Title: California Budget Basics
1California Budget Basics
- Presented by Stephen Levy
www.next-ten.org
2Planning for Californias Future
3Long-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
4California Population Growth 2004-2014
15.0
32.0
26.0
5K-12 Per Pupil Spending as of United States
Average
65 States With Largest of Roads Rated
Unacceptably Rough
7Long-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
8LAO Estimate of State Budget Deficit (May 17,
2004)
9Basic 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?
10Where is State Budget Money Spent?
11State General Fund Budget
12 of General Fund Spending in 2004-2005
13Resources for State Spending in 2004-2005
14State General Fund Budget
15State General Fund Budget, Contd
16State General Fund Budget, Contd
17State General Fund Budget
18Shared Responsibilities FundingThe Most Legal
Discretion
- Higher Education Tidal Wave II
- State Prisons 3 Strikes Law
- State Agency Spending
19Shared 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
20How 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 -
21California General Fund Local Property Tax
Money for K-12 Education
22Where State Employees Work
State Government 317,000 Full-Time Equivalent
Employees 1 in 40 California Workers
235 States With Fewest State Employees Per 10K
Population 2002
245 States With Fewest State Local Government
Employees Per 10K Population 2002
25General Fund Spending Growth
26General Fund Spending Surges Levels Off
27Spending Increases
28Determinants 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?
29Medi-Cal Caseload Spending
30Determinants 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
31Determinants 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
32State General Fund Spending as a of Total
Personal Income
Average
33State Budget Revenues
34Distribution of General Fund Vehicle Taxes in
2004-2005
35Tax Revenue From Stock Options Capital Gains
36Long-Term Budget Gap Emerges
37State General Fund Vehicle-Related Taxes as a
of Total Personal Income
Average
38Eliminating 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
39Balancing 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
40LAO Estimate of State Budget Deficit (May 17,
2004)
41Comparisons to Other States
42K-12 Per Pupil Spending as of United States
Average
435 States With Fewest State Employees Per 10K
Population
44Undergraduate Resident Tuition Fees
45Medicaid Spending Per Beneficiary
46State Local Taxes as of Income
47Retirement Benefits at Age 65
48State Retirement Costs
49Where Do We Go From Here?
50Next Round of This Project
- Long-Term Budget Choices Web Tool
- Fall Regional Dialogues
- Incorporate Feedback Plan 2005 Activities
51(No Transcript)
52(No Transcript)
53(No Transcript)
54Questions?
www.next-ten.org
55(No Transcript)