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Gov. Jerry Brown's May budget revision summary 2012-2013

Gov. Jerry Brown's May budget revision summary 2012-2013

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Published by: tvanoot on May 14, 2012
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07/10/2013

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Introduction
 A
year ago, the state aced an immediate $26.6 billion budget shortall and utureestimated annual gaps o $20 billion.
 
The state’s scal challenges were exacerbatedby an unprecedented level o debts, deerrals, and budgetary obligations accumulatedover the prior decade.The 2011 Budget Act made substantial progress in returning the state to scal stability,but more work remains.
 
The Governor’s Budget estimated that the state aced a$9.2 billion budget problem or 2012‑13.
 
The May Revision, however, estimates that theproblem has increased to $15.7 billion as a result o a reduced revenue outlook, highercosts to und schools, and decisions by the ederal government and courts to blockbudget cuts.The May Revision builds upon the key principles underlying the enacted 2011‑12 Budgetand the Governor’s Budget protecting education and public saety programs, makinggovernment more ecient and less costly, moving government closer to the people,and paying down debt.
 
While requiring more dicult cuts than originally anticipated,the May Revision will restore scal balance and make Caliornia more attractive orbusiness, investment, and the creation o jobs.
 
May Revision – 2012-13
Introduction
Substantial Progress Has Been Made
The enacted 2011‑12 Budget substantially shrank the state’s ongoing decit and rejectedthe past approach o over‑relying on one‑time solutions.The 2011‑12 Budget refected the ollowing:Passing an on‑time budget that avoided the gimmicks o prior budgets.Closing more than hal o the state's ongoing budget shortall.
 
A year ago, the gapstood at about $20 billion; it is now estimated to have shrunk to about $8 billion.Realigning public saety programs to bring government closer to the people.Eliminating redevelopment agencies to increase unding or schools, police, re,and other core local services.Making tough cuts across state government to reduce General Fund spending asa share o the economy to its lowest level since 1972‑73.
 
State SupplementaryPayment grants were reduced to 1983 levels.
 
CalWORKs grants were reduced tobelow 1987 levels.
 
General Fund support or the state’s universities was cut bynearly 25 percent.
 
General Fund support or the state’s courts was cut by about20 percent.
 
The Williamson Act subventions were eliminated, and the child care anddependent tax credit was eliminated.Protecting education, public saety, and other core state services to theextent possible.Reducing the state’s cash‑fow borrowing, and saving hundreds o millions o dollarsin short and long‑term borrowing costs.Improving management o the state’s inrastructure projects by committing availablecash to shovel‑ready projects and avoiding unnecessary debt.Through the budget and executive action, the Administration has ocused on shrinkingstate government and making it more ecient.
 
These changes will help the state keep itsbudget balanced or the long term.
 
Progress includes:Reducing the state workorce by more than 30,000 positions on a permanent basis.
 
The state workorce is at its lowest level as a share o the state’s population inalmost a decade.
 
Caliornia already had the nation’s th lowest level o governmentemployment in 2010.
 
Introduction
May Revision – 2012-13
Launching a downsizing plan or the Caliornia Department o Correctionsand Rehabilitation.
 
The plan is a long‑term strategy to save billions o dollars,conorm the prison system to post‑realignment population changes, satisythe U.S.
 
Supreme Court’s order requiring reduced crowding, end ederal courtoversight in health care and other areas, and improve rehabilitation programsto reduce recidivism.
 
It will reverse the trend o prison spending consuming agrowing percentage o the General Fund budget
 
rom 11 percent to 7.5 percent.Eliminating 20 boards, commissions, task orces, oces, and departments.
 
The Governor’s Budget and the May Revision combined propose to eliminate morethan 60 additional entities and programs.Reorganizing state government to improve the management and coordinationo government activities, acilitate urther eciencies and reduce costs.
 
The Administration submitted its reorganization plan to the Legislature on May 3.
 
The plan cuts the number o state agencies rom 12 to 10 and consolidates andaligns related programs and departments.
The 2012-13 Budget Shortfall
In January, the budget shortall was estimated to be $9.2 billion.
 
The May Revisionestimates that the gap has increased to $15.7 billion.
 
Absent actions to eliminatethe structural gap between revenues and expenditures, the state would ace aboutan $8 billion budget shortall each year.
 
As shown in Figure INT‑01, the ongoingbudget problem is much smaller than what the state aced just over a year ago.
 
The May Revision proposes to close the remaining gap.The $6.5 billion increase in the size o the 2012‑13 budget problem is largely attributableto three actors:
Prior Revenue Forecast Was Too High ($4.3 billion) 
 
— 
Finance’s January orecastwas too reliant on strong April and June 2011 receipts, which have now been wipedout by weak nal payments received in April 2012.
 
The May Revision continues toproject a modest economic recovery.
Proposition 98 Spending Increases ($2.4 billion) 
 
— 
Proposition 98 unding or K‑14education relies on year‑to‑year changes in revenues.
 
Under the revenue orecast,2011‑12 revenues have decreased ($3.1 billion), and 2012‑13 revenues, while lowerthan in January, are increasing by 5.9 percent.
 
The resulting year‑over‑year increase
• • 

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