Governor releases May Revision
Analysis from CSBA’s Governmental Relations Department
Published: May 17, 2011
Gov. Jerry Brown’s eagerly anticipated revision of his 2011-12 budget proposal was released yesterday. As expected, the revised budget projects higher state revenues than was projected in January. However, the increased revenues still fall $9.6 billion short of closing the budget gap.
Accordingly, the governor has modified his revenue proposal by calling for a four-year, extension of current personal income tax rates instead of a five-year extension. The four-year extension would begin in 2012. The other revenue proposals—relating to the sales tax, vehicle license fee, and the dependent exemption credit—are maintained in the May Revision. The governor is still proposing to seek voter approval of those revenues.
The higher level of revenue in 2011-12, plus some proposed policy changes, would increase the Proposition 98 minimum guarantee by about $3 billion next year, from $49.4 billion proposed in January to $52.4 billion. The governor proposes to use this increased funding to:
- cancel the $2.1 billion cross-year deferral that was approved in March for 2011-12
- reduce the total cross-year deferrals by $434 million
- increase Proposition 98’s minimum guarantee by $221.8 million by shifting responsibility for mental health services under Assembly Bill 3632 to schools
- use about $350 million to reduce a portion of the community college deferral
The net result of all of these adjustments is that the level of “programmatic” or “spendable” school funding would be about what was proposed in January. And this level of funding continues to be dependent on voter approval of the revenue extensions. If the revenue extension is not approved, the May Revision notes, “An ‘all cuts’ budget would require a suspension of the Proposition 98 minimum guarantee and deep reductions.”
In response to questions regarding the Assembly Republicans’ recent budget proposal, the governor stated that, Proposition 98 would actually need to be suspended to fund schools at the level they propose as a result of the higher-than-projected revenues in 2011-12. The governor also said that, because the Republican proposal relies heavily on one-time solutions, the Department of Finance estimates that, if their proposal were adopted, the 2011-12 fiscal year would end with nearly a $20 billion deficit.
As he has stated since he was a candidate, the governor reemphasized his priority of protecting funding for schools and public safety. He also noted that he doesn’t want a budget approved that relies on “games and gimmicks” and wants to focus on reducing the state’s “wall of debt” that includes well over $20 billion owed to schools.
The May Revision will now be considered by the Legislature, beginning with budget subcommittee hearings starting this week and hopefully a resolution by the end of June.
For more information, please contact CSBA's Governmental Relations department at (800) 266-3382.