California state budget (2010-2011)

Note: This article was last updated in 2011. Click here for more recent information on state budgets and finances.

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government online.

California had a total state debt of $290,855,041,516 going into the fiscal year - calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap.

Budget development

Going into the fiscal year California had the second highest debt per capita for general obligation borrowing at $2,362 per person, and overall debt per capita according to some calculations was $19,800.

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $6.128 billion, which represented 6.6% of the FY2011 state budget.

Upon taking office Governor Brown said that he would retain Ana Matosantos as budget director, a position she held under Gov. Schwarzenegger.

Budget Passed

The budget was passed on October 6, 2010. The reserve in the budget was about $200 million.

Vetoes

The governor signed the bill the day it was passed and used his line-item veto to eliminate $962.5 million billion in spending, $366 million coming from a one-time accounting maneuver that made it possible to use federal funds to avoid cutting services.

Borrowing

During this fiscal year period California and Illinois were the two lowest-rated states by the three major credit-rating agencies.

Ballot Measures

Voters approved Proposition 22, an initiated constitutional amendment that aimed to put local government and transportation funds off-limits to Sacramento. Lawmakers quickly proposed an accounting change that would ban the diversion of local and transportation funds.

Voters also approved Proposition 26, an initiated constitutional amendment that required a two-thirds supermajority vote in the California State Legislature to pass many fees, levies, charges and tax revenue allocations that under the existing rules of the time could be enacted by a simple majority vote. Both initiatives were drafted in late 2009.

Voters approved Proposition 25 , an initiated constitutional amendment to end the requirement in the state that two-thirds of the members of the California State Legislature must vote in favor of the state's budget in order for a budget to be enacted and require only a simple majority.

The FY2011 budget agreement included placing a measure on the November 2012 ballot to create a "rainy day fund" to save money in good years for use in economic downturns.

Budget background

California’s fiscal year starts July 1. The Governor was required to present the Legislature with a proposed budget by January 10 and the Legislature to pass a budget by June 15. A two-thirds majority was required to pass the budget in the Legislature. In November 2010, voters would vote on Proposition 25, a ballot measure that would lower the vote threshold down from two-thirds, so that lawmakers could pass budgets with a simple majority.

Over the past 10 years state spending from state sources had more than doubled in nominal terms (not adjusted for inflation).

The California controller delayed payments in February 2009 and issued IOUs in July and August 2009. The IOUs were redeemable with interest, paid at a 3.75 percent annual rate. “Priority payments”—including school, payroll, and debt service payments—were not subject to IOUs. As of August 2010, of the 450,000 IOUs totaling $2.6 billion that were issued, 66,350 remain uncashed, leaving $29 million of debt still outstanding, according to the state controller's office.

Governor Schwarzenegger and legislative leaders formed the Commission on the 21st Century Economy (COTCE) to suggest changes and reforms for more reliable and stable state revenues. The Commission released its report on September 29, 2009.

Budget spending

Over the past 10 years state spending from state sources had more than doubled in nominal terms (not adjusted for inflation), and during the current governor's tenure state spending from state sources had risen almost 40 percent:

California Spending, Years in Comparison

	FY 1997-1998	FY 2003-2004	FY 2007-2008
State spending	$68.5 billion	$104.2 billion	$144.8 billion
Federal money	$31.6 billion	$52.5 billion	$59.5 billion

Note: California's legislators had declined to put details of the state's spending online.

General Fund Spending by Major Program Area (In Millions)

Programs	Actual 2007-08	Estimated 2008-09	Enacted 2009-10
K-12 Education	$39,825	$32,356	$33,745
Higher Education	11,823	10,138	10,495
Health	19,906	18,794	16,077
Social Services	9,432	10,009	8,876
Criminal Justice	13,059	12,778	9,032
All Other	8,954	7,472	6,358
Totals	$103,000	$91,547	$84,583

General Fund

Category	FY2009 Amount in millions Actual	FY 2010 Amount in millions Estimated
Beginning Balance	4,071	-5,855
Revenues	82,772	88,084
Adjustments	-1,757	0
Total Resources	85,086	82,229
Expenditures	90,940	86,092
Adjustments	0	0
Ending Balance	-5,855	-3,863
Budget Stabilization Fund	0	15

Fiscal 2010 Tax Collections Compared With Projections Used in Adopting Fiscal 2010 Budgets (Millions)

Category	Amount
Sales Tax Original Estimate	27,609
Sales Tax Current Estimate	26,036
Personal Income Tax Original Estimate	48,868
Personal Income Tax Current Estimate	46,640
Corporate Income Tax Estimate	8,799
Corporate Income Tax Estimate	9,407

Accounting principles

The California Auditor and her office report to the Joint Legislative Audit Committee (JLAC), a 14-member committee comprised of seven Senators and seven Assembly Members or through legislation. The California State Auditor’s Office publishes its audit reports online.

Credit Ratings

Credit Rating	Fitch	Moody's	S&P
California	BBB	Baa1	A

The Institute for Truth in Accounting (IFTA) rates California “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider California’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not include significant liabilities for the pension plans and for other post employment benefits, such as health care. California's State Controller was responsible for filing the CAFR. California State Controller’s Office Web site, accessed October 9, 2009]</ref>

Budget links

• California Department of Finance
• Gov. Schwarzenegger 2010 State of the State Address
• Gov. Schwarzenegger's 2010 proposed budget
• 2008-2009 California Budget
• The Legislative Analyst's Office
• California Budget Frequently Asked Questions
• Amendments to the Budget Act of 2009 (dead link)