BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1633|
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THIRD READING
Bill No: AB 1633
Author: Assembly Budget Committee
Amended: 8/30/10 in Senate
Vote: 21
ASSEMBLY FLOOR : Not relevant
SUBJECT : Budget Act of 2010
SOURCE : Author
DIGEST : Senate Floor Amendments of 8/30/10 reflect an
amended version of the Governors May Revision version of
the Budget by deleting the prior version of the bill
relating to intent and, instead, provide for the specific
appropriations of the 2010-11 Budget Act.
ANALYSIS : In the 2010 May Revision, the Governor
identified a budget shortfall of $17.9 billion. He offered
a total of $19.1 billion in budget "solutions" to close the
shortfall and generate a reserve of $1.2 billion.
This version of the Budget largely reflects the Governor's
May Revision, but restores approximately $295 million
General Fund, thereby reducing the reserve contained in the
Governor's May Revision to $900 million.
I. General Budget Framework . At a high level, the amended
May Revision proposal closes the budget gap mainly
through expenditure reductions. This modified version
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of the May Revision assumes no new revenues. The
proposed solutions fall into the following four
categories:
? Expenditure Cuts:
$12.3 billion
? Federal Funds:
$3.4 billion
? Alternative Funding:
$1.0 billion
? Fund Shifts & Loans:
$2.1 billion
? Revenues:
$0.0 billion
Total Solutions:
$18.8 billion
The Governor's May Revision and this bill propose major
new cuts and eliminations. These cuts are generally in
addition to cuts proposed in the January budget, but in
some cases take the place of reductions proposed in
January:
$1.2 billion to eliminate the CalWORKS program.
$1.5 billion to eliminate child care funding except
for pre-school and after school programs.
$0.8 billion to reduce the In-Home Supportive
Services program through a stakeholder process.
$0.7 billion to delay funding to schools that would
hold harmless Proposition 98 under the Gas Tax Swap
enacted by the Legislature in February.
$0.6 billion to significantly reduce county mental
health realignment funding and shift this funding to
support food stamps and child welfare services
programs to be realigned to the counties.
$0.5 billion to implement a mandatory personal
leave program for all state employees.
$0.3 billion in additional cuts to county
administration funding to implement various social
services programs.
II. Major Highlights . The Governor's May Revision and this
bill propose a number of significant changes to
January's budget proposals including, but not limited
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to:
1. K-14 Education funding . The May Revision
provides, under the Proposition 98 guarantee, total
funding (combination of GF and local property taxes)
of $49.9 billion in 2009-10 and $48.4 billion in
2010-11. This level of funding reflects elimination
of Proposition 98 funding for child care. As a
result, Proposition 98 is rebenched downward by $1.54
billion.
2. Health Services . Significantly reduces County
Mental Health funding by shifting $602 million
(County Realignment Funds/Mental Health Subaccount),
or 60 percent of funds, to administer Food Stamps and
Child Welfare Services which would be shifted from
the State to counties under the Governor's proposal.
The Governor assumes a General Fund savings from this
reduction and shift of State responsibilities.
Revises the January Budget Medi-Cal non-specific
cost containment proposal with specific measures.
Among these cuts that sum to $523 million GF, are the
elimination of certain over-the-counter drugs, annual
dollar caps on certain medical equipment, increased
co-payments for medical visits, and provider rate
reductions.
3. Human Services . The May Revision and this bill
propose to eliminate, effective October 1, 2010, the
CalWORKs program. The proposal results in
approximately $1.1 billion GF savings, as well as a
loss of $4.2 billion in federal Temporary Assistance
to Needy Families (TANF) and stimulus funds in
2010-11.
In lieu of the Governor's January proposals to 1)
limit the provision of IHSS services to 87 percent of
the program's consumers and 2) reduce state
participation in wages to the minimum wage of $8.00
per hour, plus $.60 per hour for benefits, the May
Revision and this bill proposes $637.1 million GF
savings in the IHSS program. The Administration
intends to develop more specific plans for this "cost
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containment" in consultation with stakeholders and in
time for legislative enactment by July 1. The total
budget for the IHSS program in 2009-10 is $5.5
billion ($1.2 billion GF).
4. Public Employment . Adds a self-directed furlough
day per month [or a Personal Leave Program (PLP)] to
the existing employee compensation cuts proposed in
the January Budget. The PLP applies to both special
fund and GF departments, and is estimated to save the
state $446 million GF. The January proposals
retained by the Governor are a five percent pay cut,
a five percent increase in employee retirement
contributions, and a five percent "workforce cap" or
increase in departments' salary savings.
III. Major Changes to May Revision . This bill largely
reflects the Governor's May Revision. However, the
following changes have been made:
1. Removes revenues related to the Governor's
Automated Speed Enforcement initiative that was
dedicated to the Trial Courts. This revenue source
was backfilled with GF. This policy was also removed
from the Conference version of the Budget.
2. Removes revenues related to the Governor's
Emergency Response Initiative that was dedicated to
fire protection at Cal-FIRE. This revenue source was
backfilled with GF.
3. Assumes $243.8 million in GF savings to
corrections by assuming programmatic reductions at
the California Department of Corrections and
Rehabilitation, in lieu of the Governor's proposal to
require non-serious, non-violent, non-sex offenders
with three years or less to serve their sentence in
local jails instead of state prisons.
4. Removes revenues related to various fees
supporting the State Water Resources Control Board.
These revenues were backfilled with GF.
5. Removes various other fee revenues throughout the
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budget that do not have a GF impact, but that do
reduce program activities.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
DLW:do 8/30/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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