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2008-09 State Budget Highlights

From: Governor's Communications Office [GovComm@GOV.CA.GOV]
Sent: Thursday, January 10, 2008 10:59 AM
Subject: 2008-09 Budget Highlights

Today Governor Schwarzenegger submits his budget proposal for 2008-09, which addresses the systemic problems that drive California’s chronic deficits. The Governor will also issue proclamations declaring a fiscal emergency and calling a special session of the legislature to address the current year $3.3 billion budget gap.

The Governor’s 2008-09 budget proposal takes the difficult but necessary steps California needs to rein in the deficit and stabilize the budget without raising taxes. This budget and the proposed Budget Stabilization Act build on the Governor’s longtime efforts to bring stability and reform to California’s budget system.

At 11 a.m. the Governor’s remarks will be webcast live at www.gov.ca.gov and more information on the Governor’s 2008-09 budget proposal will be posted to www.gov.ca.gov/budget.

 

Reducing Spending and Stabilizing the Budget

Governor Schwarzenegger’s 2008-09 budget proposal will bring the state’s chronic budget deficit under control this year and permanently.

It achieves fiscal responsibility by:

• Imposing strict spending restraint this fiscal year while preserving essential services.
• Proposing the Budget Stabilization Act which keeps spending under control, builds savings in prosperous times and bridges the revenue gap in lean times.

For a generation, the state’s budget has swung in and out of balance as a result of discrepancies between fluctuating tax revenues and auto-pilot spending.

• Automatic spending increases mean that California is locked into spending above its means; as a result, spending in FY 2008-09 will rise by 7.3 percent unless we take action. Right now, California spends $400-600 million more each month than it takes in.
• Unless California takes action right now, the state faces a projected $14.5 billion deficit by June 2009.
• If the Budget Stabilization Act had been in place over the past decade, we would not be facing this budget deficit today.

The Governor’s 2008-09 budget proposal makes across-the-board reductions in order to protect any one agency or service from severe cuts.

• The proposal includes 10 percent reductions to nearly all General Fund departments and programs, boards, commissions and elected offices, except in cases where such a reduction is unconstitutional (examples include Proposition 42 and contributions to public retirement systems) or impractical (examples include cutting debt service payments or departments that generate significant revenue).
  
  • This includes a 10 percent reduction to the Governor’s Office budget and legislative and judicial branches.
• The proposed budget includes numerous measures to restore California’s rainy day reserve and secure adequate cash flow for the state. This includes selling $3.3 billion in Proposition 57 Economic Recovery Bonds by the end of February 2008 and delaying disbursement of some funding.

The Governor is calling a fiscal emergency today, with the goal of starting many proposed reductions now.

• In December, citing a projected current-year budget shortfall of $3.3 billion, Governor Schwarzenegger announced that he would declare a fiscal emergency and call a special session of the legislature in conjunction with the 2008-09 budget proposal release.
• Under the provisions of Proposition 58, the Governor has the authority to declare a fiscal emergency if he determines that the state faces substantial revenue shortfalls or expenditure increases. The Governor is then required to call a special session of the legislature and to propose legislation to address the fiscal emergency. 
• If the legislature does not approve and send legislation to the Governor to address the fiscal emergency within 45 days, it is prohibited from acting on any other bills or adjourning in joint recess until such legislation is passed.

Governor Schwarzenegger has consistently worked to achieve greater fiscal stability for the state without stealing from local governments and transportation funding.

• His actions include: proposing the California Recovery Plan (2003); negotiating and championing the Economic Recovery Bond Act and the California Balanced Budget Act (2004); negotiating and championing the Protection of Local Government Revenues Act (2004); proposing the California Live Within Our Means Act (2005); and making it more difficult for the state to tap transportation funds through the 2006 Strategic Growth Plan transportation funding protection initiative.

The Governor is continuing his commitment to prepare California for the future by addressing critical gaps in California’s infrastructure.

