07.15.20

A State Budget Comes Together After Months of Uncertainty

April, May and June are arguably the busiest months in the State Capitol, with revenue collections informing the budget revision and eventually leading to a final deal. Along with the budget discussions, the Legislature is ordinarily in full swing, holding both policy hearings for bills, and budget hearings for various pieces of the state’s proposed spending plan. Legislative leaders and the Administration were able to strike a deal and enact a 2020-21 state budget on time, though revisions are expected and the process was unlike any year in recent memory.

Recall that when Governor Newsom presented his January Budget Proposal for the 2020-21 fiscal year, the projected surplus was $5.6 billion. As of May, not only was the proposed budget deficit $54.3 billion, but millions of Californians had lost their jobs. The deal worked out for this year’s spending plan relied on a series of tools, such as drawing down on the state’s historic reserves, revenue-based “triggers”, reliance on federal funds, and cancelled programmatic expansions.

In addition, several of this year’s budget “trailer bills,” which are bills written as follow up to the main budget bill that provide additional detail, address workplace adaptability. As stated in the budget summary document:

Historically, state government has been slow to adopt modernizations in the workplace. But the COVID-19 pandemic has forced a massive experiment in telework and allowed state managers, led by the Government Operations Agency, to rethink business processes.

This transformation will allow for expanded long-term telework strategies, increased modernization and delivery of government services online, reconfigured office space, reduced leased space, and when possible, flexible work schedules for employees.

While governmental agencies aren’t traditionally considered the frontrunners on innovation in workplace function and design, it is clear that the state’s bureaucracy has responded quickly to the needs of a COVID-19 influenced workspace. It will be interesting to see how the private sector continues to respond to these new challenges and opportunities.

Both Houses of the Legislature are scheduled to be on recess until mid-July, though that scheduling has been thrown into question with the recent news that a member of the Assembly tested positive for COVID-19. Upon their return, whenever it may be, the state will have a clearer picture of this year’s revenues based on the July 15th tax deadline. It is very possible that the next quarterly report will include at least some mention of a budgetary adjustment as a result of these new figures.

Looking ahead, voters now have the full lineup of the 12 measures that will be on the Presidential Election ballot on November 3. Among the measures is a “split roll” initiative, which, if passed, would begin to differentiate between commercial and residential property for taxation purposes, and in doing so, would make the biggest change to Proposition 13 since its passage in 1978. There are several other propositions heading for the ballot, several of which are either supported or opposed by big names and deep-pockets. If you haven’t already, you’ll likely start seeing news and ads relating to these measures.

Lastly, it goes without saying that we have recently seen an incredible amount of social activism and civil unrest following the murder of George Floyd. His death set off a movement across all levels of society, and members of government also took action. Governor Newsom stated, “The black community is not responsible for what’s happening in this country right now. We are. Our institutions are responsible. We are accountable to this moment.” In addition, the Governor assembled a police reform task force, and took action to end the use of the carotid hold. Many members of the Legislature also acted, either through legislation to improve community relationships with law enforcement, develop a task force to examine reparations, or take a closer look at officer-involved civilian deaths.

State agencies are also wading into the conversation. You can click here to read a blog post from the Department of Consumer affairs regarding diversity in the construction industry, in addition to an open letter published by the leadership of the California Commission on Teacher Credentialing that poses difficult but important questions on how the licensure body and preparation programs can work towards meaningful change. The momentum behind this movement is not likely to ebb soon. While it’s not always easy to know the right thing to do or say to get engaged, these times of tension and uncertainty give us the chance to examine and improve our imperfections as a society. Conversations about equity within interior design are taking place at the chapter levels; please reach out to your leadership if you would like to get involved.

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