Budget Act
Budget Restoration
Court Funding
Education Issues
Environmental Issues
General Government
Income Taxation
Local Government
Public Social Services
Transporation Issues
Miscellaneous Budget Issues




Budget Act

Passage of the State Budget was delayed 45 days after the fiscal year began on July 1. The delay was the second longest in state history. The impasse was mainly due to Governor Wilson's court ordered back payment to the Public Employee's Retirement System for the state's use of its share of retirement payments for balancing previous state budgets. This payment to PERS necessitated cuts to be made by the Legislature.

Other issues which became part of the delay concerned the Governor's 15% tax cut, pay raises for state employees, state bridge retrofitting, school testing, and providing for implementation of the federal welfare law. The Governor did not obtain the tax cut, but legislation passed at the end of session provided some tax relief (see Revenue and Taxation Section for details), and the state employees obtained a promise of an increase in pay next year.

AB 107* (Ducheny-D) 1997 Budget Act

Enacts the $69.6 billion 1997 State Budget Act.

Chapter 282, Statutes of 1997 - Item Vetoed

The Governor item-vetoed $314 million from the bill. Most of these cuts were done to bring pressure upon the Legislature to pass the student testing program, which met the goals of the Governor. The Governor agreed to restore $203 million if this program was approved.

Budget Restoration

AB 1188* (Lempert-D) Budget Act of 1997: augmentations

Restores the item-vetoes which the Governor agreed to once a student testing program was put into place. These include $178,973,000 to fund designated public elementary and secondary education programs, $10,600,000 to fund designated community college programs, and $3,429,000 to fund designated resources projects. Provides $200,000 to the California Science Center to fund a study on Exposition Park and $3 million to fund stationary air pollution control activities.

Chapter 886, Statutes of 1997 - Item Veto

The Governor item vetoed $6,054,000 from the bill, including the $3 million to fund stationary source pollution control activities since it is also in AB 1571 (Ducheny-D).

AB 1571* (Assembly Budget Committee) Budget Act of 1997: augmentations

Augments the Budget Act of 1997 by appropriating $755,730,000 for trial court operations, commercial space development, public resources, citizenship education, social services, public elementary and secondary education, public postsecondary education, and adult protective services.

Chapter 928, Statutes of 1997 - Item Veto

This bill includes new projects and programs, programs and projects that were previously vetoed, and programs and projects that were eliminated as a result of the PERS obligation.

The Governor item vetoed $38,987,000 from the bill.

Court Funding

AB 233 (Escutia-D) Trial court funding

Enacts the Lockyer-Isenberg Trial Court Funding Act of 1997, transferring principal funding responsibility for trial court operations to the state, beginining in the 1997-98 fiscal year, while freezing court contributions at the 1994-95 fiscal year levels.

Chapter 850, Statutes of 1997

AB 1571* (Assembly Budget Committee) Trial court funding

Appropriates $662,488,000 for trial court funding subject to the enactment of legislation that substantially restructures trail court funding.

Chapter 928, Statutes of 1997

Education Issues

The State Budget (1) increased per-pupil spending by $240 a year or 4.9%, to a total of $5,144 per child during the 1997-98 school year, (2) expanded the Class-size Reduction Program to 4th grade, (3) provided for a 4% increase in college funding and eliminated the need for any fee increases, (4) appropriated $100 million for the Governor's Digitial High-School Program to train high school students in the use of computers, and (5) extended the school year by one day.

SB 376* (Alpert-D) Student testing

Establishes the Standardized Testing and Reporting Program (known as STAR), which replaces the Pupil Testing Incentive Program by expanding the grades tested to produce individual scores for grades 2-10 (under the old law) to grades 2-11, and eliminates the option for school districts to choose.

Chapter 828, Statutes of 1997

Technically, this bill is not a trailer bill, but without the bill, the budget restoration cuts would not have been able to occur.

SB 1095* (Lockyer-D) High Risk Youth Education and Public Safety Program

Establishes the High-Risk Youth Education and Public Safety Program to assist county offices of education and school districts to implement prevention and early intervention strategies for youths who are seriously becoming chronic, repeat juvenile offenders.