• In January 2006, the Governor and Legislative leaders launched the most ambitious rebuilding of California’s infrastructure in half a century. The Strategic Growth Plan (SGP) was designed to restore and expand our highways, roads and transit systems as well as our schools, courthouses, ports, levees and water supply systems.
• In November 2006 voters approved the first installment of this 20-year vision to rebuild California and in 2007 the legislature authorized $7.7 billion in lease-revenue bond authority for the California Department of Corrections and Rehabilitation to address overcrowding and mental, dental and medical services in the corrections system.
• Much progress will be made with these initial measures. But California needs additional investments in the state’s infrastructure to maintain and improve our highly-valued quality of life and continue our economic growth. Many programs are still in-need of funding, partnerships with the private sector should be leveraged and a more coordinated effort of state agencies to promote sustainability and collaboration is needed.

California’s current budget challenge has not changed our critical need for infrastructure investment.

• In his State of the State speech, Governor Schwarzenegger called on California to permit the broad use of Performance Based Infrastructure (PBI) and establish the Strategic Growth Council to promote economic, sustainable growth and development. Learn more about this proposal at http://gov.ca.gov/sots/2008/#/sgp/.
• As part of his 2008-09 budget proposal the Governor will also call for legislation to put bond measures before the voters to expand the state's water supply, continue building and enhancing K-12 and higher education facilities, and repair our courthouses.

Education

The Governor’s 2008-09 budget proposal preserves core K-12 funding and achieves an overall funding increase for higher education. But the Governor has always maintained that our educational system needs more than money to succeed. Over the next year Governor Schwarzenegger will hold hearings statewide to discuss a framework for education reform with the purpose of developing solutions and a long-term action plan.

K-12
The Governor’s 2008-09 budget proposal provides $68.5 billion for K-12 education priorities. The budget:

• Preserves all core K-12 instructional program funding, at a slightly lower level, reflecting a 1.3 percent reduction in total funding compared to Fiscal Year (FY) 2007-08.
• Includes ongoing General Fund increases of $349.1 million for Home-to-School Transportation, $115.5 million for the Deferred Maintenance program, $73 million for the High Priority Schools Grant program and $18 million for the Charter School Facilities Block Grant to fully fund these programs.
• Funds the development and improvement of California’s educational data and information system with $8.1 million dedicated to the California Longitudinal Pupil Achievement Data System (CalPADS) and $2.2 million for the workload tied to the California Longitudinal Teacher Integrated Data Education System (CalTIDES). Learn more about this proposal at http://www.gov.ca.gov/sots/2008/#/education/.

Higher Education
The Governor’s 2008-09 budget proposal provides $21.7 billion for Higher Education priorities, an increase of $1.6 billion above the revised 2007-08 budget. Highlights include:

• University of California: $5.5 billion ($3.2 billion General Fund), a net increase of $81.3 million compared to the revised 2007-08 budget.
• California State University: $4.4 billion ($2.9 billion General Fund), a net increase of $35.1 million compared to the revised 2007-08 budget.
• California Community Colleges: $9.1 billion ($6.6 billion from General Fund and Proposition 98), an increase of $146.5 million ($144.1 million General Fund and Proposition 98) above the revised 2007-08 budget.
• California Student Aid Commission: $921.3 million ($890.5 million General Fund), an increase of $47.6 million General Fund above the revised 2007-08 budget.
• Higher Education Initiatives: Includes $5 million from the Public Transportation Account for UC’s Institute of Transportation Studies to develop integrated land use and transportation models that can measure the impact of actions by local governments on greenhouse gas emissions; and continued funding for initiatives to boost career technical education, help at risk community college students and address shortages of science and math teachers and nurses. 
• $1.8 million General Fund to establish an education benefit program for members of the California National Guard. Learn more about this proposal at http://gov.ca.gov/issue/veterans-military.

Education Budget Balancing Actions
Budget balancing reductions in Governor’s proposed 2008-09 budget:

• K-12: $4.4 billion
• Higher Education: $1.1 billion
• $649.4 million in General Fund programs.
• $483.5 million in Community College Proposition 98 local assistance programs.
• Cal Grant Competitive Program: $57.4 million for new awards.

