Capitol Alert

Senate President Pro Tem Darrell Steinberg formally requested a state audit Wednesday of billions in mental health funds raised by the Proposition 63 ballot measure he authored eight years ago.

The Sacramento Democrat's letter to the Joint Legislative Audit Committee came after two Republican assemblymen, Dan Logue of Marysville and Brian Nestande of Palm Desert, made a similar request.

Mark Hedlund, Steinberg's spokesman, said the committee will consider the request before the Legislature adjourns for the year Aug. 31.

Steinberg noted that some programs bankrolled by Proposition 63 have been blasted by critics since their inception.

California parks officials apparently used obscure payroll codes intended for emergencies such as wildfires and disasters like Hurricane Katrina to turn vacation time into overtime pay, the State Controller's Office testified Wednesday.

State managers are generally not allowed to earn overtime, and California's payroll system is designed to block them from receiving it, said John Hiber, chief operating officer with the Controller's Office, at a Senate oversight hearing. But the system has codes that managers can enter for overtime in rare cases such as Cal Fire employees fighting wildfires or emergency workers providing relief in natural disasters as they did in 2005 after Hurricane Katrina.

"It appears that because those codes exist that this wasn't picked up (and) that those codes were manipulated to allow this to occur," Hiber testified.

"Someone knew what he or she was doing," observed Sen. Mark Leno, D-San Francisco, chairman of the Senate Budget and Fiscal Review Committee.

"Correct, correct," Hiber said. "And there appears to be collusion here as well. So we're in the process of evaluating those codes as they were used and changing the procedures to eliminate this practice from occurring at all in the future."

The Bee reported last month that 56 Department of Parks and Recreation employees inappropriately sold unused vacation time back to the state for more than $271,000. Because the practice was unauthorized, employees submitted buyout requests on Post-It notes in 2011 rather than official forms, according to a department audit. The money was paid as overtime.

Hiber said the state has a decentralized payroll system that puts each department in charge of its employee compensation.

Three parks department executives were disciplined this month because they "manipulated the system" or gave "recklessly flawed advice," according to formal actions imposed by the department.

California's "realignment" program, aimed at reducing overcrowding in state prisons by diverting more low-level felons into local custody and probation, has sharply reduced state inmate numbers, according to a new report, but the rate of decline seems to be slowing.

The report from the Center on Juvenile and Criminal Justice in San Francisco charts the first nine months of realignment ending June 30.

Gov. Jerry Brown and the Legislature adopted the program as an alternative to releasing inmates directly from prison in response to federal court orders to reduce severe prison overcrowding. The state is sending money to counties to keep more convicted felons in local jails, rather than send them to prison, take over parole supervision and provide more intensive probation oversight.

The study found that during the first nine months, there was a 39 percent reduction in new prison admissions and an inmate population drop of 26,480 -- two-thirds of the stated goal of a 40,000-inmate reduction.

But it suggests that the easy shifts may have been made and it will be tougher to meet the goal as diversion deals with felons who have more serious criminal records. And it also implies that some counties are deflecting the impact of realignment on local jails by "charging more defendants with those offenses still eligible for state imprisonment," singling out Los Angeles County's revised prosecutorial policies.

An initiative on the November ballot that would change the way packaged foods are labeled is shaping up like a battle between a tiny health food store and a big box grocery.

Proposition 37 would require new labeling on foods made with genetically-engineered ingredients. That would include just about every processed food that is not organic. As of yesterday, supporters have raised $2.4 million while opponents have raised $25 million - about ten times as much.

A list of supporters reads like the aisle of your local health food store: Eden Foods, Nature's Path, Amy's Kitchen, Lundberg Family Farms, Dr. Bronner's Magic Soap.

A list of opponents is like a stroll through Safeway or WalMart: Pepsi, Coca-Cola, Ocean Spray, Nestle, Kellogg's, Hershey's, Sara Lee, General Mills.

Proposition 37 has also received substantial backing from Joseph Mercola, an osteopath who sells his own line of vitamins, household cleaners and organic personal care products. The effort to kill the measure includes $13 million from companies that make pesticides and genetically-modified seeds.

Gov. Jerry Brown, beginning to campaign in earnest for his November ballot initiative to raise taxes, appeared this morning outside a Sacramento school in a push to frame the measure as a choice between higher taxes and schools.

"We all know what's at stake," said the Democratic governor, flanked by students at New Technology High School. "The kids standing behind me have their future at stake, and if we cannot pass Prop. 30, we're taking a half a billion out of our colleges and universities, and we're taking five and a half billion out of our schools."

Brown's Proposition 30 proposes to raise the state sales tax and income taxes on California's highest earners. The campaign said Brown will use the start of the new academic year to make appearances at schools throughout the state.

The appearance follows a potentially difficult July for the campaign, including the disclosure of nearly $54 million in apparently hidden state parks money and the revelation that more than 900 state legislative employees received pay raises this year. Brown also signed legislation authorizing initial construction of California's $68 billion high-speed rail project, an unpopular bill.

Asked about the potential impact of the parks scandal on the campaign, Brown said he was prepared for the question and wanted to "exhaust" it.

"You can bring up all the foibles, and you know what? There's a lot more," Brown told reporters at the school. "You know, we've got a lot of flawed people around here. I've got some flaws myself, and you can probably dig 'em out. And, you know, a lot of people don't like things about me or what I say. And I can tell you things about the Legislature, I could tell you things even about the LA Times and the AP and The Sacramento Bee and the media empire. Lots of flaws, I mean, you know they're losing money all the time. But, having said all that, are you for 30 or are you against 30? I think it's a pretty self-contained, zero-sum game."

