Legislature adjourns as budget stalemate continues
Analysis from CSBA’s Governmental Relations Department
Published: September 7, 2010
In the waning hours of the two-year legislative session, and two months into the fiscal year, both houses of the state Legislature voted on two disparate spending plans: Gov. Arnold Schwarzenegger’s May Revision and the Democrats’ July budget proposal. As expected, Republicans supported the governor’s proposal while Democrats rejected it in favor of their plan, and neither plan received the two-thirds vote needed to get sent to the governor.
In order to solve the state’s $17.9 billion budget hole, the governor’s proposal relied on some borrowing and fund shifts, but mostly on cuts that would decimate social service programs, such as eliminating CalWORKs childcare and reducing mental health support, and over $3 billion in cuts to schools. The Democratic plan proposes $8.3 billion in further cuts, a $4.1 billion increase in federal funds, a revenue increase of $1.4 billion (based on a Legislative Analyst’s Office estimate), $4.5 billion in other additional revenues, a $3.2 billion savings due to the suspension of Proposition 98, and $2.7 billion in fund shifts, leaving $535 million in reserve.
For Proposition 98, the key provisions of the Democratic plan include restoring all of the cuts proposed by Gov. Schwarzenegger, providing $52 billion in ongoing funding, and providing an additional $1.3 billion to fund prior-year mandate payments. The higher revenues in the proposal would result in a higher minimum funding guarantee for education than Democrats are prepared to fund; accordingly, their proposal calls for a suspension of Proposition 98. The net result is that K-12 funding would be $3.1 billion higher than in the governor’s May Revision, but still $3.2 billion below the higher guarantee.
The Legislature adjourned the regular legislative session without approving a budget. The governor is expected to call a special session.
$1.2 billion in additional federal funds
There was a bright spot in the last few days of the legislation session. The Legislature approved Senate Bill 847 (Steinberg, D-Sacramento), which appropriates $1.2 billion in federal funds to help schools retain jobs. The governor is expected to sign the measure, which allocates the funding to schools based on their revenue limits.
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