Chapter 340, Statutes of 1997

AB 64* (Baca-D) Advanced technology

Establishes the Digital High School Education Technology Grant Act of 1997, to provide all California public high schools with a technology installation grant within 4 years and to provide on-going support and staff training grants to high schools. The Budget contains $50 million in one-time funding and $50 million in on-going Proposition 98 funding to support this program.

Chapter 326, Statutes of 1997

AB 751* (Escutia-D) Class Size Reduction Program

Allows overcrowded school sites and school districts, which operate in multi-track year-round schedules, additional flexibilities when participating in the Class Size Reduction Program.

Chpater 285, Statutes of 1997

AB 1578* (Migden-D) Education Trailer Bill to the Budget Act of 1997

Contains various appropriations required to meet the Proposition 98 guarantee for fiscal years 1995-96 and 1996-97, and makes the necessary code changes to make the 1997 Budget Act operative. Appropriates $518,545,000 for various school district projects and programs, and provides monies for educational programs and purposes at the California Foundation Museum, the California Museum of Latino History, Art, and Culture, the Hollywood Entertainment Museum, the Simon Wiesenthal Center Museum, and the African-American Museum.

Chapter 299, Statutes of 1997 - Item Vetoed

The Governor item vetoed $14,869,000.

AB 1579* (Strom-Martin-D) School finance: staff development

Creates the Staff Development Buy-Out Program, which pays school districts $220 per day for each certificated employee who participates in core curriculum and staff development programs, that are offered on days that are in addition to the regular school year.

Chapter 296, Statutes of 1997

Environmental Issues

SB 271* (Thompson-D) Resources

Creates the Resources Trust Fund and establishes conditions and requirements for the 5-year operation of the fund. Creates the Salmon and Steelhead Trout Restoration Account and the Natural Resources Infrastructure Fund, as an account in the trust fund. Provides for the State Department of Fish and Game to grant funds from the account for fish habitat projects. Relocates the provisions of the California Sea Grant Program. Requires the State Controller to transfer the sum of $29,549,000 in revenue, money, and remittance received by the State Lands Commission for the 1996-97 fiscal year to the General Fund.

Chapter 293, Statutes of 1997

SB 1320* (Sher-D) Environmental protection

Establishes external scientific peer review requirements for all boards, departments and offices in the California Environmental Protection Agency.

Chapter 295, Statutes of 1997

AB 1582* (Bowen-D) Parks and Recreation: California Conservation Corps

Prescribes procedures for the operation and funding of the State Department of Parks and Recreation (DPR) and the California Conservation Corps during the 1997-98 fiscal year. Requires DPR to submit annual reports to the Legislature describing the allocation and expenditure of specified funds. Defines "suitable residence" for purposes pertaining to the Governor's Mansion and provides that the residence may include the Stanford Museum. Enacts changes to the administrative requirements of the state's Performance-Based Budgeting pilot program, relative to these 2 agencies.

Chapter 288, Statutes of 1997

AB 1583 (Shelley-D) Air pollution

Extends the statutory source fee, which is collected from businesses which emit 500 tons or more per year of any non-attainment pollutant, for 2 years, until July 1, 1999. Establishes reporting requirements to the Legislature.

Chapter 713, Statutes of 1997

General Government

SB 386 (Peace-D) Department of Corrections: juveniles

Requires the Bureau of State Audits to conduct annual performance and fiscal audits within the State Department of Corrections (CDC) and the California Youth Authority. Requires the CDC's Office of Internal Affairs, or its successor, to be housed and supported by CDC and requires the Office of Internal Affairs to be responsible for reviewing departmental policy and procedures regarding internal audits or investigations, as specified.

Vetoed by the Governor

SB 959 (Kopp-D) Office of Emergency Services

Appropriates $20,358,000 to support the Disaster Assistance Branch of the State Office of Emergency Services (OES) from January 1, 1998 to June 30, 1998, subject to the condition that the Governor provides the Legislature, by December 31, 1997, a plan to limit the role of OES with respect to disaster claims processing to the absolute minimum number of staff required to work with the Federal Emergency Management Agency on issues related to state disasters and eligibility and to manage one or more interagency agreements for claims processing services.

