Budget Information

Budget Information

Democrats Approve State Budget - June 16, 2011

 

 

 

 

 

Yesterday was certainly an interesting day inside the Capitol as Democrats used their Proposition 25 majority vote authority to pass a spending plan before paychecks were halted at midnight. The day included passionate speeches and near fisticuffs between two former community college trustees. Today, however, is likely a more important day, when the governor responds.

The governor, who has maintain a constant and frank media presence about the state budget, was eerily silent yesterday. The spending plan obviously doesn't meet his goal of fixing the structural budget problem, and insiders guess that it leaves a $6-7 billion shortfall in subsequent years. It also does nothing to tackle the "wall of debt" that thematically framed his May revision to his budget proposal.

However, to borrow a phrase the governor the governor used on March 24, everywhere he looks, he sees "bears in the forest." There simply may be no way out.

Let's reset for a moment:

  • The governor desparately wants to fix the structural problem so he doesn't see his governorship swallowed by perennial budget fights like his predecessor, but he pledged in his campaign not to extend or increase taxes without a vote of the people.
  • Democrats and their labor allies do not trust that the voters will approve the tax extensions/increases until November 2012's presidential election, and don't really want to spend limited campaign money when it's needed to work for two-thirds majorities in both houses after redistricting next year.
  • All but, now perhaps 6, Republicans are 100% against tax extensions or increases. The few remaining, however, continued to increase their demands for a spending cap, and reforms to pensions, regulatory procedures and CEQA.
  • Labor will not agree to the pension reforms and hard spending cap, which would lock in spending at the 2011-12 levels, reduced to remove the temporary tax revenue. In the end, labor and Democrats feel that they are being set up by Republicans in a no-win situation, as they don't think the voters will extend taxes, but will approve the changes to pensions and institution of a spending cap.
  • Business interests generally support the governor's plan to ask the voters to approve the taxes, are not particularly crazy about yesterday's spending plan, and really want the regulatory and CEQA reforms on the Republican request list.

Indeed, there are bears in the forest, and in every direction. Democratic leaders are pushing the governor to agree to this temporary package and wait to fight next year, when a friendlier economic and political environment just might enable them to get the revenues they want without giving in to Republican demands. Some Republicans privately feel like they've overplayed their hand and are worried that Democrats and the governor may pursue that strategy, and, because of redistricting, the clock may be running out for Republican influence in the state Legislature.

The governor has scheduled a 12:15 pm press availability in his Los Angeles office (notably, upsetting Sacramento-based reporters who are charged with covering the state budget).

Governor, the ball is in your court. 

For community colleges, the budget is as explained on Tuesday, and essentially mirrors the March budget plan. For most districts, this reflects Scenario A in the League's budget scenarios, and the full amount ($961 million) in deferrals is back on the table. One notable change might be about a $100 million reduction in general fund revenues in exchange for an equal amount of local property tax revenues, through what is referred to as the "single flip." We have been told to expect this shift, although the actual budget bill didn't appear to be changed to reflect it.

As always, don't hesitate to contact us with any questions at budget@ccleague.org.

Sincerely,

Scott Lay
President and Chief Executive Officer, The League
Orange Coast College '94




Community College League of California
2017 O Street, Sacramento, California 95811
916.444.8641 . www.ccleague.org
 


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Last Updated: 6/16/11