Dollars and Democracy: An Introduction to the State Budget - - PowerPoint PPT Presentation

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Dollars and Democracy: An Introduction to the State Budget - - PowerPoint PPT Presentation

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Dollars and Democracy: An Introduction to the State Budget Process JONATHAN KAPLAN, SENIOR POLICY ANALYST THE EDUCATION TRUST-WEST, SAN BERNARDINO CONVENING ON SPENDING IN EDUCATION JUNE 9, 2016 calbudgetcenter.org Goals of the

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Dollars and Democracy: An Introduction to the State Budget Process

JONATHAN KAPLAN, SENIOR POLICY ANALYST THE EDUCATION TRUST-WEST, SAN BERNARDINO CONVENING ON SPENDING IN EDUCATION JUNE 9, 2016

calbudgetcenter.org

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Goals of the Presentation

  • Highlight key terms and definitions about the state

budget process in California

  • Describe the constitutional framework for the state

budget process

  • Review the budget process timeline, including the

Governor’s role and the Legislature’s role

  • Discuss when and how members of the public can get

involved

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The state budget expresses

  • ur values and priorities.
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The state budget = state funds + federal funds.

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State Funds Account for Nearly Two-Thirds of California’s State Budget

Total Proposed 2016-17 Expenditures = $262.6 Billion

Source: Department of Finance

State Special Funds 17.1% State Bond Funds 1.2% Federal Funds 35.0% State General Fund 46.7%

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The state budget supports a range of public services and systems.

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More Than 7 in 10 State Dollars Support Health and Human Services or Education

Proposed 2016-17 General Fund and Special Fund Expenditures = $167.6 Billion

Source: Department of Finance

$0 $5 $10 $15 $20 $25 $30 $35 Legislative, Executive, and Judicial Environment and Natural Resources Transportation Other Corrections Higher Education K-12 Education Health and Human Services 31.3% 30.6% 8.7% 7.9% 6.3% 6.1% 4.4% 4.7%

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The Personal Income Tax Is Projected to Account for Two-Thirds of California’s General Fund Revenues

Projected 2016-17 General Fund Revenues = $123.4 Billion

Note: Reflects total projected General Fund revenues before a $1.3 billion transfer to the state’s rainy day fund as required by Proposition 2, the ballot measure passed by voters in November 2014, and an additional $2 billion transfer proposed by the Governor. Source: Department of Finance

Sales and Use Tax 20.9% Other 2.6% Corporate Income Tax 8.9% Personal Income Tax 67.6%

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Expiration of Proposition 30’s Personal Income Tax Rate Increases Would Leave Permanent Gap in State Revenues

General Fund Revenues Before Transfers to the Budget Stabilization Account, in Billions

Note: 2015-16 is estimated; 2016-17 onward are projected. Additional revenues for 2018-19 and 2019-20 assume that personal income tax (PIT) revenue growth under an extended Prop. 30 would reflect the Administration’s projected underlying PIT growth rate absent Prop. 30 taxes. Source: Department of Finance (DOF); Budget Center calculations based on DOF data

Projected General Fund Revenues Assuming Proposition 30 Expires Potential Additional General Fund Revenues if Proposition 30 Were Extended $118.8 $123.4 $127.9 $129.0 $133.3 $4.5 $7.7

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The State Budget Process: Key Terms and Definitions

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Speaking the Language

  • Governor’s Proposed Budget:

– Shows spending for the prior and current fiscal years

and proposed spending for the upcoming fiscal year.

  • Governor’s Budget Summary:

– Provides the Governor’s economic and revenue outlook,

highlights major policy initiatives, and summarizes state expenditures assumed in the proposed budget.

  • May Revision:

– Updates the Governor’s economic and revenue outlook

and revises, supplements, or withdraws policy initiatives included in the Governor’s proposed budget.

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Speaking the Language (continued)

  • Department of Finance (DOF):

– Prepares the Governor’s budget documents. The DOF

director is the Governor’s chief fiscal adviser.

  • Assembly Budget Committee and Senate Budget and

Fiscal Review Committee:

– Review the Governor’s proposals and help develop the

Legislature’s version of the budget. Committee analyses are released beginning in January.

  • Legislative Analyst’s Office (LAO):

– Provides fiscal and policy advice to the Legislature. LAO

budget analyses are released beginning in January.

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The “budget package” consists of the budget bill and budget-related bills.

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The state Constitution establishes the rules of the budget process.

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The state Constitution sets two budget-related deadlines: January 10 and June 15.

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The budget bill and most budget-related bills can be passed by a simple majority vote. (Proposition 25 of 2010)

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A supermajority (two-thirds) vote is needed to approve any tax increase. (Proposition 26 of 2010)

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Proposition 26 added this key phrase to the state Constitution: “Any change in state statute which results in any taxpayer paying a higher tax” requires a two-thirds vote

  • f each house of the Legislature.
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The state Constitution contains complex formulas that establish state budget priorities.

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K-14 education is guaranteed a minimum level of funding. (Proposition 98 of 1988)

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Some state revenues must be set aside to pay down debts and save for a rainy day. (Proposition 2 of 2014)

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The budget process is cyclical, not linear.

Decisions are made throughout the year, both in public settings and behind the scenes.

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CALIFORNIA BUDGET & POLICY CENTER | calbudgetcenter.org Each year the Governor and Legislature work to craft the state’s spending plan. While the January-to-June period gets the most attention, the process of developing the budget is an ongoing enterprise, giving Californians ample

  • pportunity to stay engaged and involved year-round.

