New governor unveils 18-month state budget proposal
Analysis provided by CSBA's Governmental Relations Department
Published: January 11, 2011
On Monday, January 10 Gov. Jerry Brown released his proposal for “a tough budget for tough times.” Noting that “short-term measures and gimmicks adopted in recent years did not solve our problem and in fact made it worse,” the governor proposes to close the $25.4 billion budget gap with a nearly even mix of spending cuts and revenues. The budget also would phase out redevelopment agencies, and it proposes “a far-reaching realignment of government functions by restoring to local government authority to make decisions that are best made closer to the people, not in Sacramento.”
To help close the budget gap, the governor proposes $12.5 billion in spending cuts, $12 billion in revenues, and $1.9 billion in other measures, such as internal borrowing to cover one-time costs. Most of the general fund cuts would come from health and human services ($5.8 billion, or 21.5 percent) and higher education ($1.8 billion, or 15.8 percent). The revenue would come from a five-year extension of the temporary tax increases, if approved by the voters in a measure to be placed on the June ballot.
Noting that “education has borne a disproportionate share of budget reductions in recent years,” the proposed budget would maintain programmatic funding for schools at roughly the same level in 2011-12 as it is in 2010-11. Doing so would require an additional deferral of $2.1 billion of expenses into 2012-13. This level of funding is also predicated on voter approval of the temporary tax extension. If voters reject the extension, the Proposition 98 minimum funding guarantee for 2011-12 would go down by approximately $2 billion.
The governor proposes a two-year extension of the flexibility options that have been provided to schools in recent years, including:
- categorical program flexibility
- routine maintenance set-aside
- deferred maintenance match
- instructional materials adoption
- K-13 class size reduction penalties
- school district budget reserve requirements
Realignment
The state-local realignment proposal contains two phases. Phase one would take place in 2011-12 and involves mostly public safety and mental health services. Funding for the realigned services would be provided by depositing part of the revenue from the temporary tax extension into a Local Revenue Fund. The budget summary states that, “When these taxes expire after five years, the state will provide counties an amount equal to what these two sources will generate.”
Under this proposal, mental health services for special education students that are mandated by Assembly Bill 3632 would be paid with Proposition 63 funds in 2011-12. After that, they would be funded from the Local Revenue Fund and the state general fund.
The budget also proposes to reduce total funding for child care, excluding after-school programs, by $700 million (from $2.3 billion to $1.6 billion) by eliminating eligibility for 11- and 12-year old children.
Extending the temporary tax increases would generate about $8 billion in revenue in 2011-12. The budget proposal is predicated on the voters approving the tax extension. If they do not, the $8 billion will have to be cut from the budget proposal. At the press conference at which he presented his budget, the governor resisted identifying which programs would be subject to further cuts, but he did make the point that “You can only cut from what’s left.” Since the minimum Proposition 98 guarantee would also drop if the revenues are not approved, the Legislature could cut $2 billion from the K-12 budget without suspension.
In order to place a tax measure on the June ballot, the Legislature would have to act by early March, and it would take a two-thirds vote. Assuming that all Democrats vote yes, two Republican votes would be needed in each house. Grover Norquist, president of the advocacy group Americans for Tax Reform, has sent a letter to legislative Republicans stating that a vote to put a tax measure on the ballot would be a violation on the “no tax” pledge they signed.