“Governor Schwarzenegger issued an order today directing state agencies to reinstitute furlough Fridays until a new budget is in place. The order for state workers to take three furlough days per month will take effect starting August 1 and continue until a new budget is enacted and the Department of Finance certifies that the state has enough cash to meet its obligations through the end of the fiscal year.

“ ‘Without a budget in place that addresses our $19 billion budget deficit, every day of delay brings California closer to a fiscal meltdown,” said Schwarzenegger. “The state controller has indicated he could be forced to issue IOUs starting in August in order to avert a cash crisis. Our cash situation leaves me no choice but to once again furlough state workers until the legislature produces a budget I can sign.’

“The governor’s furlough order continues to exempt CAL FIRE and California Highway Patrol from furloughs. In addition, the governor’s new order is more narrowly drafted to exempt revenue generating agencies and quasi-public entities with non-general fund resources.”

(Editor’s Note: Read the last sentence of the governor’s press release. On March 24, Schwarzeengger vetoed a bill, SB 29 8X, by Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, which proposed to do that very thing. “It is necessary to apply furloughs across the board, with limited exemptions as needed to protect public health and safety, to effectively manage the workforce and to avoid inequities and morale problem for state employees,” the GOP governor wrote in his veto message. Steinberg said that furloughs imposed on two agencies, the Franchise Tax Board and the Board of Equalization, were hampering the state’s ability to combat tax scofflaws and costing the state revenue. Schwarzenegger now exempts them from furloughs. The State Compensation insurance Fund, a semi-public entity sued to be exempted from furloughs. It now is on the governor’s furlough-exempt list, as are employees in the six bargaining units with which Schwarzenegger struck tentative agreements.)

EXECUTIVE ORDER S-12-10

BY THE GOVERNOR OF THE STATE OF CALIFORNIA

WHEREAS, due to continuing weak performance in the California economy and other factors, there is an approximately $19 billion General Fund deficit for the 2010-11 fiscal year; and

WHEREAS the State has already taken extraordinary measures to conserve cash, such as implementing payment deferrals to schools and other local governments; and

WHEREAS there is no state budget for the 2010-11 fiscal year and a lengthy budget delay is likely; and

WHEREAS the longer it takes to adopt state budget measures to implement needed savings, the more the value of those savings erode, meaning that additional savings will be needed to make up for that lost time and money; and

WHEREAS without a budget in place, the latest cash projections show that California’s cash will go into the negative no later than October 2010; and

WHEREAS to ensure that the State meets its payment obligations protected by the California Constitution and federal law, the State Controller has stated that he could be forced to begin issuing registered warrants (IOUs) as early as August 2010; and

WHEREAS the State must start preserving cash beginning in August 2010 to improve the State’s ability to meet its obligations to pay for debt services and critical and essential services to protect public health and safety and to make payments protected by the California Constitution and federal law; and

WHEREAS furloughs are necessary to immediately begin saving cash until a budget is in place that includes solutions that will ensure there is sufficient cash for the State to meet its obligations to pay for debt service and critical and essential services to protect public health and safety and make payments protected by the California Constitution and federal law; and

WHEREAS as part of the solutions to close the $19 billion General Fund deficit, the Governor’s May Revise budget proposal included a 15 percent reduction in employee compensation costs for fiscal year 2010-11; and

WHEREAS in order to preserve sufficient cash in the 2010-11 fiscal year without a budget in place, three furlough days per month are necessary to achieve savings in employee compensation for the 2010-11 fiscal year; and

WHEREAS immediate action to reduce current spending must be taken to ensure, to the maximum extent possible, that the essential services of the State are not jeopardized and the public health and safety is preserved; and

WHEREAS a furlough will reduce current spending and immediately improve the State’s ability to meet its obligations to pay for essential services and make payments protected by the California Constitution and federal law in the 2010-11 fiscal year.

NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, by virtue of the power and authority vested in me by the Constitution and statutes of the State of California, do hereby determine that an emergency pursuant to Government Code section 3516.5 exists and issue this Order to become effective immediately:

IT IS ORDERED that effective August 1, 2010, the Department of Personnel Administration (DPA) shall adopt a plan to implement a furlough of represented state employees and supervisors for three days per month consistent with the terms of this Order.

IT IS FURTHER ORDERED that effective August 1, 2010, the DPA shall adopt a plan to implement an equivalent furlough or salary reduction for all non-represented state employees, including supervisors, managers, and exempt state employees, consistent with the terms of this Order.

IT IS ORDERED that the following state agencies and departments are exempt from this furlough executive order:

California Highway Patrol

California Department of Fire and Forestry Protection (CalFIRE)

Franchise Tax Board

Board of Equalization

Employment Development Department

State Compensation Insurance Fund

California Housing Finance Authority

California Earthquake Authority

IT IS FURTHER ORDERED that the represented employees in Bargaining Units 12, 16, 18 and 19 are exempt from this furlough executive order based on the expectation that the tentative Memoranda of Understanding reached with these Bargaining Units will be ratified by the Bargaining Unit membership and the State Legislature by early August 2010, whereby the employee compensation savings in these agreements will result in immediate cash savings beginning in the August 2010 pay period.

IT IS FURTHER ORDERED that DPA shall adopt a furlough plan that will result in the closing of general government operations on the second, third and fourth Fridays of each month, beginning in August 2010.

IT IS FURTHER ORDERED that effective August 1, 2010, and for the duration of the furlough period, all state agencies and departments subject to furloughs shall take all necessary action to require their employees to take three furlough days within the month.

IT IS FURTHER ORDERED that the furlough period shall end when a 2010-11 fiscal year budget is in place and the Director of the Department of Finance determines that there is sufficient cash to allow the State to meet its obligations to pay for critical and essential services to protect public health and safety and to meet its payment obligations protected by the California Constitution and federal law.

