Speaker Karen Bass said. “By passing this difficult budget we keep infrastructure projects moving, keep teachers teaching, keep small businesses getting paid, keep taxpayers getting the refunds they are due and keep California eligible for federal stimulus. Some people may have wanted California to drive over a cliff, but tonight’s action prevents that. We may have taken a rocky ride down the side of that cliff, but the state is intact and ready to get in gear for recovery.”

An overview of the fiscal package shows the historic budget gap was closed with $14.8 billion in spending cuts, $12.5 billion in new revenues, a conservative estimate of $7.8 billion in federal stimulus funds, and $5.4 billion in borrowed funds.  The 2009-10 has a projected reserve of $1 billion.

The reserve will be built up with anticipated federal stimulus funds and additional Legislative actions before the start of the new fiscal year on July 1.

Additionally, there are several modifications of these components that would be “triggered” if California receives at least $10 billion in federal stimulus funds that benefit the General Fund budget ($2.2 billion more than the conservative estimate used in this budget):

·        Cuts would be reduced by $950 million.
·        Revenues would be reduced by $1.8 billion.

The budget package includes eight provisions that will require voter approval for enactment.  Seven of the provisions will appear on the May 19, 2009 ballot. These provisions are listed in the floor report attached to this email. 

Below are details of the spending cuts, revenues and borrowing contained in the package as well as economic stimulus items also approved Wednesday evening.

Spending cuts:

• Prop. 98 Education 
  • Prop. 98 NOT suspended, but funded at minimum guarantee level.
  • Major reductions in current and budget years totaling $8.6 billion, but actual level of programmatic cuts is much less with deferrals, swaps, and other changes making up the remainder.
  • Current-year adjustments:
  • Programmatic cuts:  $2.65 billion.
  • K-12 cuts split 50-50 between revenue limits and categorical programs (categorical cuts are across-the-board).
  • No cuts to four categoricals:  Special Ed., Economic Impact Aid, K-3 Class Size Reduction, and School Lunches.
  • Deferral (current-year to budget year):  $2.8 billion.
  • Counting current-year appropriation toward Prop. 98 “settle-up” $1.1 billion.
  • Using Public Transit Account (rather than General Fund) for Home-to-School Transportation: $618 million.
• Budget-year adjustments:
• Programmatic funding: about the same as current year (no COLA).
• Cuts again split 50-50 between revenue limits and categoricals.
• Same categoricals protected as current year (Special Ed., EIA, CSR, lunch).
• Long-term stability for school funding:
• Governor proposed to not recognize $9.3 billion owed to schools as Prop. 98 “maintenance factor” which would have been a permanent reduction, compromise package restores the $9.3 billion over a period of years.