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Reforming the Budget Process, the Budget Stabilization Act
Giving the State the Tools to Quickly Reduce Spending When Necessary
To ensure that the state quickly reduces spending to sustainable levels, the Budget Stabilization Act will provide for automatic reductions. These reductions will be triggered whenever the Governor projects that the state will be in deficit. The Governor will be required to estimate the year-end balance in the General Fund three times each year - in November, January and May. When this estimate shows a likely General Fund deficit of one percent or less, the Governor will reduce appropriations, on an annualized basis, by 2 percent and when it shows a deficit of greater than one percent of appropriations will be reduced by 5 percent. Given the difficulty of achieving actual savings during the fiscal year, the reductions will be pro-rated for the amount of time remaining in the year.
The Act will also require the Legislature and the Governor to enact statutory changes in all state entitlement programs that allow for reductions in service levels or rates of payment sufficient to achieve the targeted reductions of 2 and 5 percent. In order to ensure that a full year of savings is achieved by these program reductions, they will remain in effect, once triggered by a projected deficit in a particular year, not only for the remainder of that year, but until the Legislature takes a subsequent action, either in the next Budget Act or in separate legislation to restore the prior levels of service. In the event that the Legislature fails to enact a schedule of program reductions in a given program, or if the reductions authorized by the Legislature are insufficient to achieve the required annualized savings goals, the Governor will be authorized to waive any state law or regulation necessary to achieve the full amounts of the reductions.
Not all state appropriations could be reduced under the Act. For example, debt service will not be subject to reduction. To ensure that reductions are not inconsistent with the United States or California Constitutions, the Governor will be required to exempt appropriations from reduction if the reduction would be constitutionally unenforceable.
The Budget Stabilization Act will not change any vote threshold. Tax increases, urgency measures and most General Fund appropriations will still have to be enacted by two-thirds majorities in both houses 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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