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CSBA Forecast Conference

CSBA Forecast Conference. January 17, 2008. Budget Shortfall. $3.3 billion in 2007-08 $14.5 billion in 2008-09. “We don’t have a revenue problem; we have a spending problem.” --The Governor, January 8, 2008  “This budget also limits spending growth to less than one percent…”

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CSBA Forecast Conference

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  1. CSBA Forecast Conference January 17, 2008

  2. Budget Shortfall • $3.3 billion in 2007-08 • $14.5 billion in 2008-09

  3. “We don’t have a revenue problem; we have a spending problem.” --The Governor, January 8, 2008  “This budget also limits spending growth to less than one percent…” --The Governor, August 21, 2007 

  4. What Happened? • Revenues declined • $4.9 billion • Beginning balance declined • $0.5 billion • Spending declined • $2.0 billion

  5. Closing the Gap2007-08 • $3.3 billion from sale of economic recovery bonds • $400 million from Prop 98 • $217 million 10% cuts • $200 million “other” • $60 million tax enforcement

  6. Proposition 58 • Authorizes Governor to declare a fiscal emergency and call a special session of the Legislature • Legislature has 45 days to act (by February 23)

  7. Building the 2008-09 Budget • Step 1: “Workload” budget • Step 2: Apply 10% reduction

  8. Closing the Gap2008-09 • $9.1 billion 10% cuts • $2.0 billion June 2009 PIT accrual • $1.5 billion suspend supplemental payment on deficit bonds

  9. Closing the Gap2008-09 (cont.) • $96 million “other” • $329 million tax enforcement

  10. Proposition 982007-08 • Guarantee has declined by $1.4 billion • Governor proposes a $400 million reduction • Does not require suspension

  11. LAO—”Reduce current year Prop 98 funding to the minimum (by $1.4 billion)” • Replace CY with PY unspent monies • Unappropriate unspent CY monies • Designate the difference as settle up funding.

  12. Proposition 982008-09 • Suspend Prop 98--$4 billion • Reduce K-14 “workload” budget by $4.8 billion • $4.3 billion K-12 ($735/ADA) • $500 million community colleges

  13. Proposed K-12 Cuts(from Workload Budget) • $2.6 billion-revenue limits • Creates a 6.99% def. factor • $358 million-spec. educ. • $199 million-child devel. • $60 million-Prop 49 • $14 million-nutrition • $1.1 billion-other categorical

  14. K-12 Local Assistance Funding (Billions)

  15. Total Local Assistance Reductions • 1.99% from 2007-08 • 7% from “workload” budget

  16. Other K-12 Proposals • Defer the deferred apportionment until September • $1.3 billion • Change COLA to CPI for Wage Earners and Clerical Workers (CPI-W) • 4.94% vs. 3.65%

  17. CalSTRS • Fully vest 80% purchasing power protection • Reduce payment to SBMA from 2.5% to 2.2% of payroll • Saves $80 million in 2008-09

  18. Budget Stabilization Act • “Excess” revenues get deposited into a Revenue Stabilization Fund • Automatic mid-year cuts

  19. “The proposed budget reforms represent a serious diminution of the Legislature’s appropriation authority. In addition, the proposal would limit future policy makers’ options to craft budgets.” --Legislative Analyst

  20. What’s Next • Special session and regular session will run concurrently • Special session ends Feb 23 • Budget hearings February thru May • Budget due: • June 15 from Legislature • June 30 from Governor

  21. What We are Doing • Lobbying • Grassroots activities • Coordinate with the Education Coalition

  22. CSBA Budget Resources www.csba.org/ LegislationAndLegal/ Legislation/LegislativeNews/2008.aspx

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