A state budget for fiscal year 2015-16, which starts July 1, was enacted Friday, June 19, after a week of negotiations between Gov. Jerry Brown and the state legislative leaders.
On Monday, June 15, the Legislature passed a budget that was substantially more than Brown proposed in May. With this action, the Legislature met is requirement to enact a budget by June 15, or lose its salaries until one was passed.
The Legislature’s version totaled $117.5 billion, which was about $2.3 billion higher than Brown recommended a month ago, including $749 million of discretionary spending. This level of revenues was closer to the legislative analyst’s projection.
In an essentially partisan vote, Democrats passed a budget bill that added increased spending for many programs, including child care, preschool and state universities.
One day later, Brown and the legislative leaders announced agreement on a budget that was much closer to what Brown wanted ($115.4 billion). In addition, Brown called for two special sessions of the Legislature to address the fiscal issues surrounding the condition of the state’s roads and highways and financing the expanding state Medi-Cal program.
“This is a sound, well thought-out budget,” said Brown. “Yet, the work never ends and in the coming months we’ll have to manage our resources with the utmost prudence and find more adequate funding for our roads and health-care programs.”
Idyllwild’s State Sen. Jeff Stone opposed the budget agreement. In a Friday press release, he began, "On Monday, the Legislature passed a budget that spent over $117 billion. Today, we passed a budget that cut that amount by approximately $2 billion. That's the good news.
“Gov. Brown rightly used more conservative revenue projections than the legislative Democrats, but sadly his priorities do not fall in line with the people I was elected to represent,” Stone stated. “That is why I could not in good conscience vote for the revised budget.”
The improving state revenue picture results in substantially more money for local schools and community colleges. Proposition 98 earmarks a significant portion of state revenues to these purposes. Next year, state educational programs will grow by $14 billion.
The agreement also includes Brown’s proposal to use $380 million for an earned income tax credit, similar to the federal tax credit. Residents with less than $6,580 in income and no dependents or $13,870 with three or more dependents will benefit. Matching 85 percent of the federal credit will provide households a minimum savings of $460 and a maximum of $2,653.
And Brown’s concerns about state debt and future economic downtowns were supported. More than $5 billion will pay debt and $1.9 billion will be put into the Rainy Day Fund.
New funding will be available to expand Medi-Cal to cover all low-income, undocumented children effective May 1, 2016; for 7,000 additional preschool slots and 6,800 child-care slots, plus a rate increase for all providers; for additional funding for the California State University to expand enrollment; for a one-time restoration of the 7 percent reduction in service hours for In-Home Supportive Services; and from Prop 98 for a one-time teacher effectiveness block grant.
Also, $6 billion more will be available for local school districts through the Local Control Funding Formula.
The governor’s press release stated, “The state’s current fuel excise tax is sufficient to fund only $2.3 billion of [road] work — leaving $5.7 billion in unfunded repairs each year.”
Consequently the special session is direct to enact “permanent and sustainable funding to maintain and repair the state’s transportation and critical infrastructure …”
The state’s current managed care organization tax does not comply with new federal requirements and the state Medi-Cal program is expanding, so Brown requested a second special session to establish sustainable funding for Medi-Cal and the In-Home Supportive Services.
