California state budget (2009-2010)

Note: This article was last updated in 2010. Click here for more recent information on state budgets and finances.

## Contents

* 1 Proposed budget cuts
* 2 Budget background
* 2.1 Budget spending
* 3 Accounting principles
* 4 Budget transparency
* 4.1 Economic stimulus transparency
* 4.1.1 Error in ARRP
* 4.2 Transparency evaluation
* 4.3 Supporters of online budget
* 4.4 Public employee salaries
* 5 See also
* 6 External links
* 7 Budget links
* 8 Additional reading
* 9 Footnotes

The California State Legislature passed substantial amendments to the budget in July 2009. Gov. Schwarzenegger responded to the July legislation by using his line-item veto powers to produce a final FY 2010 budget with a $500 million surplus to be used as a reserve.[1]

California’s FY 2010 general fund budget had $90 billion in revenues and transfers with $85 billion in expenditures. The $5 billion surplus would pay the $4.5 billion deficit from FY 2009 and leave a $500 million reserve. General fund expenditures were $103 billion for FY 2008 and $92 billion for FY 2009.[2]

The size of the two-year deficit for all funds (FY 2009 and FY 2010), estimated in January of 2009 to be $41.6 billion, grew to almost $60 billion by July 2009. The February 2009 budget package included $14.5 billion in spending reductions, $12.5 billion in temporary tax increases, $8.5 billion in federal stimulus funds, and $0.3 billion in borrowing for a total of $35.9 billion.[2]

The July 2009 budget package added $18 billion in spending cuts, $3.5 billion in one-time measures and transfers, and $2.2 billion in borrowing. The combined February and July budget packages closed the entire two-year gap by $59.5 billion.[2]

### Proposed budget cuts[edit]

According to reports, the proposed FY 2011 total budget was estimated to be $118.8 billion. The general fund, however, was $82.9 billion, $3.1 billion less than the previous year. Proposed budget cuts included cuts to health, social services and transportation programs. Additionally, state workers' salaries would be reduced and corporate tax breaks would be rolled back.[3]

Proposed budget cuts are outlined below:

* Health and human services: a total of $2.9 billion cut, which included a $950 million cut to the in-home supportive services program for the disabled.[3]
* State employee salaries: a 5% across the board cut and 5% increase in employee contributions to pension funds; additionally, should federal funding fall short, an additional 5% pay cut would be implemented; a total of $1.6 billion in savings.[3]
* Prisons: the proposed budget included cuts in the form of health care reductions and moving nonviolent state inmates to county jails - a total of $1.2 billion in cuts.[3]
* Education: spending on education would not increase or decrease under the proposed plan but instead remain at the $48 billion level. On the other hand, state university systems were scheduled to receive a $225 million increase.[3]
* Transportation: millions of dollars were expected to be eliminated from the transportation fund in light of a plan to eliminate the fuel sales tax and increase the per-gallon excise tax on gasoline.[3]

## Budget background[edit]

See also: California state budget and finances

California’s fiscal year starts July 1. The governor is required to present the legislature with a proposed budget by January 10 and the legislature is required to pass a budget by June 15. A two-thirds majority is required to pass the budget in the legislature.[4] In November 2010, voters would vote on Proposition 25, a ballot measure that would lower the vote threshold down from two-thirds, so that lawmakers could pass budgets with a simple majority.[5]

Over the past 10 years state spending from state sources had more than doubled in nominal terms (not adjusted for inflation).[6]

The California controller delayed payments in February 2009 and issued IOUs in July and August 2009. This was only the second time since the Depression that the state issued IOUs for some of its budgeted payments. In effect, the IOUs forced recipients (such as state vendors and local governments) to provide the state with a loan involuntarily. The IOUs were redeemable with interest, paid at a 3.75 percent annual rate. “Priority payments”—including school, payroll, and debt service payments—were not subject to IOUs.[7] As of August 2010, of the 450,000 IOUs totaling $2.6 billion that were issued, 66,350 remained un-cashed, leaving $29 million of debt still outstanding, according to the state controller's office.[8]

Governor Schwarzenegger and legislative leaders formed the Commission on the 21st Century Economy (COTCE) to suggest changes and reforms for more reliable and stable state revenues. The Commission released its report on September 29, 2009.[9]

### Budget spending[edit]

Over the past 10 years state spending from state sources had more than doubled in nominal terms (not adjusted for inflation), and during the then-current governor's tenure state spending from state sources had risen almost 40 percent:[10][6]

California spending, years in comparison  | FY 1997-1998  | FY 2003-2004  | FY 2007-2008

|
|
|

State spending  | $68.5 billion | $104.2 billion | $144.8 billion
Federal money  | $31.6 billion  | $52.5 billion  | $59.5 billion

Note: California's legislators had declined to put details of the state's spending online.

