Budget-Balancing Reductions

In order to close the $14.5 billion budget gap, the proposed Governor's Budget includes 10-percent across-the-board reductions to all General Fund departments and programs, Boards, Commissions, and elected offices-including the legislative and judicial branches-except where such a reduction is in conflict with the state constitution or impractical. This statewide across-the-board reduction approach touches nearly every General Fund program in every department within each branch of state government. While these reductions present numerous challenges to implement, this across-the-board reduction approach is designed to protect essential services by spreading reductions as evenly as possible so that no single program is singled out for severe reductions. Reductions to General Fund budgets not under the control of the Administration are proposed as unallocated reductions. The unallocated General Fund reductions apply to the judicial and legislative branches of government and other entities such as the University of California and some very small executive branch entities.


MAJOR EXEMPT PROGRAMS
 Constitutional Restrictions

  • Debt Service/Lease Payments
  • Homeowners Exemption
  • Health and Dental Benefits for Retirees
  • Proposition 42
  • Contributions to Public Employees, Judges and Teachers Retirement Systems
Impractical to Implement

  • Medi-Cal Rates for Certain Long-Term Care Facilities
  • State Hospitals
  • Major Revenue Generating Departments (Franchise Tax Board and Board of Equalization)
  • CalGrant High School and Community College Entitlement Grants
  • Juvenile Justice Programs
  • Health Care for Inmates
  • Proposition 58 Budget Stabilization Account Transfer (fully suspended)
  • Capital Outlay
  • Undistributed Employee Compensation
  • Non-Proposition 98 Mandates
The amount of the reductions by entity was determined by first establishing the workload budget for 2008-09 pursuant to Government Code Section 13308.05 and existing policies, and reducing the amount for exempt programs, establishing a base for the across-the-board reduction from which a 10-percent reduction amount was calculated. Many of the reductions will require statutory and/or regulatory changes for implementation. Many of the reductions require early implementation in 2007-08 to achieve a full 10-percent reduction in 2008-09.

Within the entire state budget, some programs cannot be reduced for constitutional or practical reasons. See text box "Major Exempt Programs" for a list of exempt programs due to constitutional restrictions or where program reductions are not practical. Through the allocation process described above as implemented by Control Section 4.44, total savings of $216.6 million in 2007-08 and $9.1 billion in 2008-09 are proposed.

Figure BBR-01 summarizes the reductions in General Fund amounts and personnel years by agencies. Control Section 4.44 provides a listing of the reduction amount by department. A new statewide display (under item 9944) is provided in the Governor's Budget. This new display reflects the amount of reductions by agency, department, program, and component, if applicable.
CHAPTER HIGHLIGHTS for Budget-Balancing Reductions Back to Top

 Need for A Prudent Cash Reserve

BUDGET OVERVIEW Back to Top
Introduction
This budget proposes the difficult but necessary steps needed to bring the state's chronic structural deficit under control, not only for this fiscal year but permanently. This is accomplished by (1) imposing strict spending restraint in the current and budget years while protecting and preserving essential state services and (2) proposing a Constitutional Amendment to reform the budget process so that state government has the tools needed to avoid spending more than it has in the future.

PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Budget-Balancing Reductions (pdf * - 145K) -
Provides this entire Budget-Balancing Reductions Chapter in pdf format.