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Reforming the Budget Process, the Budget Stabilization Act
Avoiding Over-Budgeting Based on Extraordinary Revenue Gains
In order to prevent reliance on unsustainably high revenue gains, the Budget Stabilization Act will require that excess revenues - revenues above a reasonable, long-term average rate of growth -- be deposited in the Revenue Stabilization Fund. In years of below-average rates of revenue growth, monies will be transferred from the Revenue Stabilization Fund back into the General Fund in an amount not to exceed the shortfall. When the Revenue Stabilization Fund exceeds an amount equivalent to 10 percent of General Fund revenues in a given year, the excess will be available for one-time spending for schools (in proportion to the Proposition 98 share of total General Fund revenues) and providing one-time tax rebates, investing in one-time infrastructure projects, or paying off debt.
The Act allows transfers from the Revenue Stabilization Fund back into the General Fund only in years when revenue grows at a rate less than the long-term average. Transfers would NOT be allowed simply to avoid deficits, not even in emergencies. The state already has mechanisms for addressing emergencies, including the ability to temporarily raise taxes with a two-thirds vote of the Legislature.
CHAPTER HIGHLIGHTS for
Introduction Back to Top
BUDGET OVERVIEW Back to Top
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.
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Introduction (pdf * - 231K)
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Provides this entire Introduction Chapter in pdf format.
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