Blog

Tag ‘ deficit ’

Governor Releases May Revision to 2012-2013 State Budget

The following is an excerpt from the California Budget Project’s report: Governor Releases May Revision: Tax Collections Down and Deeper Cuts Proposed, Highlighting Need for a Balanced Approach With Significant Additional Revenues. We have included information about cuts to the two programs most likely to impact Food Bank of Contra Costa and Solano clients directly: CalWORKS and Medi-Cal.To read the full report, visit http://cbp.org/pdfs/2012/120514_May_Revise.pdf.

Governor Jerry Brown released the May Revision to his proposed 2012-13 budget on May 14. The May Revision updates policy proposals, revenue projections, and estimated expenditures for the current year as well as the upcoming budget year, which begins on July 1. The May Revision estimates a two-year budget gap of $15.7 billion, up from a $9.2 billion gap as estimated in January. The May Revision identifies lower-than-anticipated tax collections as the primary cause of the widening gap. The Governor outlines $16.7 billion in “solutions” to close the budget gap and provide a $1.0 billion reserve. Spending reductions make up nearly half ($8.3 billion) of the “solutions.”

In addition, the May Revision assumes that voters pass a tax measure that the Governor is attempting to place on the November 2012 ballot. The measure would temporarily increase personal income tax rates on very-high-income Californians and boost the sales tax rate by one-quarter cent, raising an estimated $8.5 billion in 2011-12 and 2012-13 combined. The May Revision specifies $6.1 billion in spending cuts – primarily to schools, colleges, and universities – that would automatically take effect in January 2013 if voters do not approve the proposed tax measure in November.

Regardless of whether voters pass the tax measure, the May Revision proposes deeper cuts to the Medi-Cal and In-Home Supportive Services (IHSS) programs than those proposed in January. The May Revision also includes new proposals to reduce spending on state employee compensation by more than $400 million and to use the “cash assets” of redevelopment agencies – entities that were eliminated in February of this year – in order to offset $1.4 billion in state spending for schools and community colleges in 2012-13.

The Governor’s $16.7 billion in budget “solutions” include:

  • $8.3 billion in spending reductions, including a $1.2 billion cut to Medi-Cal, an $879.9 million reduction to the California Work Opportunity and Responsibility to Kids (CalWORKs) Program, and deep cuts to IHSS, child care, the courts, and the Cal Grant college financial aid program;
  • $5.9 billion in additional revenues, nearly all of which is attributable to the proposed tax measure;
  • $2.5 billion in fund shifts, loan payment deferrals, borrowing from special funds, and other onetime measures; and
  • A $1.0 billion reserve.

The following update provides a “quick and dirty” summary of key provisions of the May Revision.

California Work Opportunity and Responsibility to Kids (CalWORKs) Program

The May Revision includes most of the deep cuts proposed in January for the CalWORKs Program, which provides cash assistance for 1.1 million low-income children while helping parents to find jobs and overcome barriers to employment. The May Revision retains the Governor’s proposed CalWORKs restructuring, while making modifications that reduce the 2012-13 cuts to $879.9 million, slightly less than the $946.2 million reduction proposed in January.

Medi-Cal Program

The May Revision maintains the Governor’s January proposal to shift more than 1 million seniors and people with disabilities who currently qualify for both Medi-Cal and Medicare – so-called “dual eligibles” – from fee-for-service Medi-Cal into managed care. However, the May Revision modifies or clarifies the original proposal in a number of ways, including phasing in the integration of long-term care services as each county transitions into managed care, delaying the implementation date from January 1 to March 1, 2013, and specifying that IHSS participants would continue to “select and direct” their home care provider. The proposal, as modified by the May Revision, is estimated to reduce state spending by $663.3 million in 2012-13 and by $887 million per year when fully implemented. However, budget documents indicate that implementation would depend on achieving a “six-month stable enrollment period,” as well as on securing an agreement with the federal government that would allow the state to share 50 percent of the Medicare savings that result from this proposal.