California Assembly Approves Plan to Close Budget Deficit

Assembly Democrats Prevent Hundreds of Thousands of Layoffs, Protect Education and Safety Net from Deep Cuts

The following perss release cae out fromthe Speaker’s Office this morning: 

SACRAMENTO – The California Assembly today approved a budget that closes the state’s deficit and prevents hundreds of thousands of layoffs that would have resulted under the Governor’s original May Revision Budget proposal.  The plan also avoids drastic cuts to education and the elimination of basic safety net programs. During floor debate leading up to the passage of the spending plan, Assembly Speaker John A. Pérez (D-Los Angeles) reiterated why creating and saving jobs must be California’s top budget and legislative priority as work toward economic recovery continues.

“This budget means hundreds of thousands of teachers, cops, firefighters, child care providers, health care workers and private business owners will keep working and contributing to our economic recovery,” Pérez said. “We maintain education funding because a well-educated workforce is essential to California’s future prosperity. We set aside $30 million to help small businesses grow and thrive by freeing up access to the capital that will help them expand and hire new employees. We protect public safety and we reject economically hurtful tax increases on California’s working families.”

“This is a solid and sober budget for the people of California,” Pérez added. “Now let’s be clear, this is not a perfect budget. In the era of the Great Recession, there is no such thing as a perfect budget. Moreover, this is a budget that reflects the compromises necessary to find a two-thirds majority. This is most glaringly obvious in the fact that it has taken us nearly 100 days to approve a spending plan. The fact that we have twin supermajority requirements for both the budget and revenues is directly correlated to the fact that California is routinely the last state in the Union to approve a budget. However this budget does speak to the values we have articulated throughout the process.”

Discussing Assembly Democrats’ commitment to making the budget process more transparent and open to the public, Speaker Pérez said, “From the moment I was sworn in as Speaker, I have consistently said that this budget must be arrived at in an open and transparent process. The people of California have every right and expectation to know what decisions their leaders are making, and in a year where we face such enormous challenges, the expectation of transparency becomes an imperative of transparency. We have lived up to that commitment. We have held more than 100 hearings here in the Capitol. We have held forums throughout the state, in Fresno, San Diego, Palm Springs, Orange County, Albany, Reseda and Sacramento. Thousands of Californians participated in these hearings and forums. We clearly outlined the scope of the problem, and the impact of the various proposals put forward to close it. Within the context of the past several years, and especially last year, this is an unprecedented level of openness and transparency in the process. That transparency has fundamentally strengthened the final product we are voting on today.”

The final budget agreement passed today follows the essential framework first laid out by the Assembly Democrats in May with the California Jobs Budget. Negotiating on behalf of Assembly Democrats, Speaker Pérez worked to ensure the following protections for jobs, education and maintaining a safety net.

Assembly Democrats Priorities Negotiated in the Final Budget Agreement

Saves and Creates Jobs – The plan protects California against the loss of hundreds of thousands of local government, school, and private sector jobs that would have been eliminated under the Governor’s May Revision, including:

• Over 35,000 teacher and school employee jobs
• Over 20,000 local government jobs
• Over 140,000 private sector jobs by preserving welfare-to-work programs that get people into the workforce and brings billions of federal funds into the local economies
• Over 50,000 child care providers and keeps their small businesses open while also keeping working parents in their jobs
• Over180,000 jobs by rejecting Medi-Cal, home care, and other health care industry cuts  

Over $30 million in new small business investments is provided to leverage millions more to benefit thousands of small businesses and create tens of thousands of jobs.

Protects Education – The budget plan maintains level education funding on a per-pupil programmatic basis for 2010-11, so no new cuts to classrooms from 2009-10.  All told, programmatic spending will be more than $2 billion higher than proposed for the Governor’s May Revision. The plan also protects last year’s $11.2 billion Maintenance Factor agreement that the Governor proposed to break.  Unfortunately, it takes the suspension of Prop 98 to help preserve the $11.2 billion – but long term protection of schools and maintaining the integrity of Proposition 98 are the key accomplishments.

The budget plan provides a $300 million Settle-up payment to schools that was not provided in the budget put forth by the Budget Conference Committee this summer. The plan also makes changes to school spending accounting by adding about $1.6 billion to the existing cash school deferrals– simply changing the date in which schools receive their cash. Together, these net a “programmatic” spending increase for schools over both the Conference Version and last year’s budget of about $300 million, while also benefiting the state’s General Fund condition for the budget year.

Protects Higher Education – Funding is maintained for all three higher education segments, including the backfilling of reduced federal funds for CSU and UC.

Rejects Draconian Cuts – The plan rejects the Governor’s call to dismantle the safety net: no elimination of CalWORKS, no elimination of child care programs, no elimination of programs for legal immigrants, no elimination of mental health programs, no elimination of Adult Day Health Care, no major rollbacks for Medi-Cal or Healthy Families, and only modest changes to In-Home Supportive Services to replace more draconian cuts that are held up in court.

Builds New Revenues without New Taxes – The plan suspends for two years the largest new corporate tax break that was set to take effect in the budget year, providing $1.2 billion in needed revenues. Also included is an updated estimate by the Governor and Department of Finance of anticipated federal funds increasing by $2 billion.

Summary of How the Budget Gap is Closed:

¨      Starting Problem:………………………………………………………….. -$17.9

o       Expenditure Reductions……………………………………………. 7.5

o       Federal Funds……………………………………………………… 5.3

o       Additional Revenues……………………………………………….. 2.4

o       Fund Shifts, Other Revenues……………………………………… 2.8

o       Alternative Funding………………………………………………… 0.5

o       Baseline Workload Adjustments………………………………….. -0.2

o       Total Solutions…………………………………………………… $18.2

¨      Final Reserve:……………………………………………………………….. $0.4

 For more details, click onto the following link: Floor Report of the 2010-2011 State Budget

Website of Assembly Speaker John A. Pérez: www.asmdc.org/speaker