entrepreneurs to forge a growing technical and professional component to fuel future growth in our state.  Hubs of innovation are springing up in San Diego, Orange County and Northern California, creating new medical techniques to make life and medical treatment more convenient and less-expensive. Green technologies creating sustainable and cleaner energy sources are likewise taking a foothold in the same locales. There is a natural synergy between the business community and the research conducted at the UC's, complemented by the CSU's and Community Colleges.  Keeping our grads in California with exciting high and low tech careers means a brighter future for our state.

Along with this exciting new Bio-tech and Bio Med endeavor I am also involved in another group that is gaining steam.  Our Republican caucus, led by Assemblyman Dan Logue, has held forums attempting to help the declining manufacturing sector.  Our regulatory system is the ''job killer'' as we are seeing in nearly every forum.  We are beginning to work together to find solutions to water, air and other regulation that is strangling our economy. We are taking ''baby steps'' at the moment, gathering data, and will be suggesting legislation to follow in an attempt to correct some of the worst offenses. I have great hopes that the positive momentum we are creating, in an otherwise negative economic scenario, will lead to a retention of living-wage jobs sustaining those who would otherwise hit the state's unemployment rolls.  

As we enjoy the fabulous local scenery and visit with family and friends this summer, I will be ''in district'' getting reacquainted with you, the people I am proud to serve.  Because water is a priority issue with me, I have assigned a member of my small Sacramento staff, Christine, the ''water czar'' designation and she will be coming south to work in Oceanside during our summer recess beginning July 17th.  Christine will also be keeping tabs on the Gregory Canyon Landfill site, which is a current focus of water concerns with regards to the aquifer supplying drinking water to the Oceanside area. We will keep you posted. 

For more information on issues addressed in this newsletter, visit my website: http://assembly.ca.gov/harkey/ for previous newsletters detailing the budget problem and the choices we face (found on the right side of the page).  You may also want to visit  http://schoolfinancecenter.org/  to see and compare the dollar amount your school district receives in total, Federal, State and other funds, as well as visit the Legislative Analysts website tutorial on Proposition 98 if you want more detail on this important and priority funding: http://lao.ca.gov/2009/edu/prop98_primer/prop98_primer.aspx

While you are ''surfing'' the web, locate your City website for fun and free activities in your neighborhood.  Concerts in the park, senior fun, water sports and other recreational activities are sponsored – so take advantage of you beautiful home town and I'll be seeing you soon.