BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT JANUARY 27, 2011 ITEM P5 ADMINISTRATION DEPUTY DIRECTOR'S REPORT Reported by: Beverly D. Toms No. CSR 1662 1 1 2 P R E S E N T 3 4 For the Board Jerome E. Horton of Equalization: Chairman 5 Michelle Steel 6 Vice-Chairwoman 7 Betty T. Yee Member 8 George Runner 9 Member 10 Marcy Jo Mandel Appearing for John Chiang 11 State Controller (per Government Code 12 Section 7.9) 13 Diane Olson, Chief Board Proceedings Division 14 15 Board of Equalization Staff: Liz Houser 16 Deputy Director, Administration 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 2 3 INDEX 4 Page No. 5 6 ITEM P5.1 4 7 ITEM P5.2 6 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 ITEM P5.1 2 Sacramento, California 3 January 27, 2011 4 ---oOO--- 5 MS. OLSON: Our next item is P5, Administrative 6 Deputy Director's Report, P5.1, Facilities update. 7 MS. HOUSER: Good afternoon, Chairman Horton 8 and Members. I'm Liz Houser, Deputy Director 9 Administration. 10 Remediation work at the 450 N Street 11 headquarters location continue. The 1st and 5th floors 12 are the last two remaining floors to be remediated. The 13 carpeting on the first floor will be replaced on the 14 weekends to minimize business disruption. The project 15 is on schedule for closeout in March of 2011. 16 The move of approximately 300 employees to the 17 third headquarters annex location in the Opus Building 18 at 160 Promenade Circle in Natomas was completed January 19 9th. 20 With the completion of this move we have 21 successfully relocated approximately 700 employees out 22 of the 450 N Street building, thereby providing a 23 balanced occupancy in this building. 24 I want to thank the Administrative Support 25 Division and the Technology Services Department staff 26 and the participating programs for their outstanding 27 work to allow these moves to be accomplished with -- 28 accomplished with minimal disruption. 4 1 Last week a site search committee visited a 2 number of sites in the greater San Diego area. The 3 committee identified the sites that best meet our 4 business needs for moving the San Diego and San Marcos 5 offices. The next step is for DGS to submit a formal 6 Request For Proposal to those sites to initiate the 7 lease negotiation process. 8 Simultaneously, BOE will be working on updating 9 the work space design. This project will include our 10 latest design for BOE's customer service center of the 11 future and we are looking forward to piloting this new 12 concept. 13 As the project progresses I will provide 14 updates and an estimated move schedule. 15 Are there any questions on the facilities? 16 MR. HORTON: Question, Members? Discussion? 17 Hearing none -- 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 5 1 ITEM 5.2. 2 MS. HOUSER: My next item is an update on the 3 budget. On January 10th Governor Brown released his 4 proposed budget for the 2011/12 fiscal year. There is 5 an impact; bOE include a proposal to continue the 6 Statewide Compliance and Outreach Program or SCOP's 147 7 limited term positions for an additional two years. The 8 program is expected to generate revenues of 9 approximately $68 million in the '11/'12 fiscal year. 10 A proposal that the fuel tax swap is approved 11 by the Legislature as part of ABX 8-6 be reenacted by a 12 two-thirds vote as required by Proposition 26. 13 The budget also recommended realignment of 14 government services in a manner where the services can 15 best and most cost effectively be delivered and provide 16 a permanent funding source. Phase one realignment 17 programs include fire and emergency response activities, 18 court security, vehicle license fee public safety 19 programs, local jurisdiction for lower level offenders 20 and parole violators, adult parole, realign remaining 21 juvenile justice programs, mental health services, 22 substance abuse treatment, foster care, child welfare 23 services and adult protective services. 24 Funding for these changes rely on the five-year 25 extension of the current rate -- tax rates in areas such 26 as personal income tax, sales and use tax, and vehicle 27 license fee that must be approved by the voters in a 28 June special election. These changes rely in part on 6 1 the revenue from the continuation of the additional one 2 percent Sales and Use Tax which generates slightly over 3 $4.5 billion. This revenue will be dedicated to local 4 government to fund the realignment of services primarily 5 in the public safety area. 6 Local government will also retain any growth in 7 these revenues to augment the program as being 8 transferred. When these taxes expire at the end of five 9 years the proposal includes a provision that counties 10 receive a State allocation equal to the amount generated 11 by these tax sources. 