California state budget (2012-2013)

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California's lawmakers approved a $92.1-billion fiscal year 2013 budget on June 15, 2012, with a Senate vote of 23-16 and an Assembly vote of 50-25, along party lines.[1] Gov. Brown signed the budget on June 28, 2012, after vetoing $195 million in spending, $91.3 million from the general fund and $66.8 from special funds and federal funds. The veto included $31 million in special funds that Democrats tapped to keep state parks open.[2]

The budget did not include the cuts to welfare and other social services that the governor included in his smaller spending plan.[1] The budget also left a gap of $8 billion that lawmakers and the governor hoped would be filled with revenue from new taxes approved by voters in November.[1]

In addition to voters approving new revenue, the budget was also predicate on existing state revenues meeting expectations. On August 13, 2012, Comptroller John Chiang said that July revenues were $475 million less than anticipated, or 10.1 percent below assumptions.[3]

The Department of Finance's final budget summary can be accessed here.

Special funds

The San Jose Mercury News found a $2.3 billion discrepancy between the numbers from the state controller and Department of Finance, with 17 accounts that appeared to have significantly more reserve cash than what individual departments reported to the finance department. State departments told the governor's administration that they had a combined $8.8 billion left in "rainy day" reserves for their special fund accounts. The controller's office, however, said there was $11.1 billion in cash reserves for the accounts.[4] The state parks department was found to have nearly $54 million in "hidden assets."[5]

Education

The budget increased spending for K‐12 schools and community colleges by 14 percent with $6.7 billion in additional funding, $6.1 billion to K-12 education and $570 million to community colleges.

Union contracts

Contracts with all 12 public employee unions, representing 182,000 workers in total, were in place prior to the start of the fiscal year and were good for fiscal year 2013, expiring in July 2013.[6]

Mortgage settlement funds

The budget used $410.6 million that the state received from banks in mortgage settlement agreement funds.

Legislative proposed budget

The governor signed the $92 billion budget into law on June 27, 2012, 12 days after lawmakers approved it.[7] The budget as signed into law made cuts to welfare and social services and presumed voters would approve Brown's tax hike on the November ballot. If voters rejected the tax initiative, a series of automatic cuts would be triggered, including three weeks less of public school for the next two years.[7]

Democrats held back a number of "trailer bills" containing the most contentious differences with Gov. Jerry Brown so that they could continue to work on them.[8]

The legislature scheduled a vote for June 15, 2012, giving lawmakers only a few hours to read the 777-page budget. Legislators approved the budget on that vote, with a Senate vote of 23-16 and an Assembly vote of 50-25, along party lines.[1]

The legislative budget put forth by Democrats followed the governor's proposed budget in some aspects, and other aspects were quite different. The governor said that the Democrats' proposal was insufficient.[9]

Both the legislature and the governor shared the same approach to the tax plan, temporarily increasing the sales tax and levies on the state's wealthiest residents. They assumed more than $8 billion in revenue from those taxes and anticipated extra cuts of more than $6 billion, mostly from K-12 education, if the taxes were rejected.[10]

The legislative proposal differed from the governor's in the following areas:

  • Welfare: lawmakers accepted less than half of the governor's proposed welfare cuts.[10] Democrats, for instance, wanted to limit reductions to CalWorks, the state’s welfare-to-work program, to about $350 million instead of the $880 million requested by the governor.[9]
  • In-home care: legislators did not agree to the governor's cuts to in-home care for the elderly and disabled.[10]
  • Mortgage settlement: lawmakers planned to use $100 million more than the $292 million Brown proposed to siphon from the state’s share of a $25 billion national mortgage-relief settlement reached with banks.[9]
  • Rainy day fund: Democrats planned reduce the rainy day fund to around $600 million for the fiscal year beginning July 1, instead of the $1 billion reserve Brown proposed.

