SENATE PASSES 2009-10 BUDGET REVISION
California Political Desk
July 26, 2009
(SACRAMENTO)- The California State Senate passed a package of bills late Friday revising the 2009-10 budget, that was passed in February, with $24.2 billion in deficit reduction solutions and a $921 million reserve; in total solving a $25.3 billion problem.
The bipartisan solution was the product of several months of negotiations and public hearings on how to address the historic downturn in the economy by responsibly cutting all areas of government while keeping the stateīs social service safety net intact.
During his floor speech before the vote, Senate President pro Tem Darrell Steinberg (D-Sacramento) noted that with this solution in place the state has resolved over $60 billion worth of deficit since January 1st. "There are a whole host of decisions on the cuts side that pain me greatly deep cuts to education, to health and human services and to local government. Given the circumstances, I am grateful for all the things we were able to save."
Steinberg said we will now pivot to a new chapter where we begin to fix what we know ails California and its system of public finance. "Over the next number of months we can now focus on fixing what we know is broken with the system," Steinberg said. "Everything from seriously considering the recommendations of the tax commission and re-doing our tax structure in California, to bringing government closer to the people and changing the relationship between state and local government, initiative reform, to changing the two-thirds requirement, it obviously isnīt working."
The budget revisionīs main features are as follows:
Cuts: $15.6 billion
Revenue solutions: $3.9 billion
Borrowing: $3.1 billion
Fund shifts: $.5 billion
Deferral/Other: $1.2 billion
24.2 billion
921 million reserve
25.3 billion
Cuts
Major spending reductions include: $6.1 billion in K-14 education funds (this number includes $700 million from Community Colleges); $2 billion in higher education (UC & CSU); $1.3 billion associated with state worker furlough days; $1.2 billion in corrections; $1.3 billion in Medi-cal general fund reductions; $1.7 billion from local redevelopment agencies; $334 million in Developmental Services; $528 million to CalWORKs; $226 million to In Home Supportive Services; $124 million to Healthy Families program.
Revenue solutions
Revenue solutions include: $1.7 billion from increasing payroll withholding schedules by 10 percent; $610 million from accelerating Personal Income Tax and Corporation Tax revenues into 2009-10; $1 billion from the sale of a portion of the State Compensation Insurance Fund (SCIF).
Borrowing
2 billion from the suspension of Proposition 1A (2004). Suspension diverts eight percent of property tax revenues of cities, counties and special districts. The state must repay the $2 billion (with interest) within three years. $1 billion from transferring transportation revenues (the Highway Users Tax Account, or HUTA) from local governments to pay for debt service on transportation bonds. Money must be paid back with interest over a 10 year period.
Fund shifts
Major fund shifts include: $100 million from and oil drilling lease for the Tranquillon Ridge project off the coast of Santa Barbara County.
Deferral/Other
1.2 billion in one-time savings from deferring the June 30 state worker pay check until July.
The package solves the worst fiscal problem in California since the Great Depression:
It avoids suspension of Proposition 98, the funding source for both K-12 education and community colleges and guarantees repayment in future years of $11.2 billion in Proposition 98 "Maintenance Factor."
It protects the human services "safety net." It protects CalWORKs from elimination and from extreme cut proposals. It maintains the IHSS program largely intact, except for major new fraud prevention measures. It protects Healthy Families from elimination or from a reduction in eligibility threshold, although there are significant cuts to the program.
Restores $62 million of the proposed $70 million parks cut to avoid massive park closures.
No new tax credits.
Reductions to local government, but with some mitigation (Prop 1A and HUTA repayment, ARRA and Prop 1B bond funds for locals, hardship exemptions, trigger off scenarios under securitization of RDAīs, HUTA take not permanent as Governor proposed, didnīt suspend Prop 42- local streets and roads money).
The bipartisan solution was the product of several months of negotiations and public hearings on how to address the historic downturn in the economy by responsibly cutting all areas of government while keeping the stateīs social service safety net intact.
During his floor speech before the vote, Senate President pro Tem Darrell Steinberg (D-Sacramento) noted that with this solution in place the state has resolved over $60 billion worth of deficit since January 1st. "There are a whole host of decisions on the cuts side that pain me greatly deep cuts to education, to health and human services and to local government. Given the circumstances, I am grateful for all the things we were able to save."
Steinberg said we will now pivot to a new chapter where we begin to fix what we know ails California and its system of public finance. "Over the next number of months we can now focus on fixing what we know is broken with the system," Steinberg said. "Everything from seriously considering the recommendations of the tax commission and re-doing our tax structure in California, to bringing government closer to the people and changing the relationship between state and local government, initiative reform, to changing the two-thirds requirement, it obviously isnīt working."
The budget revisionīs main features are as follows:
Cuts: $15.6 billion
Revenue solutions: $3.9 billion
Borrowing: $3.1 billion
Fund shifts: $.5 billion
Deferral/Other: $1.2 billion
24.2 billion
921 million reserve
25.3 billion
Cuts
Major spending reductions include: $6.1 billion in K-14 education funds (this number includes $700 million from Community Colleges); $2 billion in higher education (UC & CSU); $1.3 billion associated with state worker furlough days; $1.2 billion in corrections; $1.3 billion in Medi-cal general fund reductions; $1.7 billion from local redevelopment agencies; $334 million in Developmental Services; $528 million to CalWORKs; $226 million to In Home Supportive Services; $124 million to Healthy Families program.
Revenue solutions
Revenue solutions include: $1.7 billion from increasing payroll withholding schedules by 10 percent; $610 million from accelerating Personal Income Tax and Corporation Tax revenues into 2009-10; $1 billion from the sale of a portion of the State Compensation Insurance Fund (SCIF).
Borrowing
2 billion from the suspension of Proposition 1A (2004). Suspension diverts eight percent of property tax revenues of cities, counties and special districts. The state must repay the $2 billion (with interest) within three years. $1 billion from transferring transportation revenues (the Highway Users Tax Account, or HUTA) from local governments to pay for debt service on transportation bonds. Money must be paid back with interest over a 10 year period.
Fund shifts
Major fund shifts include: $100 million from and oil drilling lease for the Tranquillon Ridge project off the coast of Santa Barbara County.
Deferral/Other
1.2 billion in one-time savings from deferring the June 30 state worker pay check until July.
The package solves the worst fiscal problem in California since the Great Depression:
It avoids suspension of Proposition 98, the funding source for both K-12 education and community colleges and guarantees repayment in future years of $11.2 billion in Proposition 98 "Maintenance Factor."
It protects the human services "safety net." It protects CalWORKs from elimination and from extreme cut proposals. It maintains the IHSS program largely intact, except for major new fraud prevention measures. It protects Healthy Families from elimination or from a reduction in eligibility threshold, although there are significant cuts to the program.
Restores $62 million of the proposed $70 million parks cut to avoid massive park closures.
No new tax credits.
Reductions to local government, but with some mitigation (Prop 1A and HUTA repayment, ARRA and Prop 1B bond funds for locals, hardship exemptions, trigger off scenarios under securitization of RDAīs, HUTA take not permanent as Governor proposed, didnīt suspend Prop 42- local streets and roads money).
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