Wednesday, January 26, 2011

UPDATE: The California 2011-12 Budget Process Begins + Notice of Budget Hearing in Los Angeles on Governor’s Realignment Proposal

from Assemblyperson Julia Brownley’s (D-41) January 2011E-Newsletter | Brownley is Chair of the Assembly Education Committee |

On Monday, January 10, Governor Jerry Brown submitted his proposed 2011-12 budget to the Legislature, challenging them to meet the tightest timeline for adoption in recent history. Answering that challenge, 72 hours later, those of us on the Assembly Budget Committee held our first hearing to begin our analysis and consideration of the proposal with Department of Finance Deputy Director Michael Cohen and Mac Taylor, the state’s non-partisan Legislative Analyst.

The budget before us is austere and based on the stark realities of a $25.4 billion budget hole that the Constitution mandates us to fill before the final budget package can be approved. Director Cohen described it as "the best choices of very limited options." Without question, it requires us to begin to think in different terms, looking at the financing of state government with a long-term vision, and at the underlying structure of state finance itself. State government must be leaner, but therefore also smarter.

The simple math of closing a gap of this magnitude, following year after year of cuts to vital services because of the Republican "no new tax" pledge, is catching up with us. The Governor has proposed a combination of more cuts and also additional revenues in roughly equal measure. What is new this time is that we have also been presented with a budget that has built into it a "realignment" of what programs and services the state actually needs to provide and which could be done more efficiently by local counties and cities given the authority, and sufficient flexibility and funding. This is a proposal that will require very complex solutions.

In snapshot version, here are the "big picture" proposals from the Governor:

1. State services would be cut back, many severely. Almost none would be untouched.

2. The Proposition 98 funding guarantee to K-12 schools that would automatically fall by $2 billion this year because of the Prop. 98 formula based on state revenue would be maintained at the 2010-11 level through more deferrals to districts elsewhere in the education budget.

3. Decreases the University of California and California State University budgets, following tuition increases already approved for the universities. It also decreases community college budgets and proposes fee increases.

4. "Realignment," meaning a shift of some state services to the local level, including elimination of redevelopment agencies that counties and cities count on to reduce blight in their neighborhoods.

5. Severe cuts to CalWORKS, a welfare-to-work model program designed to enable self-sufficiency over time for unemployed parents and low-income families. This cut includes child care.

6. Places two measures on the June primary ballot, asking the voters to reprioritize how Propositions 10 and 63 revenues are used. Tobacco taxes that Prop. 10 authorized in 1998 to fund additional early childcare and education would be redirected to MediCal costs for children. A 1% tax on personal income for earners of $1 million or more passed in 2008 would be extended through 2015 as well as vehicle license fees, and require single sales factor apportionment for corporations. Almost $10 billion in revenue would be riding on the response from the voters.

7. Minimal fund transfers, and no new borrowing, which would end the costly debt service that has been weighing down the state, especially given the state's poor credit rating.

The Governor's proposed budget schedule assumes adoption by the Legislature no later than March 1, just weeks away. This deadline is based in large part on the need to place the two ballot measures before the voters in June.

Given the enormity of the challenge before us, and also the opportunity to begin transforming the very structure of state financing, we in the Legislature should be doing this in a bipartisan way, and I hope that we will. It was a disappointing start to hear one leading Republican announce that, as the minority party, the budget is "really not our problem," and another that "it's not like we're going to lead [with our own proposal] where we become the bad guys." We may also need Republican support to reach the 2/3 threshold on any new tax measures, which has resulted in protracted roadblocks to passing a budget in prior years.

Clearly, this will be a huge undertaking in a short period of time, and one that must be very carefully thought through, including unintended consequences and the prospects of doing permanent damage to the state just as the economy is already creeping toward recovery.


Budget Hearing in Los Angeles
on Governor’s Realignment Proposal

Friday, February 4 at 1 p.m.
Kenneth Hahn Hall of Administration
Room 3818
500 West Temple Street
Los Angeles, CA 92212

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