IT IS REQUESTED that other entities of State government, including the California Public Utilities Commission, the University of California, Hastings College of Law, the California State University, California Community Colleges, the Bureau of State Audits, the legislative branch (including the Legislative Counsel Bureau), and judicial branch, implement similar or other mitigation measures to achieve budget and cash savings for the 2010-11 fiscal year.

This Order is not intended to create, and does not create, any rights or benefits, whether substantive or procedural, or enforceable at law or in equity, against the State of California or its agencies, departments, entities, officers, employees, or any other person.

I FURTHER ORDER that, as soon as hereafter possible, this Order shall be filed in the Office of the Secretary of State and that widespread publicity and notice be given to this Order.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 28^th day of July, 2010.

____________________________

ARNOLD SCHWARZENEGGER

Governor of California

The change in how taxes are computed for companies doing business in California and other states – the so-called “single sales factor” – approved in the February 2009 budget — will cost the state $900 million in lost revenue starting in the fiscal year that begins July 1, 2012.

Republican lawmakers and Gov. Arnold Schwarzenegger insist the tax break become effective on January 1, 2011. Branding it a “corporate giveaway,” Democratic lawmakers want to postpone its implementation two years to help balance this year’s budget, now a month overdue with little sign of progress on a compromise.

While $900 million is a sizable annual revenue loss for the state, there are 13 other “tax expenditure programs,” as they’re called, that cost the state more each year.

In some cases, four, five and six times more.

None of those tax breaks are being considered for elimination or reduction by either party to help close the state’s budget gap.

The ability to deduct home mortgage interest robs state coffers of $5.7 billion, according to a 2008 study of the impact of various tax expenditure programs by the Legislative Analyst.

The housing market meltdown might have lowered that figure during the past two years although the state’s growing population may have increased it.

The most generous tax breaks for employers are excluding from taxation contributions to employee pension plans and payments for employee health care and accident insurance. The pension contributions are a nearly $5 billion revenue loss. The health care and accident contributions, $3.7 billion.

California homeowners don’t pay taxes on capital gains when they sell their primary residence – another $3.7 billion.

California’s use of the “basis step-up” on inherited property has a $3.2 billion price tag for the state. The reason it does is that “basis step-up” calculates the value of property on the date of the death of the person it is being inherited from, rather than its initial purchase price.

If the property is subsequently sold, rather than paying taxes on the difference between the sale price and the initial purchase price, the tax liability falls only on the amount between the value at the person’s death and the sale price secured by the heirs.

A home purchased in 1980 for $100,000 is valued at $500,000 at the owner’s death and sold for $550,000 shortly thereafter. Under “basis step-up,” the tax liability is on $50,000 rather than $450,000.

Social Security, railroad retirement benefits are also not taxed, a loss of $1.7 billion.

Allowing a full write-off for charitable contributions costs the state $1.6 billion.

Proceeds from life insurance or annuities also are exempted from taxation, a $1.2 billion hit to the general fund.

The Franchise Tax Board’s personal exemption costs $1.2 billion. The state’s standard deduction, another $1.1 billion.

Lawmakers and the GOP governor did reduce one of the over-$1 billion tax credits and exemptions – that for dependents.

Prior to the 2009 budget, each dependent was a $309 tax write-off, costing the state $1.7 billion, the analyst estimated. Now, each is $102, saving the state roughly $1 billion each calendar year or half that during a fiscal year.

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SACRAMENTO – The California New Car Dealers Association (CNCDA) announced that registrations of new cars and light trucks in California continue to outpace national numbers.  California’s franchised new car dealers saw an increase in second quarter sales of nearly 44,000 units over the first quarter of this year.

Though sales are forecasted to slow during the second half of this year, the market improved 23 percent during the first half of 2010 versus 2009.

“We have seen the bottom and folks are returning to the showroom” said Tom Hoffman, CNCDA chairman and owner of Puente Hills Chevrolet. “We expect slow but steady growth over the next couple of years.”

The California Auto Outlook Second Quarter 2010 Market Report provides comprehensive information on the state’s new vehicle market with charts and graphs. The report includes: a segment watch, including the top five models in each segment; a market perspective, comparing California nationally; brand scoreboards; a regional recap and more.

The complete report can be accessed at CNCDA’s website.

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(Editor’s Note: A long-time friend of the chief correspondent of California’s Capitol is a public information officer with a state agency. Her observation about the efficacy of complying with California’s Public Records Act inspired this post.)

State agencies have 10 days to respond to a Public Records Act request. The presumption would be 10 “working” days. That’s not the case.  It’s 10 calendar days.

Here’s what Government Code Section 6253 (c) says:

“Each agency, upon a request for a copy of records, shall, within 10 days from receipt of the request, determine whether the request, in whole or in part, seeks copies of disclosable public records in the possession of the agency and shall promptly notify the person making the request of the determination and the reasons therefor.”

In “unusual circumstances,” which are defined later in the code section, the time limit can be extended. However, in nearly all cases, 10 days is the limit in which agencies must respond.

While 10 calendar days would seem sufficient to decide the validity of a request, from a practical standpoint the timeframe is much smaller. A weekend subtracts two days. A Friday furlough takes away another.

Assuming a request arrives on Thursday afternoon at a state agency, it isn’t opened until Monday. By Monday, the remaining seven days would run out the following Sunday, leaving five weekdays to respond to the request.

Similar situations likely occur at the city and county level.

Legislation adding the word “working” between “10” and “days” in Section 6253 (c) would resolve the issue without drawing out the response period egregiously, several state public information officers say

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