Proposed changes to current 2007-08 budget (special session proposal): 

• Proposition 98 appropriations: Due primarily to a significant reduction in General Fund revenues anticipated for 2007-08, the Proposition 98 minimum guarantee is $1.4 billion lower than the level of Proposition 98 appropriations included in the 2007 Budget Act. However, recognizing a reduction of that magnitude would be very difficult for schools to absorb mid-year, the Budget proposes to reduce the 2007-08 Proposition 98 appropriations by only $400 million. 
• This reduction will be split between school and community college apportionments, $360 million and $40 million, respectively.
•  Proposition 98 deferrals: In order to increase cash reserves during months when cash balances are projected to be deficient, separate legislation is proposed for the special session to delay the deferral payments for K-14 from June to September.
• This will result in saving millions of dollars in interest payments by reducing the amount of funds the state will have to borrow for cash purposes.

Health And Human Services

Under the Governor’s 2008-09 budget proposal, General Fund dollars for California’s Health and Human Services Agency (HHSA) will continue to be higher in 2008-09 than any other year except the current fiscal year. Highlights include:

• Fully funding enrollment growth in the Healthy Families Program. As a result approximately 65,802 more children from low-to-moderate-income working families will receive health coverage in 2008-09, bringing projected enrollment to an all-time high of 942,252.
• Funding CalWORKs reforms to increase work participation rates, meet federal requirements, avoid penalties, and successfully move families from welfare to work. These reforms are estimated to provide net savings of $73.7 million General Fund in 2007-08 and $476 million ($389.1 million General Fund) in 2008-09.
• Fully funding enrollment growth for the Access for Infants and Mothers program. As a result approximately 1,977 more uninsured pregnant women will receive health coverage in 2008-09, bringing projected enrollment to an all-time high of 15,863.
• $32.3 million ($15.2 million General Fund) to implement the provisions of SB 437 which will simplify and accelerate enrollment in the Healthy Families and Medi-Cal programs. 
• $8.9 million to ensure that California provides long term care residents with a higher quality of care than required by federal law.
• $2.4 million ($1 million General Fund) to continue program reforms and increase California’s ability to retain federal funding for the Adult Day Health Care program.

 

Health and Human Services Budget Balancing Actions
Budget balancing reductions in Governor’s proposed 2008-09 budget:

• Health and Human Services Agency:
• $246.6 million ($181.1 million General Fund) and 11.2 positions in 2007-08 and $4.5 billion ($2.7 billion General Fund) and 367.5 positions in 2008-09.

Proposed changes to current 2007-08 budget (special session proposal): 

• Delays in payments, advances and disbursements to various programs, centers and services to save the state over $2.5 billion.

Environment And Natural Resources

The Governor’s 2008-09 budget proposal invests in environmental initiatives to preserve California’s land, air and water while protecting our communities and economy. Highlights include:

• $1 billion in Proposition 84 funds for natural resources programs in 2008-09 including:
• $350 million for regional water projects to increase water supplies, encourage conservation, improve quality and meet other goals.
• $89.1 million to restore coastal wetlands and watersheds and promote public access to the coast.
• $33.3 million for the California Conservation Corps and local conservation corps for public safety and watershed restoration projects.
• $26.4 million to develop marine protected areas and enhance habitat for marine species.
• $16.7 million for deferred maintenance and stewardship projects at state parks.
• $15.8 million to complete studies on water storage, climate change and flood control, and to develop a strategic plan for the sustainable management of the Delta.
• $10.8 million and 2.8 positions for Salton Sea environmental and ecosystem restoration.
• $598.3 million from Proposition 1E and Proposition 84 bond funds to address the state’s urgent flood control needs.
• $100.5 million in local assistance funding for the State Water Resources Control Board to continue water quality programs to keep our beaches, drinking water and agricultural water supplies clean.
• $5.6 million Air Pollution Control Fund to continue implementation of programs and strategies to implement the Global Warming Solutions Act of 2006 (AB 32).

