Budget update: June 15 deadline slips by again

Analysis from CSBA’s Governmental Relations Department

Once again, the June 15 constitutional deadline for the Legislature to pass a state budget has come, and once again— as it has for the past 20 years—it’s gone unmet. Still, the Budget Conference Committee, and legislative leadership and Gov. Arnold Schwarzenegger, have had multiple meetings.

The Conference Committee has equal representation from the state Senate and Assembly: The chair, Sen. Denise Moreno Ducheny, D-San Diego, is joined by Sens. Mike Machado, D-Linden, and Bob Dutton, R-Inland Empire; and Assembly members John Laird, D-Santa Cruz, Mark Leno, D-San Francisco, and Roger Niello, R-Fair Oaks. Committee members are tasked with resolving differences between the two houses’ budget plans. They completed their first review of all the budget items Wednesday, although they delayed taking action on most of the major issues, including funding levels for education.

There was an impassioned debate about education funding under Proposition 98, with some lawmakers offering bland assurances that it being funded above the minimum guarantee. Assembly member Laird retorted that the whole discussion of Proposition 98 is about a funding mechanism that falls far short of what schools need just to provide the services to all students next year that they did this year. He rightfully pointed out that Proposition 98’s minimum funding requirement fails to fund a cost-of-living adjustment and increases in enrollment, in effect handing schools a $4.3 billion cut from their current-year workload budget.

We’ve said it before: until the debate over raising revenues versus a cuts-only approach to the budget is resolved, funding for schools—and every other program area—cannot be resolved.

Meanwhile, the next deadline is looming: The constitution gives Gov. Schwarzenegger until June 30 to sign a budget—but he can’t do that until each house of the Legislature musters a two-thirds vote for a balanced revenue and spending plan,

Legislative Republicans propose alternative spending cap

On Wednesday, legislative Republicans held a press conference to announce their own alternative to the Budget Stabilization Act proposed by the governor. Their spending cap plan would restrict state spending growth each year to the combined growth in population and inflation, which Republicans said would roughly average a combined 5 percent. If the economy grows, revenue in excess of the spending limit would be split between funding a new rainy day reserve and paying down debt. The Legislature, with a two-thirds vote, would be able to tap the reserve only when revenues fell below the spending limit.

It is important to note that California already has a spending cap that limits appropriations from the proceeds of taxes. Moreover, other features of the state constitution constrain spending and revenue growth, such as the two-thirds vote requirements for passage of a budget, spending other than for education, and measures that increase tax revenues.