Legislative Conference Committee Adopts Budget Plan

In an effort to meet the Governor’s timeline to pass a budget, the Legislative Conference Committee adopted a budget plan yesterday that includes a balanced mix of cuts and revenues to close the $26.5 deficit and provide a $1.1 billion reserve.  Specifically, the Conference Committee’s budget has $12.5 billion in cuts, $12 billion in revenues and $3.2 billion in other solutions to address the $27.7 billion budget deficit. The Conference Committee spending plan embraces the Governors budget priorities, including:

  • Protects K-12 Education from devastating cuts on top of the massive cuts of recent years;
  • Makes very tough cuts to all other areas of the budget, including the elimination of Redevelopment Agencies, cutting CalWORKs to 48 months and slashing grant levels, and cutting higher education by $1.4 billion;
  • Realigns Governmental services to the local level; and
  • Requires temporary extension of current revenues to be approved by the voters.

K-12 education was spared cuts by Governor Brown, contingent on the passage of a special election ballot measure to extend $12 billion in existing taxes that are scheduled to expire in July 2011.  These taxes were passed in 2008 and are as follows:

  • A .25% increase in each of the state’s basic marginal income tax rates, which would be extended to apply to tax years 2011, 2012, 2013, 2014 and 2015.
  • An extension of the temporary reduction of the personal income tax dependent exemption credit (this credit was reduced from $309 to $99) for five years.
  • An extension of the 1% rate for state use (sales) tax for five years, maintaining the rate at 6%.
  • An extension of the .5% vehicle license fee for five years, maintaining the rate at 1.15%.

Education Program Highlights of the Conference Committee Proposal are as follows:

  • Overall Funding Level. Provides $49.4 billion in education funding and maintains the same level of funding as the Governor’s 2010-11budget.
  • New Deferral. Adopts the Governor’s proposal to defer $2.1 billion in K-12.
  • Basic Aid Districts. Includes an 8.9% “fair share” reduction to basic aid school districts for 2010-11 and 2011-12. This reduction is intended to be ongoing comparable to the ongoing revenue limit reductions applied to school districts two years ago.
  • Categorical Flexibility. Extends categorical flexibility for an additional two years to 2014-15.

California Community Colleges:

  • Unallocated Reduction. Specified that the $400 million reduction in apportionments is offset by the $110 million from the fee increase (rather than being used to fund growth as originally proposed), resulting in a net apportionment cut of $290 million that is applied as a workload reduction.

What’s Next?

The full membership in both the Senate and Assembly needs to vote on the Budget bill.  Both houses are expected to take up the Budget bill next week in time to meet the March 10 deadline set by the Governor.

 While the Budget bill only needs to pass by a simple majority in each house (pursuant to Proposition 25), other budget related measures related to the ballot will still require a two-thirds vote.  If all Democrats support the measure it will requires at least two Republican votes in each house to pass.

Caution: This report is based on a preliminary analysis of the budget.  Some proposals may change as additional details become available.  We will provide you with additional reports on any new and significant findings.

If you wish to comment or would like additional information, please contact: Dave Low, Executive Director, Jai Sookprasert, Assistant Director, Governmental Relations; Dolores Duran-Flores, Legislative Advocate; Steve Henderson, Legislative Advocate; Joshua Golka, Legislative Advocate, 1127 11th Street, Suite. 346, Sacramento, California  95814.  Toll Free: (800) 867-2026.

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