Once facing fiscal doom, California enjoys surplus

By JUDY LIN

Associated Press

Published: Monday, May. 13, 2013 - 1:57 pm

Last Modified: Tuesday, May. 14, 2013 - 1:02 am

SACRAMENTO, Calif. -- California was a poster child for fiscal calamity during the Great Recession with budget deficits larger than the annual spending plans of many other states.

Its credit rating was the lowest of any state at one point and drawn-out budget fights forced state officials to hand out IOUs. Today, so much tax revenue is pouring in that lawmakers face a different problem: Too much money.

Gov. Jerry Brown is pledging to restore fiscal sanity to the state and wants to fortify funding for schools serving low-income students while paying down the state's short-term debt. He is expected to champion restraint Tuesday when he releases his updated spending plan for the fiscal year that starts July 1.

Yet, his fellow Democrats who control both houses of the Legislature have ideas of their own. They want to spend money restoring safety-net programs for children, women and the poor that were eliminated or severely cut during the recession.

Many Democratic lawmakers want to restore adult dental care for the poor and expand mental health care. Doctors, hospitals and other health providers want the state to end a 10 percent Medi-Cal reimbursement rate cut. And children's and health advocates are pushing to restore health care services, if not expanded to all Californians.

Brown said last week that California needs to pay down its debt, which "frees up money" to spend on education, health care and other neglected needs.

H.D. Palmer, the governor's finance spokesman, said the governor believe that is the best way for the state to repair its finances. Standard & Poor's upgraded California's credit rating from A- to A in January and Fitch Ratings gave the state a positive outlook in March.

Brown included the additional sales and income tax revenue approved by voters last fall in the $97.6 billion general fund budget he announced in January. Since then, personal income taxes, which are the state's largest source of revenue, have come in ahead of the administration's estimates by $4.5 billion.

Budget experts say education is expected to take the largest share of that extra money under the state's complex school funding formula.

Brown is taking advantage of the surplus to push for a new way to fund K-12 schools. His plan would channel additional money to schools with high levels of low-income and non-English speaking children.

But that has received pushback from an unlikely source - Democratic lawmakers.

Many of them represent more affluent areas that would not receive the additional money Brown wants to funnel to the poorer school districts. Democratic lawmakers in the state Senate are proposing an alternative that does not include extra money for school districts where more than half of students are low-income.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he supports more money for children from low-income families but believes the money should follow the child - even if he or she lives in an affluent community.

"There's give-and-take here; we don't issue dictates," Brown said. "But the idea of putting money where the kids have the biggest challenge in the schools or districts that have the biggest challenge because of the concentration, that's the core idea."

Brown and state lawmakers also will have to work out changes to the state's Medicaid program to get ready for the Affordable Care Act, which takes full effect next year.

While the state has agreed to expand Medi-Cal to some 1.4 million low-income residents, Brown and Democratic lawmakers disagree on details of the enrollment and implementation process. Brown also is pushing to reduce local government support for indigent care, a move opposed by health advocates.

Republicans say the governor is not as fiscally restrained as he claims to be. Brown is championing the $68 billion high-speed rail system despite a decline in public support and questions over how the project will be financed.

Senate Minority Leader Bob Huff, R-Diamond Bar, said Democrats also have not done enough to address long-term obligations such as public pension underfunding.

Via Sacbee

Read more here: http://www.sacbee.com/2013/05/13/5417200/democrats-at-odds-over-california.html#storylink=cpy

Read more here: http://www.sacbee.com/2013/05/13/5417200/democrats-at-odds-over-california.html#storylink=cpy

Calif. budget debate turns to spending, not cuts

Gov. Jerry Brown is preparing a spending plan as California faces its most optimistic financial outlook in years, yet the Democratic governor's intention to stick with a frugal fiscal agenda could put him on a collision course with Democratic lawmakers who seek to restore state services lost during the recession.

After years of deep spending cuts to education, health and social programs, Brown and California lawmakers will be debating this year how to spend the state's money rather than battling over what to cut.

Brown will release his budget proposal Thursday for the 2013-14 fiscal year, which begins July 1. He is expected to boost education funding by at least $2 billion, as he promised during his campaign for Proposition 30. The November initiative's sales and income tax increases are expected to generate $6 billion a year.