Chapter 338, Statutes of 1997

AB 783 (Brown-D) Alcoholic beverage control enforcement

Establishes the Alcoholic Beverage Control Special Enforcement and Training Fund within the State Department of Alcoholic Beverage Control (ABC) to administer ABC's Grant Assistance to Local Law Enforcement (GALE) Program.

Vetoed by the Governor

In his veto message, the Governor indicated that this bill created permanent funding for ABC's GALE and sustained a related budget augmentation to fund GALE for the 1997-98 fiscal year. He stated that, as desirable as permanent funding is, the resources necessary should not be supported by the General Fund. The Governor established that he was amenable to legislation to that provided the additional revenues which did not impact the General Fund.

AB 1586* (Wright-D) State administration

Contains provisions to implement the 1997 Budget Trailer Act relative to various state agencies. Continues and expands the Performance-Based Budget contracts for the State Department of Consumer Affairs and the State Department of General Services through January 30, 1998. Makes modifications in the law concerning the California Science Center, the Capitol Park Veteran's Memorial, surplus property held by the State Department of Fish and Game and the Tourism Marketing Act. Increases licensed health plan fees to improve licensing and monitoring of health management organizations and other health care plans. Creates a False Claims Act Fund for the deposit of settlement proceeds from the judgment or settlement of false claims agsinst the state.

Chapter 300, Statutes of 1997 - Item Vetoed

The Governor item vetoed the provision concerning the establishment of the Agriculture Employee Relief Fund from the bill.


SB 391* (Solis-D) Health

Contains omnibus health trailer bill provisions consistent with the 1997 Budget Act. Contains issues relating to patient protections for the AIDS Drug Assistance Program, tuberculosis, modifying the existing transitional Medi-Cal program, and other Medicaid programs and foster care. Implements the $75 million in local government relief reflected in the budget through the disproportionate share hospital program. Reenacts the current health education, indigent health care, and tobacco-related research programs supported by on-going funds and continuous support for Rural Health Grants. Makes a variety of changes to the Early Intervention Infant and Toddler Program's Interagency Coordinating Council.

Chapter 294, Statutes of 1997

Income Taxation

AB 1592 (Leonard-R) Income tax: renters' credit

Suspends the income tax renters' credit until January 1, 1998.

Chapter 292, Statutes of 1997

Local Government

AB 1584* (Prenter-R) Local funding: public safety

States legislative intent regarding funding for the Citizens Option for Public Safety (COPS) program in future years and makes changes to existing expenditure reporting requirements for entities receiving COPS funding. The 1997 Budget contained $100 million for the COPS program.

Chapter 289, Statutes of 1997

AB 1589* (Pringle-R) Educational Revenue Augmentation Fund

Clarifies several Education Revenue Augmentation Fund (ERAF) ambiguities resulting from legal interpretations provided by the State Controller. Clarifies that all county appropriations for district fire services reduce the computation of a district's total annual revenue, irrespective of the source of the funds, or if the county appropriation was made under alternative sections of law. Clarifies that the amount identified for transfer to special districts rather than actual amounts transferred are to be used when calculating special district protection revenue exemptions under ERAF for Orange County. Clarifies that libraries must shift funds to ERAF under the 1992-93 and 1993-94 formulas.

Chapter 290, Statutes of 1997

Public Social Services

AB 1542* (Ducheny-D) Welfare reform

Contains the state's implementation of the federal welfare reform law and creates the California Work Opportunity and Responsibility to Kids Program.

Chapter 270, Statutes of 1997

Follow-up bills to AB 1542 were AB 1008 (Ashburn-R), Chapter 283, Statutes of 1997, and AB 1260 (Ashburn-R), Chapter 284, Statutes of 1997. These bills require that individuals convicted of drug felonies be excluded from the receipt of cash welfare benefits for families.

AB 1576* (Bustamante-D) Food assistance: legal immigrants

Establishes a food assistance program for legal immigrants who are adults, 65 years of age or older, and minors under the age of 18. Requires that those eligible for the state program to have been legally in the country prior to August 22, 1996. Sunsets on July 1, 2000. The Budget Act of 1997 appropriated $34.6 million in General Funds for this program.

