CSBA Forecast Conference January 17, 2008. Budget Shortfall $3.3 billion in 2007-08 $14.5 billion in...
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Transcript of CSBA Forecast Conference January 17, 2008. Budget Shortfall $3.3 billion in 2007-08 $14.5 billion in...
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CSBA Forecast Conference
CSBA Forecast Conference
January 17, 2008January 17, 2008
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Budget ShortfallBudget Shortfall
• $3.3 billion in 2007-08
• $14.5 billion in 2008-09
• $3.3 billion in 2007-08
• $14.5 billion in 2008-09
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“We don’t have a revenue problem; we have a spending problem.”--The Governor, January 8, 2008
“This budget also limits spending growth to less than one percent…”--The Governor, August 21, 2007
“We don’t have a revenue problem; we have a spending problem.”--The Governor, January 8, 2008
“This budget also limits spending growth to less than one percent…”--The Governor, August 21, 2007
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What Happened?What Happened?
• Revenues declined–$4.9 billion
• Beginning balance declined–$0.5 billion
• Spending declined–$2.0 billion
• Revenues declined–$4.9 billion
• Beginning balance declined–$0.5 billion
• Spending declined–$2.0 billion
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Closing the Gap2007-08
Closing the Gap2007-08
• $3.3 billion from sale of economic recovery bonds• $400 million from Prop 98• $217 million 10% cuts• $200 million “other”• $60 million tax enforcement
• $3.3 billion from sale of economic recovery bonds• $400 million from Prop 98• $217 million 10% cuts• $200 million “other”• $60 million tax enforcement
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Proposition 58Proposition 58
• Authorizes Governor to declare a fiscal emergency and call a special session of the Legislature• Legislature has 45 days to
act (by February 23)
• Authorizes Governor to declare a fiscal emergency and call a special session of the Legislature• Legislature has 45 days to
act (by February 23)
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Building the 2008-09 Budget
Building the 2008-09 Budget
• Step 1: “Workload” budget
• Step 2: Apply 10% reduction
• Step 1: “Workload” budget
• Step 2: Apply 10% reduction
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Closing the Gap2008-09
Closing the Gap2008-09
• $9.1 billion 10% cuts• $2.0 billion June 2009 PIT
accrual• $1.5 billion suspend
supplemental payment on deficit bonds
• $9.1 billion 10% cuts• $2.0 billion June 2009 PIT
accrual• $1.5 billion suspend
supplemental payment on deficit bonds
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Closing the Gap2008-09 (cont.)
Closing the Gap2008-09 (cont.)
• $96 million “other”• $329 million tax
enforcement
• $96 million “other”• $329 million tax
enforcement
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Proposition 982007-08
Proposition 982007-08
• Guarantee has declined by $1.4 billion• Governor proposes a $400
million reduction• Does not require
suspension
• Guarantee has declined by $1.4 billion• Governor proposes a $400
million reduction• Does not require
suspension
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LAO—”Reduce current year Prop 98 funding to the minimum (by $1.4 billion)”
• Replace CY with PY unspent monies
• Unappropriate unspent CY monies
• Designate the difference as settle up funding.
LAO—”Reduce current year Prop 98 funding to the minimum (by $1.4 billion)”
• Replace CY with PY unspent monies
• Unappropriate unspent CY monies
• Designate the difference as settle up funding.
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Proposition 982008-09
Proposition 982008-09
• Suspend Prop 98--$4 billion• Reduce K-14 “workload”
budget by $4.8 billion –$4.3 billion K-12 ($735/ADA)–$500 million community
colleges
• Suspend Prop 98--$4 billion• Reduce K-14 “workload”
budget by $4.8 billion –$4.3 billion K-12 ($735/ADA)–$500 million community
colleges
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Proposed K-12 Cuts(from Workload Budget)
Proposed K-12 Cuts(from Workload Budget)• $2.6 billion-revenue limits–Creates a 6.99% def. factor
• $358 million-spec. educ.• $199 million-child devel.• $60 million-Prop 49• $14 million-nutrition• $1.1 billion-other categorical
• $2.6 billion-revenue limits–Creates a 6.99% def. factor
• $358 million-spec. educ.• $199 million-child devel.• $60 million-Prop 49• $14 million-nutrition• $1.1 billion-other categorical
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K-12 Local Assistance Funding (Billions)
K-12 Local Assistance Funding (Billions)
SourceGF Prop 98FederalLocalLotteryTOTAL
2007-08$37.4$6.6
$12.9$0.9
$57.9
2008-09$35.5$6.5
$13.8$0.9
$56.7
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Total Local Assistance Reductions
Total Local Assistance Reductions
• 1.99% from 2007-08
• 7% from “workload” budget
• 1.99% from 2007-08
• 7% from “workload” budget
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Other K-12 ProposalsOther K-12 Proposals
• Defer the deferred apportionment until September–$1.3 billion
• Change COLA to CPI for Wage Earners and Clerical Workers (CPI-W)–4.94% vs. 3.65%
• Defer the deferred apportionment until September–$1.3 billion
• Change COLA to CPI for Wage Earners and Clerical Workers (CPI-W)–4.94% vs. 3.65%
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CalSTRSCalSTRS
• Fully vest 80% purchasing power protection• Reduce payment to SBMA
from 2.5% to 2.2% of payroll–Saves $80 million in 2008-09
• Fully vest 80% purchasing power protection• Reduce payment to SBMA
from 2.5% to 2.2% of payroll–Saves $80 million in 2008-09
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Budget Stabilization ActBudget Stabilization Act
• “Excess” revenues get deposited into a Revenue Stabilization Fund
• Automatic mid-year cuts
• “Excess” revenues get deposited into a Revenue Stabilization Fund
• Automatic mid-year cuts
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“The proposed budget reforms represent a serious diminution of the Legislature’s appropriation authority. In addition, the proposal would limit future policy makers’ options to craft budgets.”
--Legislative Analyst
“The proposed budget reforms represent a serious diminution of the Legislature’s appropriation authority. In addition, the proposal would limit future policy makers’ options to craft budgets.”
--Legislative Analyst
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What’s NextWhat’s Next• Special session and regular
session will run concurrently–Special session ends Feb 23
• Budget hearings February thru May
• Budget due:–June 15 from Legislature–June 30 from Governor
• Special session and regular session will run concurrently–Special session ends Feb 23
• Budget hearings February thru May
• Budget due:–June 15 from Legislature–June 30 from Governor
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What We are DoingWhat We are Doing
• Lobbying• Grassroots activities• Coordinate with the
Education Coalition
• Lobbying• Grassroots activities• Coordinate with the
Education Coalition
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CSBA Budget Resources
CSBA Budget Resources
www.csba.org/LegislationAndLegal/
Legislation/LegislativeNews/2008.aspx
www.csba.org/LegislationAndLegal/
Legislation/LegislativeNews/2008.aspx