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Governor Releases "Prudent May Revision" Of State Budget
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May 14, 2013

FROM:            Mike Dillon, CLA Lobbyist
                        Christina DiCaro, CLA Lobbyist
RE:                 News From the Capitol
This morning, Governor Brown appeared before the press to formally release his May Revision of the 2013-14 State Budget. The May Revision or “May Revise” as it is called, is the annual process by which the Governor assesses several months worth of tax receipts and evaluates the overall economic condition of the state and then adjusts his January version of the State Budget accordingly. The Governor stated, “For the first time in more than a decade, we have a balanced budget and it is solid.” While the state is noting a $4.5 billion cash increase since January, the Governor is only identifying $2.8 billion of that amount to be attributed to 2012-13 and is showing a deficit of $1.3 billion in 2013-14. The Governor cautioned, “We have to be planning for the next 14 months. For example, 4% growth is now 2% growth. We didn’t anticipate the (federal) sequester and the payroll tax restoration. This is a prudent budget, which responds to education and health challenges. We are sailing into rather uncertain times.”   The Governor and the Department of Finance contend that the cash increase may be “short-lived” and one-time in nature because of tax pre-payments before the close of the calendar year in anticipation of changing tax rates. As such, the Governor provides for a $1.1 billion General Fund reserve in his May Revise.
When a reporter asked if the Governor anticipated push back from the Legislature, who has been assuming that the Budget would be working with a $4.5 billion surplus, he responded, “Everyone wants to have more spending. This place is a spending machine. They can push, but I can push back. I’m the backstop. I need to keep things balanced.” 
The Governor’s Budget assumes, as is required by law, $2.9 billion in new funding for Proposition 98 “in the current year for K-12 schools and community colleges. The May Revision proposes that these one-time funds be used to reduce the deferral of payments to schools and community colleges, and to support the implementation of new academic standards.” The Governor’s Budget also significantly highlights his Local Control Funding Formula, which is a major overhaul of the current K-12 funding system. Medi-Cal is also augmented as the state readies itself for the implementation of the Affordable Care Act. CalWORKs and county probation departments are also beneficiaries of new funding.   
Very few programs received attention in the Governor’s proposal; for example, there is no new money in the Budget for employee salaries (which are being negotiated currently), and there is no new money for the court system, which has been dramatically reduced over the last few years.
Additionally, regarding an issue that we have been reporting on for several months, there is no new money proposed for the CLA/CENIC “Budget ask” proposal which seeks to connect every public library outlet to a massive high-speed broadband infrastructure backbone. While we had hoped the Governor might fund even a modest amount for our proposal, we recognized it was a “long shot,” given his fiscal prudence. We had also been seeking new money for the grant funding needed to connect the unserved and underserved libraries to the backbone, and new funding for the state literacy program. However, we continue to have very active discussions with the Senate and Assembly Budget Subcommittees regarding including an augmentation for these programs in their version of the State Budget.  
The subcommittees will now take a few days to review the Governor’s Budget and then they will address our issue next week in a scheduled public hearing. We will keep CLA members apprised of the developments and we will include instructions regarding next steps in our next “News From the Capitol.”