Capitol Alert

After wrangling with legislative Democrats earlier this month, Gov. Jerry Brown signed a new California budget late Wednesday that slashes courts and state workers while assuming voters will pass a multibillion-dollar tax hike in November.

The signing came hours before Brown's deadline to sign or veto the main budget bill that legislative Democrats sent him 12 days ago. Lawmakers moved the bill to the governor without a deal as they faced the threat of losing pay if they had waited beyond June 15.

Both houses held floor sessions Wednesday to pass a series of "trailer" bills that contained the guts of the compromise between Democrats and Brown. They also amended the main $91.5 billion general fund budget bill.

The 2012-13 spending plan is intended to bridge a $15.7 billion deficit.

Brown did not release details of his line-item vetoes, which he is expected to make public Thursday.

The owner of a Sacramento vocational school that can no longer accept Cal Grant money because of cuts in the state budget says his company will find another way to provide the scholarships to needy students, using private instead of public funds.

"We're going to come up with something so that our students will know no difference," said John Zimmerman, president of MTI College, which will be eliminated from the state's Cal Grant program this year based on new performance standards established in the budget. "Instead of the check coming from the state of California, it's going to come from us," he said.

Zimmerman said he plans to move $1 million from his company's reserves to a scholarship fund that would support about 200 students who qualify for Cal Grants because of their low incomes.

MTI College is in the same situation as the vast majority of for-profit colleges in California, which do not meet new criteria the state is establishing for schools to receive Cal Grants in 2012-13. The state is allowing only those schools with graduation rates of at least 30 percent and loan default rates lower than 15.5 percent to participate in the Cal Grant program for the coming year, a move that will eliminate Cal Grants to some 11,000 students statewide.

Zimmerman said he expects his school will be eligible to accept Cal Grants next year because its loan default rate is improving.

Editor's note: This post was updated at 4:45 p.m. to clarify the state's performance standards.

There's still one potential November ballot measure pending - one that would subject health insurance rates to state regulation - and with only hours before the qualification deadline, its fate is up in the air.

Santa Monica-based Consumer Watchdog, a veteran of several high-profile ballot measure battles, and sponsored the initiative measure after the Legislature blocked a rate regulation bill that Insurance Commissioner Dave Jones had sought.

Consumer Watchdog submitted more than 800,000 signatures in May, and midnight Thursday is the deadline for counties to report whether validation sampling indicates that a full count would generate the 504,760 registered voter signatures needed to qualify. If it doesn't make it, the measure will proceed to a full signature validation count, but even if successful would not appear on the ballot until 2014.

To date, validation is running just under 70 percent and it would have to maintain that level, assuming all counties complete their processing, to make it to the ballot this year.

It all hinges on Los Angeles County, which has yet to submit any validation data. "It's going to be close," Jamie Court, Consumer Watchdog's president, said Wednesday.

If the measure qualifies, it will spark a multi-million-dollar shootout pitting Court's organization and its allies, including labor unions, against the huge health care insurance industry, medical care providers and business groups.

Twelve measures have already qualified for the ballot, including two high-profile tax increase measures, but the Legislature may remove an $11 billion water bond it had placed before voters.

California cities are considering legal action over a new budget provision that allows the state to garnish local tax revenue if it believes governments are keeping too much money formerly dedicated to redevelopment.

Assembly Bill 1484 gives the California Department of Finance new ability to withhold money from cities if it determines they have not returned enough dollars to state coffers. The new budget relies on $1.4 billion in revenues from former redevelopment assets, as well as $1.7 billion in property tax dollars that would have otherwise flowed to redevelopment agencies had the state not shuttered them last year.

Under the elimination of redevelopment, cities generally took over the payments of debt still owed by redevelopment agencies and are allowed to keep as much as is necessary to retire the remaining borrowing. Those making the debt payments are called "successor agencies."

But cities disagree with the state about how much money they need to retire debt, and the League of California Cities fears that AB 1484 gives the state too much power to keep sales tax money. The bill also allows counties to withhold property tax revenues for the same reasons.

The Senate passed the bill this afternoon and sent it back to the Assembly.

"I suspect the stakes will be very high, and you might see some lawsuits," said Chris McKenzie, executive director of the League of California Cities. "There are serious disagreements between Finance and successor agencies how much they should be receiving for debt service payments."

McKenzie said he believes the blockage of sales and property taxes would violate voter-approved initiatives that local governments won to block state transfers.