General fund spending by major program area (in millions)[11]

Programs  | Actual 2007-08 | Estimated 2008-09 | Enacted 2009-10

|
|
|

K-12 education | $39,825 | $32,356 | $33,745
Higher education | 11,823 | 10,138 | 10,495
Health | 19,906 | 18,794 | 16,077
Social services | 9,432 | 10,009 | 8,876
Criminal justice | 13,059 | 12,778 | 9,032
All other | 8,954 | 7,472 | 6,358
Totals | $103,000 | $91,547 | $84,583

General fund[12]

Category  | FY 2009 amount in millions - actual  | FY 2010 amount in millions - estimated

|
|

Beginning balance | 4,071 | -5,855
Revenues | 82,772 | 88,084
Adjustments | -1,757 | 0
Total resources | 85,086 | 82,229
Expenditures | 90,940 | 86,092
Adjustments | 0 | 0
Ending balance | -5,855 | -3,863
Budget stabilization fund | 0 | 15

Fiscal year 2010 tax collections compared with projections used in adopting fiscal year 2010 budget (millions)[12]

Category  | Amount

|

Sales tax original estimate | 27,609
Sales tax current estimate | 26,036
Personal income tax original estimate | 48,868
Personal income tax current estimate | 46,640
Corporate income tax estimate | 8,799
Corporate income tax estimate | 9,407

## Accounting principles[edit]

See also: California government accounting principles

Elaine M. Howle had been California State Auditor since 2000. The auditor and her office report to the Joint Legislative Audit Committee (JLAC), a 14-member committee comprised of seven Senators and seven Assembly Members or through legislation.[13] The California State Auditor’s Office publishes its reports online.

Credit rating | Fitch | Moody's | S&P

|
|
|

California[14] | BBB | Baa1 | A

The Institute for Truth in Accounting (IFTA) rated California “tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – the annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider California’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[15] California’s State Controller is responsible for filing the CAFR. John Chiang was elected State Controller in November 2006.[16]

## Budget transparency[edit]

See also: States with spending online and Evaluation of California state website

As of 2009, California had no statewide, official spending database online, despite multiple attempts to pass legislation that would create one. However, Assembly Member Kevin de León introduced AB 400, a bill that would bring partial transparency to California's state spending. It was to be heard on June 23, 2009 and was re-referred to the California Senate's Committee on Appropriations.[17] In addition, on June 19, 2009, California launched a transparency website that detailed government contracts of $5,000 or more.[18]

Twenty other states had put their spending online since 2007.

* In light of California lawmakers' success in coming to a budget agreement, the National Taxpayers Union said that although they were pleased that lawmakers had not added new tax increases, they were concerned about fiscal reform in the state. Real fiscal reform, they said in a statement, "will not be achieved until we control government spending, and the only way to do that is if citizens know where their tax money was going- not simply by employing accounting gimmicks to make the numbers look good." The organization was advocating for the approval of AB 400.[19]

### Economic stimulus transparency[edit]

* The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[20]

* It was estimated that California would receive at least $17.3 billion in federal funding.[21] In the next two years, that number was expected to be approximately $85 billion.[22]

Thirteen California projects were noted in Senator Coburn's and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. In one project, the California Academy of Sciences received nearly $2 million to send researchers to the Southwest Indian Ocean Islands and east Africa to capture and analyze thousands of exotic ants.[23] Another project gave $308 million to Hydrogen Energy California, LLC (HECA), owned largely by BP, to “generate more environmentally friendly electricity by capturing carbon dioxide from the burning of fossil fuels.”[24] A third project awarded Boeing a $16 million no-bid contract in stimulus money to clean up a California site it helped pollute.[23]

#### Error in ARRP[edit]

According to Recovery.gov, the plan showed funds would go to 884 congressional districts, though there are only 435.[25][26]

The ARRP website claimed to have to created jobs in 9 congressional districts in California that did not exist.[27]

### Transparency evaluation[edit]

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database.

Criteria for evaluating spending databases State database | Searchability | Grants | Contracts | Line item expenditures | Dept./agency budgets | Public employee salary

|
|
|
|
|
|

Reporting transparency |

| N

| N

| N

E Budget | N

| N

| N

| N

| N

### Supporters of online budget[edit]

On March 18, 2008, Americans for Tax Reform sent a letter to Californian legislators, urging them to support SB 1494, the Taxpayer Transparency Act of 2008, which was sponsored by Sen. Tom McClintock.

