“President Obama today unveiled the details of his budget for Fiscal Year 2011. The President’s budget is a sober reflection of the challenges our country faces – a nascent economic recovery that is encumbered by deep and persistent unemployment, and the rising costs of national debt and deficit.

It’s clear that the number one priority for this Administration and Congress is jobs. The President recognizes the gravity of the unemployment problem, and has called on Congress to produce a Jobs Bill without delay. I urge my colleagues in the House and Senate to enact a bill to get this money flowing to projects that will create jobs for the American people, many of whom are continuing to suffer in an economy that remains bad despite signs of recovery.

At the same time, this budget reflects the extraordinary fiscal pressures we face as a nation, including soaring national debt and deficit. We need to begin to address the long-term solvency of our nation’s entitlement programs -- Social Security, Medicare and Medicaid, while ensuring that they remain solvent for the millions of Americans who depend on these safety net programs for their economic survival.  I am encouraged by the President’s directive to establish a fiscal commission to put forth legislative recommendations to deal with the growing costs of these entitlements and help balance the budget.

There are a number of provisions in this budget proposal that will be a big help to California, and these include:

• $100 billion for a Jobs Bill to help put Americans back to work;
• Tax relief for 12.6 million middle class families in California; 
• $330 million nationwide for SCAAP, the State Criminal Alien Assistance Program; 
• Six month extension of enhanced FMAP (Federal Medical Assistance Percentage); 
• $40 million for CalFed; and 
• More than $6 billion for infrastructure modernization in California, including funding for high-speed rail and increased oversight of transit rail.

Over the next few days and weeks, more work needs to be done to fully analyze the budget and its impact on all Americans.

I look forward to working with my colleagues during the annual appropriations process to address some of these shortfalls, within the budgetary spending constraints approved by Congress.”

Following is preliminary analysis on how this proposed budget might affect some of California’s priorities:

Extension of the Enhanced FMAP (Federal Medical Assistance Percentage)

The President’s budget includes a six month extension of the enhanced FMAP (Federal Medical Assistance Percentage) provision that was in the stimulus bill (the American Recovery and Reinvestment Act or ARRA). The enhanced FMAP provides states with additional Medicaid money.

The enhanced funding included in the stimulus bill has increased California’s FMAP from 50 percent to 61.6 percent, generating an expected $10 billion to $11 billion for California.

“I’m encouraged to see that the President has proposed a six month extension of the enhanced FMAP provided under the American Recovery and Reinvestment Act (ARRA) to help states continue to provide safety net health care during the economic downturn.  Like many states, California continues to experience a severe economic downturn, resulting in a budget deficit and increasing demand for safety net services. Thanks to the stimulus bill, California will receive roughly $10 billion to avoid additional cuts in Medi-Cal and other safety net programs,” Senator Feinstein said. “Extending this provision for six additional months would provide the state with at least $1.5 billion in federal assistance.  But unless Congress acts, the enhanced FMAP will expire on December 31, 2010. Congress should provide for at least a six month extension, giving the economy and states’ budgets additional time to stabilize.”

Assistance for Small Businesses

The President’s budget includes some important tax relief for small businesses.  For example, many qualifying small businesses would be able to write off up to $250,000 in new equipment purchases this year.  Additionally, capital gains taxes on the sale of small business stock would be eliminated.

“Small businesses are the backbone of California’s economic engine – and yet small businesses in the State experienced an 81 percent increase in bankruptcy filings over the past year as a result of the economic crisis,” Senator Feinstein said. “We’ve got to do more to help small business owners get back on their feet and put more Californians back to work.  I pledge to do all I can to work with the Administration to provide relief to California’s small businesses.”

SCAAP (State Criminal Alien Assistance Program)

The President’s budget includes $330 million in SCAAP funding for FY11, the first time in nearly a decade that the program has been funded at all in a President’s budget. Last year, Congress restored $330 million funding for SCAAP after President Obama had zeroed out the program, marking the eighth straight year the program had been zeroed out by a Presidential budget.

California is home to approximately 32 percent of the nation’s illegal immigrants.  Undocumented aliens comprised approximately 11 percent of the inmates in California’s state prison system.  In 2009, the California State government spent over $945 million to house these criminal aliens, but only received approximately $112 million in SCAAP funding from the Federal government to reimburse them for these costs. 

