Between June and August of each year, state agencies or departments develop budget proposals to augment their existing levels of service. Departments prepare Budget Change Proposals (BCPs), which are sent to the Department of Finance (DOF) for review. The DOF analyzes these budget proposals, estimates future state revenues and prepares a balanced expenditure plan for the Governor’s approval.

 

The Governor’s Budget is Introduced

The Governor evaluates the DOF budget proposal and, on or before January 10 of each year, releases to the public and the California State Legislature the “Governor’s Budget” for the coming fiscal year. The Governor’s Budget is then introduced as two identical budget bills, one Assembly bill and one Senate bill, for consideration by each House.

The Legislative Analyst, the financial review agency of the Legislature, prepares an extensive “Analysis of the Budget Bill,” which includes program backgrounds, economic projections and recommended revisions. Soon after the Analysis is released, budget subcommittee hearings on the Budget Bill begin.

The Budget is Heard in Committees

The Assembly Budget Bill is referred to the Assembly Budget Committee, and the Senate Budget Bill is referred to the Senate Budget and Fiscal Review Committee. The two committees divide their respective bills by subject matter and assign items to the appropriate budget subcommittees for public hearings.

Assembly Budget Subcommittees

No. 1.......Health and Human Services
No. 2.......Education Finance
No. 3.......Environmental Resources
No. 4.......State Administration
No. 5.......Information Technology and Transportation

Senate Budget Subcommittees

No. 1 .......Education
No. 2 .......Resources, Environmental Protection and Energy
No. 3 .......Health and Human Services
No. 4 .......State Administration, General Government, Judicial and Transportation

The Best Opportunity to for Public Input

Most of the changes in the Budget Bill are made in the budget subcommittees of each House.

Representatives from state agencies, the Department of Finance and the Legislative Analyst’s Office appear before the subcommittees and make funding recommendations.
Interested citizens and groups also have an opportunity to offer input supporting the continuation, expansion or deletion of a budget item.

The most important time for constituents to be heard on items relating to the budget is between March and May, when subcommittees are meeting.

In order to influence an item in the budget, it is important to contact:

• Your State Assembly member and State Senator;
• Members of the budget committees and the appropriate subcommittees; and
• The Governor

Elected officials can be contacted by calling their district or capitol offices, writing a letter, scheduling an appointment or sending an e-mail.

The May Revise

In mid-May, the Governor releases an update to his or her original budget based upon changes in the state’s revenues, and expenditures. Known as the “May Revise,” it includes the latest economic updates to ensure that the most current information is considered before the Budget is enacted. These figures are then used to draft amendments to bills being heard in the budget subcommittees. The Legislature typically waits for the May Revise update before final budget decisions are made on major programs, such as education, corrections and health and human services.

The Amended Budget Bills Are Sent to each House

Upon completion of the hearings, the budget subcommittees approve, revise or disapprove specific details of the Budget. The subcommittees then submit a report to their respective budget committees.

The full budget committee of each House adopts its subcommittees’ reports and sends revised Budget Bills to the Assembly and Senate floors for amendments and votes.

The Assembly and Senate Vote on Budget Bills

The Assembly and the Senate vote to pass their version of the Budget Bill and send it to the other House for concurrence. If either bill is not passed by the other House, it is sent to a Budget Conference Committee to resolve the differences between the two bills.

The Budget Conference Committee

Budget Conference Committee hearings begin in early June and last until the Budget is sent to each House for final passage.

The Conference Committee, made up of three members from each House, is formed to resolve the differences between the Assembly and Senate versions of the Budget Bill. These differences are often the most contentious portions of the Budget. Generally, the committee is not allowed to consider new proposals or review those issues on which the two Houses already agree.

The Conference Committee methodically works through the agenda, approving compromises when possible and skipping over areas where conflict remains. This process is repeated until the last few issues are settled — often during intense negotiations with the Governor.

The Budget Conference Committee passes and reports to both Houses of the Legislature a conference committee report containing the Budget Bill.

If the Conference Committee cannot reach an agreement on the Budget, the “Big 5,” consisting of the Governor, the President pro Tem of the Senate, the Speaker of the Assembly, and the minority leaders of both Houses, often meet to resolve the stalemate.

The Final Passage of the Budget

Once the full Assembly and the full Senate receive the conference committee report, each caucus meets to be briefed on the contents of the final agreement, and a floor vote follows. At this time, the conference committee report containing the Budget Bill cannot be amended.

If the Budget Bill has provisions that require changes to existing law, separate bills that implement those changes — “Trailer Bills” — are introduced and voted on, generally at the same time as the Budget Bill.

California is one of the few states in the nation that requires a “super majority” vote of both Houses to pass the State Budget. Therefore, the Budget Bill must be approved by a two-thirds vote of each House before it can be sent to the Governor for approval. The California State Constitution requires that the Governor receive the Budget Bill by June 15.

The Budget Bill Goes to the Governor

Following the Governor’s signature, the Budget Bill goes into effect on July 1.
The Governor has 12 working days to sign or veto the Budget Bill after receiving it from the Legislature. By using the line-item veto, the Governor may reduce or eliminate — “blue pencil” — any appropriation before the Budget Bill is signed. The Legislature can override a line-item veto with a two-thirds vote of both Houses. A new budget for the state is adopted every fiscal year. The fiscal year runs from July 1 through June 30.