TO: CSAC Board of Directors
County Administrative Officers
CSAC Corporate Partners
FROM: Graham Knaus, CSAC Executive Director
Darby Kernan, CSAC Deputy Executive Director, Legislative Services
RE: Governor’s May Revision for 2020-21
Link to CSAC's full summary of the Governor's May Revision (pdf)
In a normal year, the May Revision is a chance for the Governor to make relatively minor revisions to his budget proposals base on April income tax revenues and public reaction to his earlier proposals. But this is not a normal year, and the May Revision reflects that by putting forth an entirely different set of proposals than we saw in January.
For the first time in a decade, a Governor in California is proposing deep spending reductions, attempting to balance cuts against the desire to help those most in need and prime the state for as quick and robust a recovery as possible. As the Governor repeated several times during his press conference this afternoon, the state’s circumstances have changed, but our values have not.
For counties, four of the major proposals include:
- Realigning to counties responsibility for juvenile offenders from the Division of Juvenile Justice.
- Distribution of $1.3 billion to all counties from the Coronavirus Relief Fund, part of the CARES Act.
- Negotiating purchase of hotels being used for Project Roomkey using additional money from the Coronavirus Relief Fund.
- Eliminating most of the funding for CalWORKs Subsidized Employment, which helps small businesses hire recently unemployed individuals.
Those proposals, along with dozens of others, are reviewed in more detail in the full CSAC summary.
The summary document released as the Governor spoke outlines two tiers of budget solutions, with some—about $14 billion-worth—only going into effect if the federal government fails to provide sufficient additional funding, such as that contained in the HEROES Act Congress is scheduled to vote on soon. Those conditional cuts would fall heavily on health programs, human services, schools, and state workers, who would see a 10 percent cut to their salaries.
Regardless of federal aid, though, the situation is grim. State General Fund revenues have dropped nearly 10 percent from last year’s budget. Funding for realignment, which depends largely on the volatile sales tax, is projected to drop by 13 percent. The school funding guarantee has fallen from $81.1 billion in last year’s Budget Act to just $70.5 billion, although the Governor proposes to use a significant piece of CRF funding to cushion that blow.
Fortunately, as the Governor and Director of Finance Keely Martin Bosler pointed out, the state is better prepared for this economic downturn than it has been for any other. To cushion the blow of plummeting revenue, the state plans to use $16.2 billion from the voter-created Budget Stabilization Account (Rainy Day Fund) over three budget years, as well as nearly a billion from the legislatively created Safety Net Reserve. Having recently paid off the so-called ‘Wall of Debt’, the state has several one-time borrowing options at its disposal, such as borrowing $4.1 billion dollars from special funds, along with other deferrals and one-time solutions.
As part of his strategy to maintain support as much as possible for those most vulnerable and those most affected by the coronavirus, the Governor proposes to maintain the state’s Earned Income Tax Credit, CalWORKs and SSI/SSP grant levels, and eligibility for middle-income families for Medi-Cal and Covered California.
Thus begins a frenzied season of budget negotiations in the Capitol, even if less of the frenzy than usual will physically take place in the Capitol. The Legislature faces a constitutional deadline of June 15 to pass a balanced budget, although it’s likely they will have to make adjustments mid-year due to the income tax filing deadline being delayed to mid-July. This, on top of a compacted schedule of committee hearings and continuing struggles with holding open meetings at a safe distance, and a Governor who is still only in his second year on the job, will put a strain on policymakers. Your personal calls to them to advocate for county priorities are more important than ever.
CSAC will continue to keep counties up to date as negotiations progress. Feel free to contact our legislative staff for more information about any of the proposals described in the full summary.
Link to CSAC's full summary of the Governor's May Revision (pdf)
If you would like to receive the Budget Action Bulletin electronically, please e-mail Karen Schmelzer, CSAC Legislative Assistant at kschmelzer@counties.org.
|
|
|
|