“The inclusion of $330 million for the State Criminal Alien Assistance Program marks the first time in almost a decade that the President’s budget has included funding to reimburse states and local governments for the cost of incarcerating criminal aliens, and it sends the right signal-- that this Administration is taking seriously its federal responsibility to control immigration,” Senator Feinstein said. “This funding is a good start. However, much more is needed. In 2009, California’s state government spent $945 million to incarcerate criminal aliens. I look forward to working with my colleagues in Congress to ensure the SCAAP program is fully funded.”

California Water

The President’s budget includes $40 million for CalFed, consistent with the enacted Fiscal Year 2010 level.  The CalFed program is a collaborative effort by more than 20 state and federal agencies to improve California’s water infrastructure. The program includes water storage, ecosystem restoration, water supply reliability, conveyance, water use efficiency, water quality, water transfers, watersheds, the Environmental Water Account, levee stability, governance, and science.

“This is a make it or break it year for California water. Recent storms have helped to increase water levels at some key reservoirs and partially replenished the Sierra Nevada snowpack. Yet it is still too early to know whether this spring will be wet enough to restore groundwater levels and prevent a fourth or fifth straight year of drought.  I will be watching closely,” Senator Feinstein said. “Cal-Fed is vital to California’s short-term and long-term water goals to balance the needs of agriculture, the environment and communities across the State.  I’m pleased that the President’s budget includes a renewed commitment to addressing California’s ever-increasing demand for a reliable water supply.” 

The budget also includes $72.1 million for the continued implementation of the San Joaquin River Restoration Settlement agreement. Senator Feinstein was the lead sponsor of legislation enacted by Congress in 2009 to implement the historic San Joaquin River Restoration Settlement.

High Speed and Intercity Rail

The President’s budget includes $1 billion nationwide for High Speed and Intercity Rail, in keeping with the President’s commitment to spend $5 billion over five years.  However, this is $1.5 billion less than what Congress appropriated last year.

“Building high-speed rail and improving our existing rail infrastructure are vital to the future of California and the nation,” Senator Feinstein said. “High-speed rail will create tens of thousands of jobs and spur commerce, ease congestion and reduce greenhouse gases, and help restore California’s competitive advantage. Building high-speed rail is a top priority for me, and this budget shows it is a priority for the President as well.”

Last week, the Administration announced that California would receive $2.25 billion of the $8 billion national funding from the stimulus bill (the American Recovery and Reinvestment Act), to help develop a high-speed rail system in the state. The $2.25 billion will be spent on work in high-speed rail corridors linking San Francisco to San Jose, Los Angeles to Anaheim, Fresno to Bakersfield, and Merced to Fresno.

Food Safety

There have been numerous outbreaks of foodborne illness in recent years in the United States. In October, two people died as a result of E. coli found in ground beef.  A recent outbreak of Salmonella in peanuts sickened up to 714 people in 43 states.

The President’s budget increases the funding for USDA’s Food Safety Inspection Service (FSIS), which is charged with ensuring the safety of meat products and the humane treatment of animals, to $1.03 billion -- a 2 percent increase over last year.  This includes a requirement that there are at least 140 full-time equivalent staff solely dedicated to enforcing the Humane Methods of Slaughter Act.  

The budget also increases the budget for the Food and Drug Administration to $2.5 billion, an increase of 6.4 percent over last year.  This includes a 8.2 percent increase in the funds used for food safety.  The President also proposes to expand the food facility registration program to cover additional food producing facilities. This is expected to generate $220 million in registration fees.

“I am encouraged to see that the President’s budget includes increased funding for the Food and Drug Administration and the Food Safety Inspection Service at USDA,” Senator Feinstein said. “FDA’s food safety programs received $848 million, an 8 percent increase from last year, and FSIS received $1.03 billion this year, a 2 percent increase.

These two federal agencies are charged with ensuring that our food is safe and free of harmful pathogens that sicken thousands of Americans each year.  It is my hope that with the substantial increases proposed by the Administration, and the important reform legislation that is currently moving through Congress, that we will see a dramatic reduction in the number and seriousness of foodborne illness outbreaks in the coming years.”

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