• $2 million General Fund to establish a new Central Valley Flood Protection Board.
• $1.1 million one-time for 2008-09 and $917,000 one-time for 2009-10 from the California Beverage Container Recycling Fund to implement the California Education and the Environment Initiative
• $772,000 to support the Green Chemistry Initiative by expanding the existing Pollution Prevention Program.

 

Environment and Natural Resources Budget Balancing Actions
Budget-balancing reductions in Governor’s proposed 2008-09 budget:

• California Environmental Protection Agency:
• $1.6 million in 2007-08 and $8.3 million and 16.5 personnel years in 2008-09.
• $234.8 million ($1.2 million General Fund) in one-time cost reductions for 2007-08.
• California Resources Agency:
• $4.2 million in 2007-08 and $89.3 million and 296.5 positions in 2008-09.
• $66.5 million General Fund and $878.5 million other funds in one-time cost reductions for 2007-08.

Proposed changes to current 2007-08 budget (special session proposal): 

• California Resources Agency:
• Revert $30 million General Fund for deferred maintenance at state parks. Proposition 84 provides $400 million for various state park improvements, and this reversion will be backfilled with a $30 million augmentation from these Proposition 84 funds.

Public Safety

The Governor’s 2008-09 budget proposal supports the implementation of critical prison reforms, supports law enforcement and funds programs to reduce and prevent gang violence. Highlights include:

• $11.4 billion ($10.3 billion General Fund and $1.1 billion other funds) for CDCR. This reflects an increase of $646.7 million ($172.4 million General Fund) over the revised 2007-08 budget.
• $1.9 billion for CHP. This is an increase of $35.7 million above the 2007-08 Budget.
• Includes funding to add 120 uniformed positions and 44 support positions ($21.6 million Motor Vehicle Account) to address workload growth associated with population growth.
• $20.1 million General Fund to fund the California Multijurisdictional Methamphetamine Enforcement Team (Cal-MMET) Program on a permanent basis. This funding is in addition to the $9.5 million of existing funds.
• $18.5 million in additional funding, for a total of $116.3 million in 2008-09, to replace and upgrade CHP’s radio system.
• $7.5 million increase ($407,000 General Fund and $7.1 million Motor Vehicle Account Fund) for the CDFA to operate all Border Protection Stations on a full-time basis, to inspect all vehicles, commercial and private, entering California.
• $5.3 million General Fund to fund the Department of Justice's four existing Gang Suppression Enforcement Teams on a permanent basis.
• $2.5 million in 2007-08 and $35.4 million in 2008-09 to implement the rehabilitation components of the Public Safety and Offender Rehabilitation Services Act (AB 900).
• $1.3 million General Fund to establish the Office of Gang and Youth Violence Policy per AB 1381.

Public Safety Budget Balancing Actions
Budget balancing reductions in Governor’s proposed 2008-09 budget:

• · California Department of Corrections and Rehabilitation:
• $17.9 million in 2007-08 and $378.9 million in 2008-09. This grows to $782.7 million in 2009-10. Under the proposed reductions, specified non-serious, non-violent, non-sex offenders with no prior serious or violent offenses and similar offenses will be placed on summary parole. The will remain subject to searches, seizures, and drug tests by any peace officer but will not be returned to prison without first being prosecuted locally for any new offenses that they commit.
• Office of Emergency Services:
• $3.1 million in 2007-08 and $8.1 million in 2008-09 for the Office of Emergency Services local criminal justice grant programs.

