California will soon have a revised budget in place to put this fiscal crisis behind us and to address our ongoing cash crisis. Yesterday evening, the Big 5 announced a budget agreement on which we plan to have a vote this Thursday. A light is at the end of the tunnel.
A comprehensive analysis of the budget package is now being compiled by the Assembly Budget Committee for release tomorrow. Below is a brief summary of the $24.2 billion in solutions to close our $23.3 billion budget deficit:
• $15.5 billion in cuts;
• $3.9 billion in revenue enhancements;
• $2.1 billion in borrowing;
• $1.5 billion in funding shifts;
• $1.2 billion in deferrals; and
• $875 million in financial reserves.
About 95% of the agreement is based upon Conference Committee recommendations or proposals made in the one or more of the Governor’s May revisions, which means the deal could have been accomplished weeks ago, saving the state and Californians $25 million a day and the drama of IOUs. The major differences between this budget and the Conference Budget include approximately $2.6 billion more in cuts, $4.3 billion less in revenues, and nearly $2 billion more in borrowing.
This revised budget includes something for everyone to dislike, such as the Tranquillon Ridge off-shore drilling proposal. And almost all borrowing is from local government, meaning cash-strapped cities and counties will either be forced to cut more local services or borrow against the state’s promise to repay them in the future. Others are very concerned about the impacts of cuts to the corrections budget.
However, I am pleased to say that the budget agreement does not include the following:
• Proposition 98 will not be suspended; K-12 education will be repaid $11.2 billion when the state can afford it;
• CalWORKS will not be eliminated or decimated by extreme cuts;
• In-home supportive services (IHSS) programs are preserved for the neediest Californians;
• Healthy Families Program will not be eliminated or face eligibility reductions;
• State parks will not face sweeping and massive closures at over 200 park locations, although some of the lesser-used parks may close;
• Transportation will not face a suspension of Proposition 42;
• No new tax giveaways will be given to special interests; and
• Billions in federal funds will continue flowing into California because the Legislature rejected the governor’s proposals that failed to meet federal maintenance of effort requirements.
Legislative Counsel is in the process of drafting the appropriate language and the Legislature is expected to begin voting as early as Thursday afternoon. More details to follow tomorrow.