Chapter 287, Statutes of 1997

AB 1577* (Ducheny-D) Supplemental Security Income Program

Creates a state-only Supplemental Security Income (SSI) program for disabled citizens and children and a state-only SSI program for elderly non-citizens.

(Failed passage on the Assembly Unfinished Business File; motion to reconsider pending)

Transporation Issues

SB 60 (Kopp-I) Bridge funding

Adds provisions establishing a long-term financing plan for the seismic retrofit and/or replacement of 7 state-owned bridges. Identifies sources of funding and specifies amounts to be allocated through the 2004-05 fiscal year for the seismic retrofit or replacement of state-owned bridges.

Chapter 327, Statutes of 1997

SB 226 (Kopp-I) Bay Area Toll Authority

A follow-up measure to SB 60, creating the Bay Area Toll Authority. Designates the Metropolitan Transportation Commission as that entity and transfers the responsibility and control of existing Bay Area toll to the authority from the California Transportation Commission.

Chapter 328, Statutes of 1997

AB 1591* (House-R) Vehicle registration and transfer fees

Increases the motor vehicle registration fees by $1 and increases the vehicle transfer fees from $10 to $12 for some classes of vehicles, and from $9 to $11 for other classes of vehicles. Represents the Governor's fee proposal on this issue.

Chapter 291, Statutes of 1997


AB 1593* (Machado-D) Flood protection

Authorizes a flood control project along the American River in accordance with the recommendation of the Chief of Engineers in a report titled, "The American River Watershed, California," and as adopted by Congress in 1996.

Chapter 297, Statutes of 1997

Miscellaneous Budget Issues

SB 1093* (Rainey-R) State budget: performance measures

Requires the State Budget to focus on the results of government services at the state and local levels. Specifies that state and local government officials are required to respect existing program evaluation requirements and program performance measures, and that outcome measures are to be realistic and commensurate with the level of reviews for each year.

(In Senate Budget and Fiscal Review Committee)

SB 1304 (O'Connell-D) Zero-based budgetary

Establishes a framework for implementation of zero-based budgetary in state government.

(In Assembly Budget Committee)

A companion measure is SCA 13 (O'Connell-D), which is in Assembly Elections, Reapportionment and Constitutional Amendments Committee.

SCA 16 (Lockyer-D) Budget Bill: passage

Provides for forfeiture of legislative per diem and salary and the Governor's salary if the Budget goes over the June 30th Budget deadline. Exempts the State Budget from 2/3 vote requirement.

(In Senate Rules Committee)

Similar legislation is ACA 25 (Morrissey-R), which is in Assembly Budget Committee, and ACA 26 (Torlakson-D), which is in Assembly Budget Committee.

AB 889 (Gallegos-D) State contracts: budget delays

Provides for an interim budget, if the Budget Bill goes beyond 15 days, of the deadline in order to make payment to vendors, as specified.

(In Senate Rules Committee)

AB 980* (Ashburn-R) State budgets

Requires the State Department of Finance to annually provide for meetings between representatives designated by the Governor or the Director of Finance and county representatives to discuss Budget issues of concern to counties relative to programs administered by counties as agents of the state and the impact of the issue on county revenues.

Vetoed by the Governor

AB 1562 (Assembly Budget Committee) Budget Act of 1996: contingencies

Appropriates $466,159,000 in augmentation of 1996 Budget Act appropriations for the payment of a number of funding deficiencies incurred by various departments and state agencies.

Chapter 27, Statutes of 1997

ACA 1 (Goldsmith-R) Balanced State Budget

Provides for a balanced State Budget.

(In Assembly Budget Committee)

ACR 73 (Perata-D) Budget Bill: deliberations

Directs that both houses of the Legislature, with regard to the annual Budget Bill, take all action necessary to ensure that decision making on a Budget Bill that has been referred to Conference Committee be done exclusively by Members of the Conference Committee and other representatives of the legislative branch of state government.

(In Assembly Budget Committee)

ACR 75 (Miller-R) Joint Committee on the Budget Bill

Creates a Joint Committee on the Budget Bill to annually review the Budget Bill that is annually introduced in each house of the Legislature and to report 1 of them back to the house of origin no later than June 10, and would operate as a Conference Committee in the event of nonconcurrence.

(In Assembly Budget Committee)