Emergency Preparedness And Response

The Governor’s 2008-09 budget proposal supports California’s ability to prepare for and respond to the wide range of emergencies and natural disasters and significantly strengthens the state’s wildland firefighting capabilities for the benefit of all Californians. Highlights include:

• $3 million General Fund to replace older OES radios.
• $2 million General Fund for OES to enhance OASIS, a satellite-based communications system that helps different operational areas and regions communicate during an emergency or disaster.
• $1.6 million General Fund and $1.6 million in federal funds to increase OES staff in order to enhance emergency preparedness, response and recovery operations. 
• $1.3 million General Fund to provide 24-hours-a-day, 7-days-per-week staffing at the state’s Joint Operations Center (JOC). This will enable the California National Guard to rapidly deploy personnel and equipment during an emergency or disaster.

Wildland Firefighting Initiative
The Governor’s 2008-09 proposed budget enhances California’s wildland firefighting capability to prepare the state for the next, inevitable round of wildfires.

• The Wildland Firefighting Initiative will not be funded through the General Fund. It will be financed through a 1.25 percent surcharge on all property owners statewide, amounting to approximately $10-12 per property owner each year.

CAL FIRE ($77.8 million):

• $28.9 million and 1,100 seasonal firefighters to staff all 336 state fire engines with full four-member crews during peak and transition fire seasons.
• $4.2 million and 3.8 positions to install GPS tracking on key pieces of equipment, such as fire engines and aircraft, linked to computer-aided dispatching.
• $44.7 million in 2008-09 to backfill the budget balancing reductions CAL FIRE is taking to its fire protection budget. Restoring these budget-balancing reductions will prevent the closing of 20 one-engine fire stations, 11 conservation camps, and 1 helitack base.
• A multi-year expenditure plan to enable CAL FIRE to purchase eleven new, all-weather, 24-hour firefighting helicopters over the next six years.

Office of Emergency Services: ($12.1 million):

• $8.1 million in 2008-09 to purchase 26 fire engines as part of the first year of a five-year cycle to purchase and maintain a total of 131 additional fire engines. 
• $1.9 million in 2008-09 to backfill the budget-balancing reductions OES is taking to its Fire and Rescue Mutual Aid Response section and its Warning Center/Information Technology/Telecommunications section. 
• $1.6 million and 9.2 positions in 2008-09 to enhance response to wildland fires throughout the state.
• $480,000 to fund the increased maintenance and fuel costs of OES’ existing fleet of fire engines and vehicles. 
• The Office of Homeland Security will make grant funding available to ensure that telephone emergency notification in all counties that do not currently have these systems. Learn more about this proposal at http://gov.ca.gov/index.php?/press-release/8396/.

California National Guard ($9.2 million):

• $4.4 million in 2008-09 and 36 positions to provide 24-hours-a-day, seven-days-per-week coverage and full-time helicopter crews to be able to respond to any emergency situation in California in a matter of four hours or less. 
• $2.6 million in 2008-09 to purchase the first of two Modular Airborne Fire Fighting Systems (MAFFS) over two years for the Military Department's C-130J aircraft. 
• $2.2 million in 2008-09 to purchase the first of three Firehawk firefighting systems over three years. 

Emergency Preparedness and Response Budget Balancing Actions
Budget balancing reductions in Governor’s proposed 2008-09 budget:

• Office of Emergency Services:
• $2.4 million in 2007-08 and $9 million in 2008-09 for the Disaster Assistance Program.
• $400,000 in 2007-08 and $824,000 in 2008-09 for the Plans and Preparedness Program.
• $100,000 in 2007-08 and $665,000 in 2008-09 for the Fire and Rescue Mutual Aid Response Program. The 2008-09 reduction will be offset by the Wildland Firefighting Initiative.
• $100,000 in 2007-08 and $1.2 million in 2008-09 for the Warning Center/Information Technology/Telecommunications Program. The 2008-09 reduction will be offset by the Wildland Firefighting Initiative.
• CAL FIRE:
• $44.7 million for CAL FIRE’s Fire Protection Program in 2008-09. This reduction will be offset by the Wildland Firefighting Initiative.
• $3 million for CAL FIRE’s Resource Management Program in 2008-09.
• California National Guard:
• $44.7 million for CAL FIRE’s Fire Protection Program in 2008-09. This reduction will be offset by the Wildland Firefighting Initiative.