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SENATE HEARING ON CALIFORNIA'S FISCAL OUTLOOK
TO: CLA MEMBERS/ SYSTEMS/ NETWORK CONTACTS
FROM: Mike Dillon, CLA Lobbyist; Christina Dillon, CLA Lobbyist
RE: News From The Capitol
Last week, the Senate Budget and Fiscal Review Committee held an informational presentation by Elizabeth Hill, the Legislative Analyst, regarding her recent "Fiscal Outlook" report, with Budget projections from 2007-08 through 2012-13. The purpose of the hearing was to have the Legislative Analyst present her findings to the Senate Budget and Fiscal Review Committee for consideration as the Budget process moves forward.
In August, the Legislature passed a budget with a General Fund Reserve of $3.4 billion, and the Governor vetoed, under his Constitutional authority, an additional $700 million, which increased the final available 2007-08 General Fund Reserve to over $4.1 billion. However, the Budget was predicated on many assumptions regarding anticipated Budget solutions and level of revenue. For example, revenues have either not materialized or are in jeopardy from sources, such as the sale of the Ed Fund at over $1 billion, the big three tax sources (personal income, sales, and corporation), the need for the State General Fund to backfill more than $1 billion in lost property tax revenues under the Proposition 98 guarantee, as well as expanded tribal gaming revenues. In addition, unexpected expenditures occurred, such as increased fire fighting costs and the loss of $500 million from the State Teachers Retirement lawsuit.
Ms. Hill informed the Committee that her office anticipates the 2007 fiscal year to conclude with an approximate deficit of $1.9 billion, and when carried forward and combined with expected revenues and anticipated expenditures for 2008-09, the Budget deficit could rise to approximately $10 billion. Republican Senator Dennis Hollingsworth, Vice Chair of the Committee, stated that there were "many shaky assumptions that caused last year's long Budget debate, and we Republicans have been saying that there is a spending problem, not a revenue problem." He also suggested that adjustments should be made to the Budget in the current fiscal year.
The Analyst's report also notes that Proposition 98 school funding, the largest expenditure in the State Budget, will fall almost $1.5 billion short of covering baseline costs in 2008-09. To address such a large shortfall, the Analyst suggests the Legislature will likely need to consider an array of options, including suspending or reducing growth and COLA for 2008-09, or making reductions to base programs. Capitol sources have suggested that if no reductions were made in Proposition 98 funding, other major State programs, such as corrections and health and welfare, would have to face reductions of nearly 40%, in order to completely balance the Budget without increased revenues. The long-term forecast is expected to improve, but only slightly. The Analyst says that the "State's Budget woes are projected to continue through 2012-13. In 2009-10, the State would once again face an operating shortfall of $8 billion. After that, the annual operating shortfall would drop to the range of $3 billion each year."
Senator Denise Ducheny, Committee Chair, announced that, unlike previous years wherein the full Budget Conference Committee met in June after the Budget Subcommittees had wrapped up their hearings, the Senate Budget Committee would meet every three or four weeks because of the severity of the Budget situation. To get more information on the Legislative Analyst's "California's Fiscal Outlook - LAO Projections 2007-08 through 2012-13," go on line to http://www.lao.ca.gov/laoapp/main.aspx.
CALL FOR ACTION
You will recall that several weeks ago, CLA began a campaign to encourage members to write to the Governor, expressing disappointment with the $7 million cut to the Public Library Foundation (PLF), and the $7 million cut to the Transaction Based Reimbursement (TBR) Program. Members were also encouraged to call the Governor's office. While we have no way of telling how many of you called the Governor's office, our office and the CLA office have not received many copies of letters to the Governor or individual legislators.
The $10 billion deficit has implications for every program funded with State General Fund revenues, including the PLF and TBR, as well as the State Library. It is critical that you write the Governor today and urge that he restore the $14 million to the PLF and TBR. At a minimum, your letters may cause the Governor to think seriously about further cuts to these two important programs. Now is the time to act, as the Governor is in the process of finalizing his Budget, which is expected to be released on January 10th.
PLEASE CALL THE GOVERNOR TODAY AT:
(916) 445-2841 and select "Option 5: Hot Topics." You will be able to leave your name and details regarding your support of the PLF and TBR, with a Governor's representative.
OR
PLEASE WRITE THE GOVERNOR TODAY AT:
The Honorable Arnold Schwarzenegger
Governor of the State of California
State Capitol
Sacramento, CA 95814
Posted on December 4, 2007 11:02 AM | Permalink