While California’s proposed budget is introduced in January, the figures in that proposed budget becomes more tangible in May when state revenues have actually been received and counted—a process known as “May Revise.” This week, Governor Jerry Brown unveiled his revised budget and announced receipts for personal income tax are $4.9 billion higher than expected according to the Department of Finance. The added revenue is largely attributed to Proposition 30, which increased sales and income taxes after voters passed it last fall. With higher revenues, California’s budget is balanced and projected to lower the state’s debt.
The legislature is constitutionally required to pass a budget by June 15th. With less than a month away from that deadline, it is widely expected that intense negotiations between Governor Brown and the legislature is likely to ensue as they have different spending priorities. Governor Brown has publicly supported giving local school districts greater flexibility in how they spend state money and directing more funds to school districts that have high proportions of students who are poor or learning English. Conversely, Senate Pro Tem Steinberg prefers a per-pupil funding increase for all students, while Assembly Speaker Perez appears to be focused on establishing a reserve fund.
Governor Brown continues to preach a cautious approach to the legislature due to a number of risks that could materialize. For instance, more funding could be legally required to address California’s overcrowded prison systems, health care costs could still strain California’s budget as more people apply for Medi-Cal, and outstanding lawsuits against California related to the budget could affect projected savings (e.g., elimination of redevelopment agencies). For a summary of Governor Brown’s May Revise, click the following link: http://www.dof.ca.gov/