With only days until the Legislature is required by the state constitution to produce a balanced budget, the Senate-Assembly Budget Conference Committee started meeting Friday.
During Friday's
Budget Conference Committee, Legislative Analyst Mac Taylor presented an overview of the budget situation and
told the committee: "This is the most difficult budget year I've seen in
my 32 years." Mr. Taylor noted that past legal constraints, borrowing, and
various differing opinions on how to develop a budget solution have made the
budget process more complicated this year. He noted that the state will
continue to experience long-term budget problems, and said that the state's
economy will not rebound fast enough to keep in step with projected spending
trends on state services.
Mr. Taylor also gave
the Legislature an overview of both the Assembly and Senate budget plans. In
regard to the Assembly's budget plan to borrow funding from the beverage
recycling program, he said that particular proposal relied too heavily on
one-time use of funds to pay for immediate needs.
Senator Ducheny said the conference committee will attempt to discuss revenue issues on Thursday.
Many tax increase provisions are on the table, along with draconian tax enforcement provisions. The Legislature and governor are working on what the Department of Finance calls a $19.1 billion budget deficit for 2010-11 and the remainder of 2009-10. This deficit estimate is based on a projected 14 percent increase in general fund spending from 2009-10 to 2010-11.
Meanwhile, Controller John Chiang sent a letter to the governor and legislative leaders warning that even with the payment deferrals that hurt schools and local governments, and with the excessive leveraging of special funds, "A protracted budget stalemate or the passage of a 'get-out-of-town budget' relying on accounting gimmicks and unrealistic solutions will create cash shortfalls starting in October."
The controller added:
"While there should be debate regarding the role tax increases and spending cuts are to play in this budget, there is no debate that the worst thing you can do is nothing. Political paralysis cannot be an option. Consider the following:
· "Cash solutions need time in order to be realized. For example, reductions in payments that are scheduled for later in the year cannot help the cash shortage we face in the near term;
· "Inaction compromises the ability to implement the necessary programmatic changes in time to achieve the full year benefit of your 2010-11 solutions;
· "Cash receipts continue to be volatile and difficult to predict. For example, 2009-10 receipts through April 30, 2010, were $1.3 billion below the estimates included in the Governor's January Budget, and General Fund receipts were $3.6 billion below April estimates; and
· "If I am forced to implement emergency cash management measures, I must act before the State's treasury is depleted. Depending on several factors, including how much cash needs to be conserved and the market conditions for borrowing, I will have to act weeks in advance of the projected date that the State goes into the red."
Budget Conference
Committee Members Named
Members have been appointed by legislative leaders to the two-house conference committee that will try to produce a 2010-11 state spending plan. The 10 members – including four Republicans and three "Bobs" – are:
· Senate: Denise Ducheny (chair), Alan Lowenthal, Mark Leno, Bob Dutton and Bob Huff.
·
Assembly: Bob Blumenfield, Connie
Conway, Felipe Fuentes, Jim Nielsen and Nancy
Skinner.
Cal-TaxReports, June 7, 2010
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