By Rebecca Gonzales, Director of Government Relations and Political Affairs
The Governor released his proposed budget on January 7, 2015. This proposal is the opening volley in the annual budget process which will play out over the next six months. The final budget will undoubtedly vary from the Governor’s initial proposal, but, if recent history is any indication, the final budget will closely mirror the Governor’s priorities.
As we have seen in the Governor’s recent budgets, he is mainly focused on paying down debt and shoring up our rainy day fund, at the expense of reinvesting in services for low-income communities that were cut during the recession. These priorities are reflected in the proposed budget despite the fact that there is a budget surplus of close to $6 billion over the current budget year and the 2016-17 budget year due to improved economic conditions. As before, the schools will see the lion’s share of the revenue increase because of Proposition 98. In addition, the Governor proposes to deposit an additional $2 billion in the rainy day fund beyond what is required by current law.
We were happy, and surprised, to see a modest increase to the SSI grant of $17 a month in the Governor’s budget, although we will continue to advocate for a bigger increase. Other programs that serve needy communities did not fare as well. The Governor did not propose an increase in CalWORKs grants and only allocated a small increase for child care. Both of these programs were slashed during the recession. In addition, the Governor did not propose to eliminate the Maximum Family Grant in CalWORKs, which is a policy proposal we supported during last year’s Lobby Days (SB 23).
In corrections, the Governor’s Budget reports that reductions in the prison population due to Proposition 47, which reclassified some drug and property crimes as misdemeanors, will result in savings of $29.3 million. The savings are to be spent on truancy, diversion, and victim services grant programs. Many advocates see the projected savings as being grossly underestimated. Just last year, the nonpartisan Legislative Analyst’s Office (LAO) projected the savings to be approximately $100 million to $200 million annually. A higher estimate of the savings will direct more money to needed services. We hope to see this estimate change by the time the final budget is signed. Overall, the Governor proposes to increase spending to the Department of Corrections and Rehabilitation, despite the fact that our prison population has declined substantially because of the federal court order to reduce our overcrowded system.
Another major budget battle will be to revise a tax on managed care organizations which was deemed to not meet federal requirements. If not passed, the expiration of this tax will result in a $1 billion General Fund “hole” in the budget. It should be noted that even if we did not receive this money, the “hole” could be covered by our huge projected budget surplus. If the Legislature comes up with a solution, the tax money will provide funding for the In-Home Supportive Services Program and may increase funding for those with developmental disabilities.
Altogether, we are disappointed that the Governor has not addressed reducing poverty in any substantial way. We will continue to advocate that essential services be restored so that the poor can be lifted by our improving economy.
