Legislative Update: Assembly Republicans Release Budget Proposal

Four days before Governor Brown is scheduled to issue his May revise, Assembly Republicans released their own budget proposal to address the state’s remaining $15.4 billion deficit.

The Assembly Republican proposal includes: a roughly 10 percent reduction in state employee costs; health and welfare cuts proposed by Brown in December but rejected by legislative Democrats; taking money from redevelopment agencies; and emptying out special accounts for First 5 and mental-health programs.  It does not include Brown's proposal to extend higher taxes on vehicles, sales and income, in part because it assumes California will benefit from about $5 billion in higher revenues than the Department of Finance anticipated in January.  That includes $2.5 billion more already in the bank, as well as another $2.5 billion bump in 2011-12.

The Republican budget proposal provides K-12 schools and community colleges nearly the same amount that Brown's proposal did, absent about $450 million in supplemental funds for low-performing schools.  It also provides $500 million for local law enforcement that Brown wanted to fund through a portion of higher vehicle taxes.  It does not include Brown's proposal to extend higher taxes on vehicles, sales and income, in part because it assumes California will benefit from about $5 billion in higher revenues than the Department of Finance anticipated in January.  That includes $2.5 billion more already in the bank, as well as another $2.5 billion bump in 2011-12.  The plan also rejects Brown's proposal to shift responsibilities to local governments.

The Republicans said they could save nearly $1 billion by trimming what they identified as government waste — for example, by reducing Medi-Cal fraud ($300 million) and transferring prisoner medical care to the University of California or the private sector ($400 million).  Their plan also includes provisions to hire private contractors instead of state workers to perform many services, such as electronic court reporting, saving $700 million.

Assembly Speaker John Perez responded to the Republican proposal saying he is pleased the Republican Caucus has finally put forward a budget proposal in public for the people of California to evaluate.  However, Democratic members and staff were quick to point out the proposal’s flaws.  Several aspects of the plan will be very contentious—particularly the 10 percent compensation cut to public employees.  Another hurdle would be the fact that two of the ideas would require voter approval.  The plan calls for taking $2.3 billion from tobacco-tax funded First 5 and millionaire-funded Proposition 63 mental health accounts, which represents the entirety of their reserves and 2011-12 revenues.  Voters rejected similar proposals in a 2009 special election, and it is hard to see Democrats getting behind a complete raid of those programs.  Furthermore, the Republican proposal asks Democrats to revisit about $1.4 billion in solutions that the governor originally proposed.  That would mean further cuts to In-Home Supportive Services, developmentally disabled and welfare-to-work.

As stated above, Governor Brown will issue his May revise on Monday, May 16th.  It is expected to include additional taxes to pay for schools and law enforcement.  Brown announced today the closure of 70 state parks, part of the $33 million in parks cuts approved by the Legislature earlier this year.  He has not yet signed the budget bill to make these cuts.  The Governor is also expected to announce the elimination of the Unemployment Insurance Appeals Board, which has been criticized as being a spot for termed out legislators looking for work.  The administration estimates the savings will amount to $1.2 million a year.

For more information relative to the Republican budget proposal, please click here.