May 2, 2006

$2.5 Billion More For Proposition 98 – 5.92% COLA

Some people laughed when we estimated that state General Fund revenues would exceed the Governor’s Budget by up to $5 billion. It now appears that we were too low. The most recent revenue information is that state General Fund revenues will be up by $4 billion this year, and by as much next year. The combined new revenue could be up to $8 billion for the two-year period.

The Legislative Analyst’s Office (LAO) presented the good news today to the Assembly Budget Subcommittee Number 2 which considers education budget appropriations. Highlights of the LAO’s comments are:

• Proposition 98 guarantee would grow by $1.5 billion for 2005-06 (the current year).
• Proposition 98 guarantee would grow by an additional $1 billion for next year (2006-07).
• The 2006-07 revenue limit COLA will be 5.92%.

The Subcommittee also stated their intent to fund Proposition 49 in 2006-07. All school districts should start considering how they will implement expanded after school programs.

The May Revision will be released on May 12, 2006. The Budget Subcommittees will start acting on the May Revision and final budget recommendations during the week of May 15th.

~Dave Walrath