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Governor Brown Releases Updated 2016-17 Budget
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May 13, 2016

 

TO:                  CLA MEMBERS/ SYSTEMS/ NETWORK CONTACTS

FROM:           Mike Dillon, CLA Lobbyist
                        Christina DiCaro, CLA Lobbyist 

RE:                 News From the Capitol

GOVERNOR BROWN RELEASES UPDATED 2016-17 BUDGET
He recommends no new spending with tax revenues down $1.9 billion 

This morning Governor Jerry Brown appeared before the press corps at the State Capitol to release his “May Revision” of the 2016-17 State Budget.  The “May Revision” or “May Revise” is an annual document that is prepared by the Governor, which seeks to update the Governor’s January Budget, to reflect the state’s current fiscal condition after April tax receipts have been accounted for and various state and national financial factors are incorporated.   Governor Brown’s May Revise notes that the “tax revenue forecast has been reduced by $1.9 billion, reflecting poor April income tax receipts and more sluggish sales tax receipts than expected.”  The Governor spent a significant amount of time referring to a series of charts that predicted past economic turn-downs, and he cautioned, “Like everything else, things don’t last forever.  We need to prepare for our time of necessity.”  The “Revise” also warns, “By 2019-20, the annual shortfall between spending and revenues is forecast to be over $4 billion.  This shortfall does not take into account the likelihood of an economic slowdown or recession.”  The predicted shortfall is partly due to the Proposition 30 taxes that will expire unless the voters approve the extension via an initiative this November.  In light of this, the “Revise” states, “Until the voters decide this important question, no significant new ongoing spending commitments should be made.  The May Revision reflects this principle.”

Earlier this week, State Controller Betty Yee issued a press release confirming that April state revenues had fallen “short of Governor Jerry Brown’s proposed 2016-17 Budget…mostly the result of lower-than-expected receipts from the personal income tax in one of the most important months for collections.”  She added, “We know that state revenues cannot defy gravity forever.  It is too early to call this a trend rather than a one-time occurrence.  However, we should always expect peaks and valleys in the state’s financial performance.”

The May Revision includes two minor adjustments that were requested by the State Library:  an increase in $56,000 to account for a rent increase for its Sacramento facility, and $505,000 for “services, including publications, database subscriptions, and other resources.” 

Highlighted below is additional funding that the Governor proposed for the California Library Services Act in his January Budget and is continued in the May Revise:

  • Adding $1.8 million in ongoing funding to the current $1.8 million baseline
  • Adding $3 million in one-time funding for the purpose of allowing the regional systems to explore more creative and effective ways to loan and share materials between libraries (e.g. “digital delivery.”)

As you are aware, CLA has also been actively lobbying at the State Capitol for additional funding for public library broadband connection grants (to be able to bring Phase 3 libraries on to the high-speed, broadband “backbone” operated by the Corporation for Education Network Initiatives in California (CENIC).  CLA has also been requesting $1-2 million in additional funding for adult literacy services.  CLA continues to pursue this additional funding in the subcommittee process, although it will be challenging in light of the Governor’s admonition to curtail new spending commitments due to the slowing economy. 

STATE’S LEGISLATIVE ANALYST RECOMMENDS LEGISLATURE REJECT CLSA PROPOSAL 

This week the state’s Legislative Analyst’s Office, the non-partisan unit that advises the Legislature and provides annual analysis of the Governor’s proposed Budget, is recommending that the legislature reject the $3 million proposal relative to the CLSA due to lack of specifics about the proposed expenditure.  

When CLA met with the Governor’s Department of Finance after the Governor’s January Budget was released, the Finance representatives indicated that they hoped the $3 million in one-time funds would go towards encouraging innovations by the regional Systems relative to digital delivery.   However, the DOF representatives also told us that they did not want to stifle that innovation by placing specific restrictions on the CA Library Services Board in determining how the money could be spent.  During the recent Budget Subcommittee hearings regarding the CLSA proposal, it became apparent that the legislature would like to see the issue fleshed out a bit more.  To that end, CLA offered proposed Budget trailer bill language that would suggest the $3 million be spent in the following areas:

  • Development of regional or statewide E-resources
  • Promotion of student success cards (library cards for K-12 students)
  • Expanding digital access to California resources
  • Analytics or data-mining programs to identify better ways for libraries to serve their communities   

This information was provided to the LAO by CLA, while State Librarian Greg Lucas also submitted a two-page letter to the LAO, helping to further define the $3 million expenditure.  Unfortunately, the LAO has recommended the legislature “reject without prejudice” the Governor’s proposal.  The LAO cites that “critical details on how the funds would be spent are still lacking and, without such details, the benefits of the funding might not be maximized or realized.”  Instead the Analyst suggests that the item be deferred in this Budget year, to make way for a year of planning by the State Library, which would include a “proposed timeline for development and implementation and expected outcomes.”  (However, this assumes that the Governor would include $3 million in next year’s Budget, which is clearly now an uncertainty given the declining state revenues.)

Next week the Assembly and Senate Budget Subcommittees on Education Finance will begin reviewing the Governor’s May Revision and will either accept, reject, or modify his January and May proposals.  These subcommittees are the critical first step in ensuring that new library funding is included in the Budget.  Without the support of the subcommittees, it is very difficult to include new funding for libraries down the road in the Budget negotiations.  The subcommittees are on schedule to conclude their work by Friday, May 27.  After that date, the full Senate and Assembly Budget Committees will meet, followed by the commencement of the powerful Budget Conference Committee process, where the final details will be reconciled between the conferees and the Governor.  We will keep you posted as developments continue to emerge.