Budget Committee Chair Laird Releases First Highlights of Governor’s Proposals for the Special Session Fiscal Emergency & 08-09 State Budget

SACRAMENTO – Assembly Budget Committee Chair John Laird (D-Santa Cruz) today released the Assembly Budget Committee’s first analysis of the governor’s proposals for the Special Session Fiscal Emergency and the 2008-2009 State Budget.

To view the document, go to:

http://democrats.assembly.ca.gov/members/a27/pdf/Highlights2008.pdf

Overview statement:

Today the Governor released his proposed budget for the 2008-09 budget year. In addition, the governor declared a fiscal emergency and called a special session (in accordance with Proposition 58) to address a projected current year budget shortfall of $3.3 billion, and a projected budget year operating deficit of $11.2 billion, which together total a $14.5 billion shortfall.

Combined, the governor's special session and budget proposals provide $17.3 billion in general fund solutions that close the projected $14.5 billion shortfall and result in a final reserve of $2.8 billion.

The general fund solutions include additional borrowing and skipping debt payments ($4.8 billion), accounting changes ($2 billion), roughly 10 percent across the board cuts ($9.3 billion), and other various solutions ($1.5 billion).

While not proposing any major general fund revenue increase—which previous Republican governors have done to address major budget challenges—the governor does propose suspending Proposition 98 and cutting $4.7 billion from schools, cutting $1 billion from health care programs, closing 48 state parks, and releasing over 34,000 prisoners early.

In total, the governor's proposed budget for 2008-09 includes $104.7 billion in available general fund resources, $101 billion in expenditures, and a reserve of $2.8 billion. While the governor's proposal does balance the 2008-09 budget, it continues to leave the state with a projected $2.8 billion operating deficit for 2009-10.

With the special session proposals now before the legislature, the legislature has 45 days to act to address the fiscal emergency. The Assembly Budget Committee and Subcommittees will begin holding hearings to gain an understanding of the governor's proposals, explore alternative budget solutions and develop legislation to address the fiscal emergency.

Once the special session responsibilities and requirements are met, the Budget Committee will begin the regular Subcommittee process for crafting the annual state budget.