Opponents of the tax are building their campaign around the arguments that high-speed rail and other expenses are frivolous, and that Brown is a poor steward of what tax revenue he already has.

Joel Fox, president of the Small Business Action Committee, said there will be "some cuts" to education if Proposition 30 fails, but he said Brown exaggerates the impact. He said that opposing the tax increase is necessary to pressure Brown and state lawmakers to enact pension changes and otherwise reduce spending.

Public support for Brown's measure remains above 50 percent, according to recent polls. The measure of support is tenuous but greater than support for a rival tax measure proposed by lawyer Molly Munger. Her Proposition 38 would raise income taxes on all but California's lowest earners.

Nathan Ballard, a spokesman for the Proposition 38 campaign, said in a prepared statement that Brown's appearance was "good stagecraft" but that Proposition 38 would raise more money for public schools.

Proposition 38 would not avert billions of dollars in automatic, midyear spending cuts if Proposition 30 fails, according to the Legislative Analyst's Office, but it could raise billions of dollars more for schools in future years.

"I can tell you one thing," Brown said. "Only this measure saves cuts this year."

The school visit was billed by Brown as a "kick off," though it followed a press conference in Oakland earlier this month and one in Sacramento in May. Still, it has the flourishes of a campaign's beginning - with new signs and promises of a vigorous fundraising and organizational effort.

Brown was accompanied by his dog, Sutter, outfitted in a red vest with Proposition 30 stickers on it. The dog barked when Brown started speaking.

"He wants to get a little more attention, see?" Brown said. "He's a young politician on the make."

As he left, Brown signed a bobblehead and an old newspaper photograph for two young people.

California may have high taxes and high unemployment, but its residents have one of the nation's lower rates of obesity, according to a new report from the federal Centers for Disease Control and Prevention.

While the agency says more than a third of American adults are obese, it's just 23.8 percent in California. Other states range from a high of 34.9 percent in Mississippi to 20.7 percent in Colorado.

The report also found that obesity rates are much higher than average among African Americans- nearly 50 percent - and Latinos and tend to be higher among low-income adults.

California has nearly 3 million businesses so small that they have no employees, according to a new compilation by the Census Bureau.

The report, based on 2009 income tax data from the Internal Revenue Service, found 2.7 million "nonemployer" businesses in the state, 12 percent of the nation's total, right in line with California's proportion of the U.S. population. The largest single category of such businesses - 480,000 - is "professional, scientific and technical services" and the smallest is "utilities" at 1,314.

Legislation aimed at closing a legal "loophole" allowing owners of military-style guns to sidestep the state's assault weapons ban has died in the Assembly Appropriations Committee.

Sen. Leland Yee, D-San Francisco, said the appropriations committee has decided not to hear Senate Bill 249 on Thursday, when it must decide which bills reach the Assembly floor for a vote before lawmakers adjourn for the year Aug. 31.

SB 249 would ban devices that allow magazines of ammunition to be reloaded so quickly that semiautomatic firearms can be fired almost like assault weapons, releasing dozens of bullets within seconds, Yee said.

Yee's bill comes in the wake of mass murders in Colorado and Wisconsin that he says have generated momentum for a crackdown.

"My greatest fear is that another senseless act of violence will happen before the loophole is closed," Yee said in a prepared statement. "Despite the gun lobby's efforts to derail common sense legislation, I will not give up this fight."

Geoff Long, chief consultant for the appropriations committee, said that Yee's proposed ban was crafted only this month, targets a major issue, and has not been the subject of a public hearing by policy committees of either house. Action should not be rushed on it, he said.

Dan Walters says nothing goes untouched when the workers' compensation issue hits the Capitol.

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DAN WALTERS DAILY: Dan's video says lobbyists are poised for another workers' comp showdown.

Those pesky "special funds" that have been in the news so much lately are the subject of a hearing today by the Senate Budget and Fiscal Review Committee. The special pots of dough hit the news last month when The Bee revealed that the state parks department was hiding $54 million in two special funds. A subsequent audit showed billions of dollars in differences between the way the Department of Finance and the Controller's Office kept track of more than 500 special funds.

Sen. Mark Leno, who chairs the committee, has said he wants to introduce a bill to square the special funds records kept by the two offices. The timber tax is also on the agenda. The hearing is at 9:30 a.m. in Capitol room 4203.

CHARITY CASE? Nurses are rallying outside the Capitol today to draw attention to a report about non-profit hospitals - and whether they earn their tax breaks. The noon rally by the California Nurses Association follows a 10 a.m. hearing on the same subject by the Senate Select Committee on Charity Care and Nonprofit Hospitals.

CALIFORNIA DREAMIN: The federal government makes applications available today for immigrants to apply for a new relief program known as "Deferred Action for Childhood Arrivals." The Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA) says it will be one of the first organizations in the nation to help immigrants apply for the program during an event today at the group's "Seize the Dream" center in Los Angeles.

BACK TO SCHOOL: Gov. Jerry Brown will be at Sacramento's New Technology High School this morning to promote Proposition 30, his tax measure on the November ballot. Teachers and others likely to benefit from the proposed tax increases will be joining him for the 10:30 a.m. campaign stop being billed as a "back to school" press conference.