Navigating the State Budget Process

Members of the public can meet with Governor’s stafg and legislative stafg to discuss any changes or new proposals in the May Revision. The public can continue to ofger comments at legislative hearings, although typically not during the two-house conference committee. As the Governor’s proposed budget for the next fjscal year is being developed, members of the public can meet with

  • fcials from the Governor’s

administration to share budget priorities and discuss areas of concern. In the months following the release of the Governor’s proposed budget, members of the public can testify at budget subcommittee hearings and meet with legislative stafg and

  • fcials from the Governor’s

administration to share budget priorities and discuss areas of concern.

By May 14: Governor releases revised budget proposal (”May Revision”) By June 15: Legislature must pass a balanced budget July 1: Start of the state fscal year

After the release of the Governor’s proposed budget, members

  • f the public can submit letters of support/opposition to budget

subcommittees, meet with budget subcommittee stafg and legislative leadership stafg, and get involved with coalitions. Summer to fall is also a good time for members

  • f the public to get to

know key legislative stafg, educate them on particular issues, and suggest ideas that deserve a hearing in the year ahead.

By January 10: Governor releases proposed budget for next fscal year, which begins on July 1

Summer to fall: State departments and agencies develop budget proposals for the coming fjscal year and submit them to the Department of Finance (DOF) for review. Following a series

  • f meetings, the Governor

makes fjnal decisions and the DOF prepares the proposed budget for release in January. January to mid-May: Full budget committees along with subcommittees in the state Assembly and Senate review the Governor's proposed budget and begin to craft their versions of the annual spending plan. After Governor signs budget: Legislature may override vetoes by a two-thirds vote of each house.

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  • b

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e m b e r D e c e m b e r J a n u a r y F e b r u a r y M a r c h A p r i l J u n e

January to mid-May: Ofcials from the Governor’s administration explain and defend the proposed budget at legislative hearings and develop the May Revision.

The Governor

The Governor has the lead role in developing the state budget. Each year the Governor proposes a spending plan, which is introduced as the budget bill in the Legislature. The Governor can sign or veto the budget bill passed by legislators as well as other bills in the budget package that make policy changes related to the budget. The Governor can also reduce or eliminate individual appropriations using the line-item veto.

Fall: Legislative leaders develop their budget priorities for the coming fjscal year.

The Legislature

The Legislature – made up of the Assembly and Senate – reviews the Governor’s proposed budget and crafts its own version of the spending plan. The Legislature can maintain, modify, or reject the Governor’s proposals, with review occurring through each house’s budget committee and related

  • subcommittees. The Legislature must

pass the budget bill, but not other bills in the budget package, by June 15. The Legislature can override a Governor’s veto by a two-thirds vote of each house.

The Public

The public has various opportunities for input during the budget process. Members of the public can meet with

  • fcials from the Governor’s

administration and with legislators and their stafgs, testify before budget committees and subcommittees, and write letters of support and opposition. Through individual engagement or as part of coalitions, members of the public can express their budget priorities and areas of concern.

Mid-May to early June: Ofcials from the Governor’s administration testify at legislative hearings. Early June: Legislative leaders and Governor meet to address

  • utstanding

issues. Budget goes to Governor: Governor signs budget package and may issue vetoes. Mid-May to early June: State Assembly and Senate review the May Revision and move toward fjnalizing their versions of the budget in subcommittee hearings. A legislative conference committee may meet to resolve difgerences. July and following: Legislature may pass budget amendments and other changes to the adopted budget package, including into the next calendar year.

May

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The Governor has the lead role in crafting the budget.

Department of Finance (DOF) Governor’s proposed budget May Revision Line-item veto authority

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The Legislature reviews and revises the Governor’s proposals.

Assembly Budget Committee Senate Budget and Fiscal Review Committee Legislative Analyst’s Office (LAO)

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Members of the public have various opportunities for input during the budget process.

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State Budget Process: July to December

DOF crafts the Governor’s proposed budget. Legislative leaders develop budget priorities. Legislative staffers look ahead to the upcoming budget deliberations.

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State Budget Process: January to Mid-May

Proposed budget released by January 10. Budget committees review proposed budget. Governor’s staff explains and defends the proposed budget.

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State Budget Process: Mid-May to June

May Revision released by May 14. Assembly and Senate finalize their versions of the budget. “Big 3” negotiate final budget deal.

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The Bottom Line

  • The state budget expresses our values and priorities.
  • The state Constitution establishes the “rules of the game.”
  • The budget process is cyclical – budget decisions are made

throughout the year.

  • The Governor has the lead role in crafting the budget; the

Legislature reviews and revises the Governor’s proposals.

  • Public input is a key part of the budget process and comes

in many forms.

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State Budget Resources

  • California Budget & Policy Center: Analyses and

commentary, presentations and events, and technical assistance (calbudgetcenter.org).

  • Department of Finance: The Governor’s budget proposals

and related documents (www.dof.ca.gov).

  • Legislative Analyst’s Office: Budget and policy analyses,

budget recommendations, and historical budget data (www.lao.ca.gov).

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State Budget Resources (continued)

  • Legislative Counsel: Bills and bill analyses, a free bill-

tracking service, the state codes, and the state Constitution (leginfo.legislature.ca.gov).

  • State Assembly and Senate: Committee agendas and other

publications, floor session and committee schedules, the annual legislative calendar, and live audio streaming of legislative proceedings (assembly.ca.gov and senate.ca.gov).

  • The California Channel: Live and archived webcasts of

legislative hearings and floor sessions (www.calchannel.com).

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1107 9th Street, Suite 310 Sacramento, California 95814 916.444.0500 jkaplan@calbudgetcenter.org @JKapBudget @CalBudgetCenter

calbudgetcenter.org