12 We are working with the Department of Finance 13 and the Legislative consultants to determine if this 14 additional one percent Sales Tax will be subject to the 15 normal Sales and Use tax costing model. 16 The budget also includes provisions for the 17 Director of Finance to allocate $363 million in 18 reductions of which 200 million is General Fund. The 19 reductions are intended to reflect savings through 20 agency consolidations and operational efficiencies, such 21 as reducing or eliminating contracts. 22 At this time we are waiting for the Department 23 of Finance to respond to our request regarding any 24 potential impact to BOE. 25 My last item is an update on the revenue impact 26 associated with the one day per month Personal Leave 27 Program, or PLP, that was part of the State employees' 28 pay program implemented in November 2010. The PLP is 7 1 scheduled for 12 months and is applicable to most BOE 2 employees, including those represented by SEIU and our 3 non-represented staff, such as managers and supervisors. 4 We estimate the revenue loss or delay 5 associated with this program to be $87 million, of which 6 50 million is General Fund. The salary savings 7 associated with the PLP is approximately $11 million 8 over the 12-month period. This impact -- the impact -- 9 this impact will be spread over two fiscal years. The 10 chart in your materials provides greater detail. 11 This information has been provided to the 12 Department of Finance and the Legislative consultants 13 for consideration in their revenue projections. 14 This concludes my presentation. I'll be happy 15 to answer any questions you may have. 16 MR. HORTON: Questions, discussion, Members? 17 MS. STEEL: Just quick question regarding our 18 SCOP program, that we are asking for additional two 19 years. I see this, you said $68 million expected 20 income. Can you give me the cost, too, that how much 21 it's going to cost for 147 limited term positions and -- 22 MS. HOUSER: I can. Let me see if I have my 23 BCPs with me. If not, I will send them to your office. 24 MS. STEEL: Could you? And then another thing 25 is last time that I had very much concern this SCOP 26 program, people go out to the retail stores and they 27 were using their powers and harassing the employees and 28 then that added to the audit. So I need kind of report 8 1 that, you know, how much that SCOP program went out and 2 started audit after that. That, you know, asking 3 questions to employees instead of the owners or 4 managers. So --- 5 MS. HOUSER: I -- I can respond to your -- 6 MS. STEEL: Thank you. 7 MS. HOUSER: -- your cost, but then I'll ask 8 Mr. McGuire from Sales and Use Tax to come up and 9 discuss the instructions that have been given to -- 10 MS. STEEL: I just need the numbers later on, 11 so -- 12 MS. HOUSER: Oh, so you don't need the numbers 13 now? Okay, because it's 14.1 million for the cost for 14 SCOP. 15 MS. STEEL: Okay. And then how much we 16 collected so far? 17 MS. HOUSER: Our projected revenues are 68.2 18 million. 19 MS. STEEL: Right, 14.1 million cost is for 20 expected cost for next two years? 21 MS. HOUSER: For the 147 positions, yes. 22 MS. STEEL: 147 positions. Okay, thank you. 23 MS. HOUSER: And did you want Mr. McGuire to 24 address -- 25 MS. STEEL: I just need the number later on. 26 MS. HOUSER: Okay. 27 MS. YEE: Yeah, I don't think he's -- he's 28 around. 9 1 MR. HORTON: Ms. Yee. 2 Ms. Houser, thank you very much. That 3 organization and moving all those people was an 4 organizational nightmare that you made look like a 5 dream. So, thank you so very much for that. We 6 certainly appreciate those efforts and the continued 7 efforts to work with us, trying to move us around in 8 that process. 9 We -- at least speaking as one Member of the 10 Board, I am extremely -- and I'm going to speak for the 11 entire body because I know the body is extremely 12 appreciative of that. 13 I think there's a guy named -- what's his name, 14 Peter Dresser, that said efficiency is doing the right 15 thing; effectiveness is doing the right thing right. So 16 thank you for both. 17 MS. HOUSER: Thank you very much. 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 10 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, BEVERLY D. TOMS, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 January 27, 2011 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding 10 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: February 17, 2011. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 11