Republicans fail to get their spending plan approved
Published: September 12, 2008
Analysis from CSBA's Governmental Relations Department
As expected, albeit with a few Republicans in both houses abstaining, party-line votes in the Senate Monday and the Assembly Tuesday defeated a budget plan that was proposed by legislative Republicans. While the proposal included elimination of some tax loopholes and a tax amnesty, it was based largely on deeper cuts, more borrowing and risky assumptions about revenues that could be leveraged now by future state lottery proceeds.
For education, it would have meant elimination of the partial cost-of-living adjustment proposed by the Senate-Assembly Conference Committee, and it would have tied nearly $2 billion of education funding this year to successful securitization of the state lottery. Specifically, the GOP plan included $56 billion for ongoing Proposition 98 funding, but another $1.9 billion would have been just one-time funding relying on the lottery securitization plan, which Gov. Arnold Schwarzenegger’s Department of Finance and the California Teachers Association believe may not be legal absent voter approval.
The proposal also called for a hard spending cap, an expanded rainy day fund reserve and authority for the governor to make midyear cuts. It also included an “economic stimulus” package involving changes to labor laws related to overtime, work shifts and meal and rest periods, plus unspecified “regulatory relief.” While the governor supports some of these additional provisions, he has said repeatedly that he wouldn’t sign a budget that’s based on borrowing. (Then again, in January he said he would not support a tax increase—but he now favors a temporary sales tax hike followed by a reduction.)
An expected vote on another spending plan in the Senate today was abruptly canceled Thursday.
Contact your legislators
Meanwhile, the governor continues to call on legislators to take up his “August Revise.” That proposal and the most recent plan advanced by Senate Democrats both include an expanded rainy day fund that would essentially lock funding for education in at current levels and restrict future growth in other program areas.
In CSBA’s view, these proposals would prohibit the Legislature from responding to changes in federal law, lawsuits or initiatives approved by voters, and the rainy day fund they would create would not be sufficient to respond to unforeseen fiscal crises. They would also amend the state constitution—an extreme remedy that would be hard to scale back or repeal in the future—as a trade-off for a temporary sales tax increase, one that would upend the budget once again when the revenue stream ends in three years, again jeopardizing already-inadequate funding for schools.
We continue to implore you to contact your legislators and urge them to reject any proposal that fails to protect current education funding and threatens the ability to make future investments in schools.
Categorical payments unlikely
Where we go from here is unknown; we are definitely treading in uncharted waters. For school districts and county offices of education, this continued budget stalemate means you will not likely receive your September categorical payments. For more information on the continued budget stalemate’s impact on categorical program funding, including which funds will be withheld, which payments will be made and options for managing cash flow, please see the joint advisory issued last week by CSBA, the Association of California School Administrators, California Association of School Business Officials and California County Superintendents Educational Services Association.
On a related note, we are only 120 days away from the release of the Governor’s Budget Proposal for 2009-10.
Related links:
The Sept. 5 CSBA “Action Alert: Help Stop a Bad Budget!” remains in effect, and we urge you to act @ http://ga1.org/campaign/stop_bad_budget.
The joint advisory on categorical funding and managing cash flow during the budget stalemate is @ http://www.csba.org/EducationIssues/EducationIssues/~/media/Files/EducationIssues/SchoolsInvestment/K12AdultProgramBudgetAdvisory.ashx.