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California Budget Update March 5, 2009

Learn about California's current financial situation, the impact of budget cuts, borrowing measures, and projected future deficits. Explore the effects of these cuts on state workers, departments, programs, and the community.

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California Budget Update March 5, 2009

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  1. California Budget UpdateMarch 5, 2009

  2. Agenda • California’s financial situation • The situation in other jurisdictions • This year’s budget process • The 08-10 California State Budget • Upcoming initiatives

  3. California’s financial situation Amounts in Billions

  4. Other jurisdictions Layoffs…Furloughs…Pay deferrals… Elimination of holidays…Wage freezes …Elimination of bonuses…Contract reopeners…Elimination of positions…

  5. This year’s budget process • Different than normal • Budget already signed • For 08-09 and 09-10 • Hearings will still take place • June Revise

  6. 08-10 California state budget: Revenues • $12.5 Billion in new revenues, all temporary, including: • One-cent sales tax increase • VLF increase from .65% to 1.15% • Personal Income Tax Increase of between .125% and .25% • Reduction of Personal Income Tax dependent credit (From $399 to $99)

  7. 08-10 California state budget: Cuts • $14.9 Billion in spending cuts, including: • Major cuts to K-14 education • Denying pass-through of SSI/SSP Federal COLA • Suspends CalWORKs, Medi-Cal COLA • 10% cut to receiver’s inmate medical support budget • “Changes” to state employee compensation = $333 M in 08-09 and $834 M in 09-10

  8. 08-10 California state budget: Borrowing • “$5.4 Billion in borrowing: • Lottery Securitization • One-time loans and transfers from various special funds

  9. 08-10 California state budget: Tax Credits • Tax credits or “stimulus” including: • Single Sales Factor • Film Credit • Job Credit • Housing Credit

  10. California state budget: “Trigger” • Additional cuts and a tax increase if state doesn’t receive $10 Billion in Fed Funds by June 30, 2009. • $1.8 B in Personal Income Taxes (.125% vs. .25%) • $948 M in additional cuts, including deeper cuts to SSI/SSP, Medi-Cal, CalWORKs

  11. California state budget: Federal stimulus • State of CA will receive close to $23 B (2009-2019): • $11.2 billion for Medicaid • $5.9 billion for Fiscal Stabilization Fund (Education) • $3.9 billion for Highways and Bridges • $2.6 billion for other Education and Social Programs • $1.5 billion for Food Stamp Program

  12. California state budget: Non-Budget Related Items • Public Private Partnerships • Design Build • CEQA exemptions • Air Quality program changes • Employee schedule flexibility • Courthouse building accelerated

  13. Ballot initiatives: May 19, 2009 • “Spending cap” (Prop 1A) • Funding for education (Prop 1B) • Lottery securitization (Prop 1C) • Redirecting Prop 10 funds (Prop 1D) • Redirecting Prop 63 funds (Prop 1E) • Budget deficit = no raises for elected officials (Prop 1F)

  14. The Future • Future deficits • 2010-11 - $11.7 billion • 2011-12 - $9.9 billion • 2012-13 - $13.4 billion

  15. Discussion • As a state worker, what cuts have you seen to your department or program? • How have those cuts impacted the services you provide? • As a DLC leader, what cuts do you know about in other departments or programs? • How have those cuts impacted the services state workers provide? • As a member of the community, how have budget cuts hurt you and your family? How have they hurt your community?

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