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California Budget Basics

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California Budget Basics. Presented by: Stephen Levy. www.next-ten.org. Planning for ... Term Budget Deficit. Long-Term Budget Challenges. California Population ... – PowerPoint PPT presentation

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Title: California Budget Basics


1
California Budget Basics
  • Presented by Stephen Levy

www.next-ten.org
2
Planning for Californias Future
3
Long-Term Budget Challenges
  • Planning for Growth
  • Population Growth Will Continue
  • State Program Caseloads Will Increase
  • We Start Behind in Many Areas
  • Starting with Long-Term Budget Deficit

4
California Population Growth 2004-2014
15.0
32.0
26.0
5
K-12 Per Pupil Spending as of United States
Average
6
5 States With Largest of Roads Rated
Unacceptably Rough
7
Long-Term Budget Deficits to Continue
  • Prop 57 (15B Bonds) Eliminates Past Deficits
  • Long-Term Deficits will Re-emerge
  • What is the Structural Deficit?
  • Economic Growth Alone Cannot Balance the
    Budget
  • Legislature, Governor Reflect Citizens Conflict
    About Budget Choices

8
LAO Estimate of State Budget Deficit (May 17,
2004)
9
Basic Budget Balance Choices
  • Spending Cuts Are We Spending
  • Too Much?
  • Cuts in Service Levels
  • Elimination of Waste, Fraud Abuse
  • Revenue Increases Should We Raise More Money?
  • Tax Fee Increases
  • Reduce Tax Breaks
  • More Federal Funding
  • What Helps The Economy?

10
Where is State Budget Money Spent?
11
State General Fund Budget
12
of General Fund Spending in 2004-2005
13
Resources for State Spending in 2004-2005
14
State General Fund Budget
15
State General Fund Budget, Contd
16
State General Fund Budget, Contd
17
State General Fund Budget
18
Shared Responsibilities FundingThe Most Legal
Discretion
  • Higher Education Tidal Wave II
  • State Prisons 3 Strikes Law
  • State Agency Spending

19
Shared Responsibilities FundingMore Mandates
Earmarking
  • K-12 Education
  • Health Human Services
  • Transportation Other Special Funds
  • But There is Discretion
  • State Sets Many Spending Rules
  • Can Eliminate or Suspend Mandates

20
How is K-12 Education Funded?
  • State Has Major School Funding
    Responsibility After Proposition 13
  • Increases in Local Property Tax Revenues Reduce
    State Funding So Schools Do Not Get More
    Money
  • Per Pupil funding is Below the National Average
  • Schools Pay Above-Average Salaries and have
    Above-Average Class Sizes
  • Proposition 98 and Categorical Mandates Reduce
    Local Flexibility

21
California General Fund Local Property Tax
Money for K-12 Education
22
Where State Employees Work
State Government 317,000 Full-Time Equivalent
Employees 1 in 40 California Workers
23
5 States With Fewest State Employees Per 10K
Population 2002
24
5 States With Fewest State Local Government
Employees Per 10K Population 2002
25
General Fund Spending Growth
26
General Fund Spending Surges Levels Off
27
Spending Increases
28
Determinants of Spending Increases
  • Caseload Growth
  • K-12 vs. Higher Ed Enrollment Growth
  • Growth in Poor Families vs. Elderly Disabled
  • Inflation
  • General Inflation vs. Healthcare Inflation
  • Service Level Changes
  • Why is the State Different From a Business?

29
Medi-Cal Caseload Spending
30
Determinants of Spending Increases
  • K-12 Education
  • Enrollment Increases
  • Cost of Living Increases
  • Program Enhancements Teacher Retention, Longer
    School Year, Child Care
  • Tax Relief
  • Vehicle License Fees Cut State Reimbursement

31
Determinants of Spending Increases, Contd
  • Health and Human Services
  • Caseload and Cost of Living Increases
  • Program Enhancements Expanded Coverage for
    Health Care, Child Care
  • More Difficult Cases Foster Care, Older Children
    Served

32
State General Fund Spending as a of Total
Personal Income
Average
33
State Budget Revenues
34
Distribution of General Fund Vehicle Taxes in
2004-2005
35
Tax Revenue From Stock Options Capital Gains
36
Long-Term Budget Gap Emerges
37
State General Fund Vehicle-Related Taxes as a
of Total Personal Income
Average
38
Eliminating the 1998/99-2003/04 Budget Deficits
  • 9.3 Billion from 15 Billion March 2004 Bond
  • 5 Billion in Spending Reductions
  • 10 Billion from
  • Borrowing Transportation Money
  • Using One-Time Federal Money
  • Reducing Payments to Local Governments
  • Higher then Expected Income Tax Revenues
  • Deferring Spending to Later Years

39
Balancing the 2004-2005 Budget
  • 3.4 Billion in Program Savings
  • 3.2 Billion from March 2004 Bond
  • 3.6 Billion from Fund Shifts, Borrowing
  • 1.6 Billion from Higher Revenues, Transfers
  • 1.3 Billion from Local Governments

40
LAO Estimate of State Budget Deficit (May 17,
2004)
41
Comparisons to Other States
42
K-12 Per Pupil Spending as of United States
Average
43
5 States With Fewest State Employees Per 10K
Population
44
Undergraduate Resident Tuition Fees
45
Medicaid Spending Per Beneficiary
46
State Local Taxes as of Income
47
Retirement Benefits at Age 65
48
State Retirement Costs
49
Where Do We Go From Here?
50
Next Round of This Project
  • Long-Term Budget Choices Web Tool
  • Fall Regional Dialogues
  • Incorporate Feedback Plan 2005 Activities

51
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Questions?
www.next-ten.org
55
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