Governor's proposed budget

On May 14, 2012, in light of a projected $16 billion budget gap, Gov. Brown unveiled a revised, $91.4-billion spending plan.[11] The governor proposed a five percent cut in payroll costs, as a result of reducing the state workweek to 38 hours, worked over four days. It would save $839 million overall, but only about $402 million of that savings would come from the $91 billion general fund and it was unclear if unions would agree to the change.[12] Brown's proposed budget would have reduced the state workforce to about 216,000, down from 225,000 workers in 2007-2008 and about 4,000 fewer than the previous year year.[12]

The governor said that steep cuts in social services were needed, although legislators were resistant to such cuts. Some of the cuts included:

  • Cutting $1.2 billion from MediCal, which meant slicing funds for hospitals and nursing homes;[11]
  • $1.3 billion in reductions to welfare and child care;[11]
  • Temporary reductions in court funding; and[11]
  • Five percent pay cut.[13]

His plan also included some borrowing and transferring money to help pay the bills. He pleaded with voters to increase taxes that were on the ballot in November 2012, which he said would generate $5.9 billion in new revenue.[14] Gov. Brown warned that if those taxes were not approved, there would be an extra $6.1 billion in cuts, most of which would be to K-12 education.[11] [14]

The proposed budget would limit the practice of retirees double dipping.[15]

A summary of Gov. Brown's initial proposed fiscal year 2013 budget prepared by the state budget office can be accessed here.

The governor's proposal intended to reduce the number of state agencies from 12 to 10 through a series of mergers and reorganizations. The California Emergency Management Agency, for example, would lose its cabinet status and instead report directly to the governor. It also reduced the state's workforce by some 3,000 positions, mostly from the Department of Corrections and Rehabilitation. The governor's proposal also included eliminating 39 departments, offices, boards and commissions and wiping out nine state programs.[16]

As of January 2011, the budget was officially $137.3 billion total, with a general fund budget of $92.6 billion, $39.8 billion in special funds and approximately. $5 billion in bond funds. The proposed budget as presented, however, did not include $70 billion in federal funds and public pension payouts of approximately $50 billion. State expenditures would be close to a quarter-trillion dollars.[17]

The state legislature's policy analyst said on February 27, 2012, that the governor's proposed budget might have overestimated revenue by as much as $6.5 billion through June 2013.[18] This was in spite of the $2.5 billion that the state Legislative Analyst's Office said the state could receive from 2012-2017 as a result of the Facebook initial public offering.[19]

References

  1. 1.0 1.1 1.2 1.3 The Los Angeles Times, "California Legislature approves $92.1-billion budget," June 15, 2012
  2. The Sacramento Bee, "Gov. Jerry Brown vetoes $195 million from final CA budget," June 2, 2012
  3. Bloomberg, "California’s Revenue Falls 10.1% Below Forecast, Chiang Says," August 13, 2012
  4. The Mercury News, "Up to $2.3 billion in California public funds hiding in plain sight," July 27, 2012
  5. The Sacramento Bee, "Hidden California state parks funds spark outrage," July 21, 2012
  6. The Los Angeles Times, "Gov. Jerry Brown targets state workers for cuts," May 9, 2012
  7. 7.0 7.1 The Atlanta Journal Constitution, "California governor signs budget relying on taxes," June 28, 2012
  8. The San Jose Mercury News, "Democrats send California budget bill to the governor," June 15, 2012
  9. 9.0 9.1 9.2 Bloomberg.com, "Brown Says California Democrats’ Budget Plan Insufficient," June 12, 2012
  10. 10.0 10.1 10.2 The Los Angeles Times, "State lawmakers will start moving budget plan through Legislature," June 11, 2012
  11. 11.0 11.1 11.2 11.3 11.4 The Los Angeles Times, "Jerry Brown's plea to voters: 'Please increase taxes temporarily,'" May 15, 2012
  12. 12.0 12.1 The San Jose Mercury News, "Savings from state worker pay cut far from assured," May 14, 2012
  13. []
  14. 14.0 14.1 Politico.com, "Jerry Brown urges budget cuts amid California's $16B shortfall," May 15, 2012
  15. The Sacramento Bee, "Jerry Brown moves to eliminate retiree workers," June 13, 2012
  16. The Sacramento Bee, "Jerry Brown budget would slash 3,000 state jobs, merge departments," January 7, 2012
  17. The Fresno Bee, "How big is Jerry Brown's proposed California budget, really?" January 9, 2011
  18. Bloomberg, "Brown Budget May Overstate California Revenue by $6.5 Billion, Study Says," February 27, 2012
  19. CNN.com, "California expected to reap Facebook windfall," February 26, 2012