But he also said this week that "2013 is the year of fiscal discipline and living within our means, and I'm going to make sure that happens."

The state's nonpartisan legislative analyst has pegged the 2013-14 budget deficit at $1.9 billion, a vast turnaround from the double-digit deficits of the last several years. The Legislature is required by law to approve a balanced budget by June 15, which will still force lawmakers to cut some areas of spending to close the deficit.

Brown is likely to face some of his biggest challenges this year from fellow Democrats, who now hold two-thirds majorities in the Assembly and Senate and are eager to restore spending to a host of programs after years of cuts. Brown is more fiscally conservative than many Democratic lawmakers, favoring restoring school funding and building a robust rainy day fund over expanding services.

"People want to have more child care, they want to have more people locked up, they want to have more rehab, more, more, more. More judges, more courtrooms. We have to live within reasonable limits," Brown said in a Capitol news conference this week.

The legislative analyst's office has projected that the state will spend nearly $56 billion of a $94 billion general fund budget on education in the 2013-14 fiscal year, about $2 billion more than last year. That money comes partly through a voter-approved education funding guarantee that requires the state to spend more on schools when tax revenue rises.

"You can take this to the bank: We're not going to spend money that we can't afford to spend," Brown said. "We have to do more with less; that's just the way life is."

Like Brown, the analyst's office has also cautioned that the state's rosy forecast is dependent upon maintaining the strict spending limits of the past few years.

Still, the added revenue from the voter-approved tax increases allow the governor and lawmakers to begin to tinker with school funding formulas, which Brown is expected to address in his budget.

His administration advocates scrapping a series of dedicated funds aimed at addressing specific issues. Instead, he favors freeing school districts to spend that money in areas they deem most important.

Brown's proposed school formula also is intended to target spending to the neediest students, which is likely to draw opposition from parents and teachers in more prosperous areas.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he is open to Brown's school funding proposal. He said the goal is laudable, but there will be a lot of details to work out.

"How do you make sure, without micromanaging, that the kids that need help the most get the help that they need?" Steinberg said. "How do you make sure that the proven approaches to improving student achievement and helping kids graduate are funded?"

The legislative analyst projected last fall that the state's overall general fund spending would be about $94 billion, nearly 8 percent more than in 2012. California's general fund spending hit a high of $103 billion during the 2007-08 budget, the year the recession began, falling to a low of $87 billion in the 2011-12 fiscal year.

Still, some expenses will grow in the short term, although the analyst said they are likely to be outpaced by higher revenue in the long term. For example, more Californians are expected to sign up for Medi-Cal, the state's health insurance program for the poor, as states prepare to implement the federal health care reform law.

via Fresno Bee

Read more here: http://www.fresnobee.com/2013/01/09/3127418/calif-budget-debate-turns-to-spending.html#storylink=cpy

Long Beach school board may cut another $13 million

LONG BEACH - The Long Beach Unified Board of Education today will consider closing summer school and freezing open teaching positions next year in a round of budget cuts meant to save $13 million.

While the passage of Proposition 30 prevented severe program cuts, the district is still facing a $20 million deficit in the 2012-2013 fiscal year due to years of state funding cuts, officials said.

The sales tax hike passed last month is meant to provide funding for California's schools.

The district's structural deficit would have ballooned to $55 million next year had Prop. 30 failed, officials said.

The LBUSD is projecting a $57 million deficit by the end of the 2014-2015 fiscal year if it doesn't make reductions.

The first phase of proposed reductions for a savings of $13.8 million includes: Closing grades six through seven at Burcham School, transportation reductions, eliminating summer school in 2013, eliminating the AVID college prep program, cuts to special education, and freezing open positions for teachers and other staff.

As part of this reduction plan, the board last month voted to close Monroe K-8 school in Lakewood for a savings of $2.7 million. The closing of the AVID program, which stands for Advancement Via Individual Determination, would save $1 million annually.

The board in coming months is expected to also consider other budget reductions, which could include more small school closures, reductionsto programs and services, and other measures designed to safeguard the LBUSD's fiscal health, officials said.

The Board of Education meets today at 5 p.m. at 1515 Hughes Way.

via Press Telegram