Murdoch, Walrath & Holmes Logo
Association Clients Association Management Meetings & Conferences Publications & Links Staff Directory


June 28, 2011

Some Budget Detail

Sacramento Bee

Democratic aides provided details this afternoon on the handshake budget deal between Gov. Jerry Brown and Democratic leaders to bridge a $9.6 billion deficit.

It maintains parts of the package Brown vetoed nearly two weeks ago:
-- $150 million cut each to University of California, California State University
-- $150 million cut to state courts
-- $200 million in Amazon online tax enforcement
-- $2.8 billion in deferrals to K-12 schools and community colleges
-- $300 million from $12 per vehicle increase in DMV registration fee
-- $50 million from fire fee for rural homeowners
-- $1.7 billion from redevelopment agencies
-- Higher tax receipts (now worth $1.2 billion from May and June)

The new budget rejects some parts of that package:
-- $1.2 billion from selling state buildings
-- $900 million from raising a quarter-cent local sales tax
-- $1 billion from First 5 commissions
-- $500 million cut in local law enforcement grants
-- $540 million deferral to University of California
-- $700 million in federal funds for Medi-Cal errors

And it adds the following:
-- $4 billion in higher projected revenues in 2011-12, with triggered cuts
-- 1.06 percentage point sales tax swap that redirects money to local governments for Brown's "realignment" plan rather than to the state. Sales tax rate will still fall 1 percent on July 1.

The $4 billion "trigger" plan bears some explaining.

First, the plan requires Brown's Department of Finance director, Ana Matosantos, to certify in January whether the $4 billion projection is accurate. She will use revenue totals for July to December and economic indicators to project the remainder of the fiscal year.

The "trigger" cuts are essentially in three tiers, based on how much of the extra $4 billion comes in.

Tier 0: If the state gets $3 billion to $4 billion of the money, the state will not impose additional cuts and roll over any balance of problem into the 2012-13 budget.

Tier 1: If the state gets $2 billion to $3 billion of the money, the state will impose about $600 million of cuts and roll over the remainder into the 2012-13 budget. The $600 million in cuts include a $100 million cut to UC, a $100 million cut to CSU, a $100 million cut to corrections and a $200 million cut to Health and Human Services.

Tier 2: If the state gets $0 to $2 billion of the money, the state will also impose up to $1.9 billion in cuts, including a $1.5 billion reduction to schools that assumes seven fewer classroom days. It also includes a $250 million elimination of school bus transportation (except for that which is federally mandated). Cuts will be proportionate to how much of the first $2 billion in revenues the state gets. State will also impose the Tier 1 cuts.

    Murdoch, Walrath & Holmes, 1130 K Street, Suite 210, Sacramento, CA 95814
    Voice: 916.441.3300, Fax: 916.441.3893, Email:
      © 2006 Murdoch, Walrath & Holmes