Introduction

The 2007 Budget Act signed by Governor Schwarzenegger includes the largest reserve of any budget act in the state's history. The May Revision proposed a total reserve of $2.2 billion. Due to the shortfall in revenue collections that came to light in June, and in recognition of the state's continuing structural deficit and other potential threats, the Legislature took actions to reduce spending and increase funds available, thereby increasing the total reserve to an unprecedented $3.4 billion. The Governor further reduced spending with $703 million in General Fund vetoes, raising the total reserve to $4.1 billion. As a result, General Fund spending growth in this budget is held to $0.6 billion, or 0.6 percent.

Figure INT-01 displays the major changes to the amounts proposed in the May Revision.
This table reflects the Major General Fund Changes Since May Revision. All dollars are in millions. Total Reserve; Total Reserve at May Revision Total Impact ($2,199) Ongoing Impact ($0); Overall Proposition 98 Changes Total Impact ($749) Ongoing Impact ($0); Reject Economic Recover Bonds Pre-payment Total Impact ($595) Ongoing Impact ($0); Repay Prior Year Early and Periodic Screening, Diagnosis and Treatment (EPSDT) Claims Over Three Years Total Impact ($174) Ongoing Impact (-$69); Reduce Medi-Cal Estimate Total Impact ($332) Ongoing Impact ($332); Funded Various Capital Outlay Projects with Lease Revenue Bonds Total Impact ($101) Ongoing Impact ($0); Use TANF Reserve Total Impact ($84) Ongoing Impact ($0); Integrated Services for Homeless Mentally III Adults Program Total Impact ($55) Ongoing Impact ($55); Medi-Cal Managed Care Rates Total Impact ($53) Ongoing Impact ($0); Unallocated Reduction Total Impact ($72) Ongoing Impact ($72); Reverse Price Increase (except the Legislature, Judicial Branch and Constitutional Officers Total Impact ($40) Ongoing Impact ($40); Continue Funding for Williamson Act Total Impact (-$39) Ongoing Impact (-$39); Use Public Transportation Account for Various Purposes Total Impact (-$41) Ongoing Impact (-$119); Reverse STRS Supplemental Benefit Maintenance Account Contribution Savings Total Impact (-$75) Ongoing Impact (-$75); Enhance Effort to Reunite Owners and Their Unclaimed Property Total Impact (-$87) Ongoing Impact (-$77); Reverse CalWORKs Reform Proposals Total Impact (-$314) Ongoing Impact (-$314); Net of All Other Changes Total Impact ($171) Ongoing Impact (-$20); Total Changes Total Impact ($1,870) Ongoing Impact (-$214); Total Reserve at Budget Act ($4,069).

Click here for figure in PDF format (pdf * - 171K)

These actions eliminate the gap between spending and revenues in 2007-08, after discounting the $1.023 billion of transfer to the Budget Stabilization Account for rainy-day purposes.

Despite the modest year-over-year increase in General Fund spending in the Budget Act, it still fully funds K-12 education (providing a 3.4-percent increase in per-pupil spending from all funds), law enforcement and the Governor's compacts with higher education and the judiciary. It also continues the commitment to reform the state's prison system by reducing recidivism, improving prison health care and reducing overcrowding. The Budget Act also continues the commitment to improve the state's critical infrastructure through prudent use of the general obligation bonds authorized by the people in 2006.
PRINTABLE BUDGET DOCUMENTS Back to Top
Enacted Budget Summary - Introduction (pdf * - 22K) -
Provides the entire Introduction Chapter in pdf format.