Governor Revises Budget Proposal

Governor Brown today released his May Revise – an updated budget proposal designed to reflect the reality of 2011’s tax take and newer revenue estimates. According to the document, California’s estimated shortfall has grown substantially to $15.7 billion, up from the $9 billion anticipated in the Governor’s January budget proposal. The Governor blamed that increase on three factors: his prior revenue estimates were too high; mandated spending to education under Proposition 98 increased; and courts have blocked some $1.7 billion in cuts included in the FY 2011-12 enacted budget.

That forced the Governor to propose additional cuts, which he called “more difficult” than initially anticipated but also necessary to restore the state to fiscal balance by reducing overall spending to a sustainable level. Overall, the proposal seeks an additional $8.3 billion in cuts and $5.9 billion in revenues. $5.6 billion of the revenues are attributed to passage of the Governor’s temporary tax increases that will likely appear before voters on the November ballot.

Included in the May Revise proposal are:

  • A 5% across-the-board reduction in State worker pay (achieved through either reduced workweek or pay reduction);
  • Implementation of some co-payments for Medi-Cal beneficiaries including pharmacy co-pays of $1 and $3 (based on drug status and method of dispensing);
  • A reduction of $2.5 Million in funding to the California Department of Food and Agriculture (CDFA saw a $31 Million reduction in the prior budget);
  • Trigger cuts totaling $6.1 Billion should the Governor’s proposed temporary tax increases fail to reach the ballot or be rejected by voters.

CGA is continuing to review the proposal and will provide updates as warranted. In the meantime, should you have any questions about today’s proposal from Governor Brown please do not hesitate to contact Keri Askew Bailey.