The issue bogged down the Senate budget committee on Tuesday night and prompted a meeting of Democratic lawmakers in Senate President Pro Tem Darrell Steinberg's office to assuage concerns. Steinberg agreed to send a letter to Gov. Jerry Brown asking for a "fair and open review" that gives local governments advance notice of their redevelopment calculations.

Legislation aimed at protecting California homeowners facing foreclosures cleared a key hurdle today, winning approval in a joint committee created to hammer out the details of the proposal.

The two identical bills approved by a two-house conference committee today - Senate Bill 900 and Assembly Bill 278 -- are part of a larger package of bills Attorney General Kamala Harris has been pushing to put provisions of a national foreclosure settlement with major lenders into state law.

The language approved by the committee ends the practice of "dual tracking" by forcing lenders to halt the foreclosure process while a loan modification is being negotiated and provides some legal recourse for borrowers, allowing them to get an injunction to stop the sale of their home or seek damages if their property has already been sold. It also limits the use of robo-signed documents in the foreclosure process and requires some institutions to provide affected borrowers with a single point of contact.

The conference committee was created to craft compromise language after opposition from business and banking groups threatened to derail the original proposal in committee.

Supporters said the new version, while more narrow than the original language, makes major headway in helping homeowners in the state. They say California would be the first state to enact such a large portion of the settlement into law. Nevada has also passed legislation addressing the robo-signing issue.

More than three-quarters of California's public school students who entered the 9th grade in 2007 were awarded diplomas four years later, the state Department of Education reported today.

The 76.3 percent graduation rate in 2011 was up 1.5 percentage points from the previous year, and gains among Latino, African American and "English learner" students were somewhat higher, state schools Superintendent Tom Torlakson said.

"Every graduate represents a success story in one of the most effective job and anti-poverty programs ever conceived, our public schools," Torlakson said in a statement. "These numbers are a testament to the hard work of teachers and administrators, of parents and, most of all, of the students themselves. While they are a great illustration of all that is going right in California schools, they should also remind us that schools need our support to continue to improve so that every student graduates prepared for college, a career, and to contribute to our state's future."

Torlakson said that the remaining 23.7 percent of 2007's 9th graders who did not graduate in 2011 were not all dropouts. Using the state's new computerized tracking system, the Department of Education calculated that 14.4 percent were dropouts and 9.3 percent were either still enrolled in school, were special education students or had passed a high school equivalency examination.

Asian-American students had the state's highest graduation rate at 89.7 percent while blacks had the lowest at 62.9 percent. Filipinos, at 89 percent, were second highest, followed by non-Latino whites at 85.5 percent, Pacific Islanders at 74.3 percent, Latinos at 70.4 percent, and American Indians at 68 percent.

The new data are broken down not only by ethnicity, but by grade, county, school district and individual school.

Dan Walters says that yes, having a simple majority instead of two-thirds vote on the budget and its "trailer" bills allows majority Democrats to give "goodies" to interests they favor.

Have a question you'd like Dan to answer? Post it on our Facebook page.

See other Dan Walters Daily clips here.

VIDEO: Dan Walters, in today's report, wonders what "goodies" are buried in the budget trailer bills now before the California Legislature.

Gov. Jerry Brown has until midnight tonight to sign the budget, and both the Senate and the Assembly have scheduled sessions at 9 a.m. to vote on legislation needed to finalize it.

Click here to see the list released Tuesday of 21 updated measures they're expected to consider. Brown may be sharpening his blue pencil already.

Other votes are scheduled even earlier today on mortgage and foreclosure legislation being considered by a joint legislative committee chaired by Assemblyman Mike Eng and Sen. Noreen Evans. That meeting starts at 8 a.m. in the Capitol's Room 444.

The Senate Rules Committee, meanwhile, takes up the governor's appointments, starting at 1:30 p.m. in the Capitol's Room 113.

Those required to appear include Denise Brown, director of the Department of Consumer Affairs; Brent Barnhart, director of the Department of Managed Health Care; and Charlton "Chuck" Bonham, director of the Department of Fish and Game.

Outside the building, practitioners of Falun Gong gather on the west steps at noon to urge legislators to help stop what they characterize as their persecution in this country and in others.

Then, members of the Communications Workers of America protest AT&T's conduct during ongoing contract negotiations during a rally on the north steps at 4 p.m.