by cwhitfield –
The Governor has release an updated version of his proposed budget originally submitted to the Legislature in December. Known as the “May Revise,” the budget plan for 2017–18 exhibits restraint on new spending with a warning from the Governor that the economic recovery won’t last and uncertainty in Washington adds to unpredictability in California’s budget outlook.
According to the Governor’s news release, the state’s Rainy Day Fund will end the 2017–18 fiscal year with a balance of $8.5 billion, 66% of the constitutional target of 10% of tax revenues.
By the time the budget is enacted in June, the release points out, the California economy will have completed its eighth year of expansion, two years less than the longest recovery since World War II.
Here are some of the Budget Highlights:
• More Funding for Schools: Due to the slightly improved fiscal outlook, the May budget increases funding for K–12 schools by about $4,058 per student over 2011–12 levels.
• Reducing Pension Liabilities: The Governor proposes a $6 billion supplemental payment to the California Public Employees Retirement System (CalPERS) with funds borrowed from the Surplus Money Investment Fund, part of the state’s short-term savings account. The payment is estimated to save the state $11 billion over the next two decades while continuing to reduce unfunded liabilities and stabilizing state contribution rates.
• Transportation System Funding: The May revise reflects the first $2.8 billion in new funding from the $54 billion transportation package adopted earlier this spring, plus enhanced oversight of the California Department of Transportation.
• Restored Child Care Funding: Instead of the one-year delay in providing rate increases to child care providers as proposed in January, the May revise proposes restoring the funding and maintaining the $500 million child care package from the 2016 budget.
The nonpartisan Legislative Analyst’s Office (LAO) reported its estimates of state General Fund revenues and transfers are just slightly above the administration’s – close to $900 million over three fiscal years.
The difference, the LAO said, is due to its higher estimates of personal income tax and sales-and-use tax revenues, offset by lower estimates of corporation tax revenue.
The LAO said the Governor’s proposal for the additional CalPERS payment is a “very new idea” that “has promise,” but suggested the Legislature wait to finalize the plan until later in the legislative session to allow time to make sure the plan works and fully maximizes its potential benefit for the state.
The changes are currently being reviewed by the Legislative Budget Committees. Click here for full information on the Proposal.