### Public employee salaries[edit]

See also: California state government salary

## See also[edit]

* California budget deal: Federal stimulus funds
* California budget deal: New revenue
* California budget deal: Governor's vetoes
* California government sector lobbying
* California public pensions
* California state budget and finances

## External links[edit]

* State Budget Solutions, California
* Department of Finance, California Budget for 2009-2010
* Department of Finance, California Budget
* California State Legislature
* California Budget Project
* California state and local spending
* California Budget Bites
* California
* Pacific Research Institute
* Independent Institute
* Model transparency legislation from the American Legislative Exchange Council is available at this link.
* California budget bites blog
* National University System Institute for Policy Research

## Budget links[edit]

* California Department of Finance
* Gov. Schwarzenegger 2010 State of the State Address
* Gov. Schwarzenegger's 2010 proposed budget
* 2008-2009 California Budget
* The Legislative Analyst's Office
* California Budget Frequently Asked Questions
* Amendments to the Budget Act of 2009 (dead link)

## Additional reading[edit]

* Los Angeles Times, "The worst budget mess ever," January 11, 2010
* Appeal Democrat, "Schoolkids, public employees prime budget crisis victims," January 25, 2009
* Napa Valley Register, "California's budget disaster," January 22, 2009
* Los Angeles Times, "California's budget breaking point," January 15, 2009
* California National Organization for Women, "2009 California State Budget Crisis Worsens," January 7, 2009 (dead link)
* San Francisco Chronicle, "California's budget mess gets worse," November 14, 2008

## Footnotes[edit]

1. ↑ Gov. Schwarzenegger press release, “Gov. Schwarzenegger Signs Budget to Solve $24 Billion Deficit,” July 28, 2009
2. ↑ 2.0 2.1 2.2 California Legislative Analyst’s Office (LAO), “The Budget Package, 2009-10 California Spending Plan,” October 2009
3. ↑ 3.0 3.1 3.2 3.3 3.4 3.5 The San Diego Union Tribune, "State budget calls for big cuts," January 9, 2010
4. ↑ National Association of State Budget Officers, “2008 Budget Processes in the States” (dead link)
5. ↑ "California's Proposition 25 would have "majority rule" on budgets" Aug. 6, 2010
6. ↑ 6.0 6.1 Wall Street Journal, Opinion, “California's Gold Rush Had Been Reversed” by Congressman Devin Nunes, January 10, 2009
7. ↑ Legislative Analyst’s Office (LAO), “The Budget Package, 2009-10 California Spending Plan,” October 2009
8. ↑ The San Diego Union-Tribune "Bill would force the state to take its own IOUs" August 6, 2010
9. ↑ COTCE Press Release, September 29, 2009
10. ↑ Historical Data; Actual Budget Expenditures
11. ↑ California Legislative Analyst’s Office (LAO), “The Budget Package, 2009-10 California Spending Plan,” October 2009
12. ↑ 12.0 12.1 National Governors Association and National Association of State Budget Officers Fiscal Survey of States June 2010 (dead link)
13. ↑ California State Auditor Web site, accessed October 9, 2009
14. ↑ California State Treasurer, “Comparison of Other States’ General Obligation Bond Ratings”
15. ↑ Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
16. ↑ California State Controller’s Office Web site, accessed October 9, 2009
17. ↑ "Current Bill Status: AB 400"
18. ↑ Office of the Governor, "Gov. Schwarzenegger Furthers Commitment to Government Transparency," June 4, 2009
19. ↑ National Taxpayers Union, "California Finally Agrees on Budget," July 22, 2009
20. ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
21. ↑ Wall Street Journal, "Stimulus Spending by State"
22. ↑ recovery.ca.gov, "About Recovery.CA.gov (dead link)
23. ↑ 23.0 23.1 "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
24. ↑ California Watch "Snapshot of Corporations Receiving Stimulus Funds Despite Past Troubles” January 10, 2010
25. ↑ $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
26. ↑ Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
27. ↑ California, Watchdog.org, November 17, 2009

v • e

Budget policy

Budget background|

Government budgets • Cost of state transparency websites • State budget issues • Public employee salaries • Public pensions • States with spending online • Glossary of state budget terms • Total state expenditures • State spending by function as a percent of total expenditures

* * *

State budget and finance pages|

Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming

* * *

Tax policy background|

Personal income tax • Sales tax • Corporate income tax • Property tax • Excise taxes • Estate and inheritance taxes • Capital gains tax

* * *

State tax policy pages|

Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming

* * *

Comparative analysis of state debt|

Federal outlays to state government (2014-2017) • State tax revenue projections and shortfalls (2020-2021) • Proportion of state government general revenues from the federal government (2014-2018) • State debt per capita (2014-2018) • State unfunded public pension liabilities, 2003-2018

v • e

State of California
Sacramento (capital)

|

Elections |

What's on my ballot? | Elections in 2026 | How to vote | How to run for office | Ballot measures

Government |

Who represents me? | U.S. President | U.S. Congress | Federal courts | State executives | State legislature | State and local courts | Counties | Cities | School districts | Public policy