State Budget:
State Spending Up $15 Billion Over Governor's January 2011 Proposed Budget

According to figures from the California Department of Finance, total state expenditures will be $15 billion above the level of spending first proposed by Governor Jerry Brown in January 2011 if voters approve the governor's tax increase in November. Governor Brown's original 2011-12 budget called for $127.37 billion in total expenditures. After the adoption of the new 2012-13 budget, total state spending for the new fiscal year is estimated to be $142.42 billion.

One of the problems is that the governor has faced a Democratic majority in the Legislature that is hostile to a number of his proposals to reduce spending. Legislators have been empowered by the passage of Proposition 25, which removed restraints on spending growth by lowering the budget vote threshold from two-thirds to a bare majority.

Also, as illustrated in the table below, general fund expenditures have grown, from the amount proposed by the governor in January 2011 to the amount in the budget adopted last month, by an estimated $6.72 billion if the tax increase initiative is passed (from $84.61 billion proposed in January 2011 to $91.33 adopted in June 2012).

Total Proposed Expenditures (in billions)
2011-12			2012-13
Original Proposal	May Revise	June Adopted Budget	Original Proposal	May Revise	June Adopted Budget
$127.371	$132.530	$129.476	$137.328*	$141.900*	$142.421*
Proposed General Fund Expenditures (in billions)
2011-12			2012-13
Original Proposal	May Revise	June Adopted Budget	Original Proposal	May Revise	June Adopted Budget
$84.614	$88.803	$85.946	$91.353*	$91.387*	$91.338*
*Assumes passage of governor's tax increase initiative in November 2012.
Source: California Department of Finance

According to the governor, total state spending is at the same level as the mid-1990s. Because of the recent shift of general fund spending to special funds and local governments, a comparison of general fund spending levels over time is not an apples-to-apples evaluation.

In other budget developments:

SEIU Members Approve 12 Furlough Days, Get Other Goodies in Return. Members of the state's largest public employee union, Service Employees International Union Local 1000, have approved an agreement with the governor to take 12 furlough days this year. According to the union, the vote was 65.76 percent in favor.

In exchange, the union is trumpeting several concessions made by the governor, such as the elimination of student assistants and non-critical retired annuitants from the state payroll. The union believes these positions will have to be filled by dues-paying union members.

Also, a task force will be created to review the state's use of private-sector workers for state jobs. The union's goal is to reduce and/or eliminate contracting out, so jobs will be created for dues-paying members.

SEIU Local 1000 President Yvonne R. Walker said: "Because Local 1000 chose to negotiate with the governor rather than let our members be subject to imposed furloughs, we were able to achieve important solutions that went beyond a pay reduction in exchange for time off. This agreement eliminates student assistants and non-mission-critical retired annuitants. More importantly, this side letter creates an outsourcing task force that will identify and reduce or eliminate wasteful vendor contracts. This is solid progress on a problem we have been fighting for years." (Source: SEIU Local 1000 website, accessed July 3.)

State Controller Appeals Court Ruling on Legislative Pay. State Controller John Chiang is appealing a Sacramento Superior Court judge's ruling that the controller does not have authority to withhold lawmakers' pay when the Legislature passes a budget that the controller finds unbalanced.

The appeal, filed with the Third District Court of Appeal shortly after this year's budget was signed, revisits last year's dispute between the controller and legislative leaders. The controller last year withheld legislators' pay for 12 days after finding that the budget sent to the governor was not balanced.

The controller noted that when voters approved Proposition 25 in 2010, they were told that in addition to lowering the vote threshold for passage of the budget, the initiative would dock legislators' pay if they missed the June 15 deadline for sending a balanced budget to the governor. If the controller does not have the power to enforce the latter provision, it will be rendered meaningless, he said.

The Sacramento Superior Court ruled that the Legislature itself has the power to determine whether the budget is balanced. This "flies in the face of the voters' will, which was to hold lawmakers accountable for late, unbalanced budgets by docking their pay when they miss the constitutional deadline," said Hallye Jordan, spokeswoman for Controller Chiang. (Source: The Sacramento Bee's Capitol Alert, July 2.)

July 6, 2012
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