First in a Series of Essays by Sheila Kuehl on the 2008 California State Budget: Background Information

[courtesy of California Progress Report]

By State Senator Sheila Kuehl

This essay will set out some background information on California’s budget this year beginning with the actions taken on the 2007-2008 budget earlier this year. The next essay will set out the budget proposed by the Governor in January, highlighting those issues he later changed his mind about. Following essays will detail the new budget proposals contained in the May Revision (usually called the May Revise) to the January budget, divided into sections by subject matter along with analyses of the winners, the losers, the false scares, the posturing, and some possible conclusions.

What budget are we talking about here?

Just as a reminder, the California budgets run from July 1 of any year to June 30 of the next year. Last August, 2007, the Governor and the Legislature finally agreed on the 2007-2008 budget, which was balanced through deep cuts in social services, borrowing from special funds and no new taxes or fees. By the time the Legislature returned from end-of-the-year time in our districts, the budget, as expected, since no long-term solutions had been adopted, was again out of balance. Revenues to the state had dropped precipitously as income dropped, capital gains dropped and sales tax revenues went down as families tightened their belts.

First Action: January, 2008

On January 10th, 2008, the Governor took two simultaneous actions. He released the proposed 2008-2009 budget (next essay) and he declared a “fiscal emergency”, declaring a potential 2007-2008 3.3 billion dollar shortfall. Under the rules adopted in Prop 58, the Governor must propose the fix and the Legislature must act within 45 days to adopt the Governor’s proposal or to change it and adopt some other budget solution. Although the Governor’s proposals mixed the current budget and the 2008-09 budget proposals, the Legislature separated the two in order to act on the shortfall in the current budget and, through more cuts, converted the 3.3 billion dollar problem to a little over 1 billion in reserve. But it was painful yet again for those most vulnerable in the state.

Education