BILL ANALYSIS
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Denise Moreno Ducheny, Chair
Bill No: SB 1426
Author: DeSaulnier
As Amended: May 26, 2010
Consultant: Keely Martin Bosler
Fiscal: Yes
Hearing Date: May 27, 2010
Subject : State budget: 2-year spending plan.
Summary: This bill proposes a two-year budget process
starting in 2011-12.
Background:
State Budget Process Overview. Under the current State
Constitution the Legislature has the power to appropriate
State funds and make midyear adjustments to those
appropriations. The annual State budget act is the
Legislature's primary method of authorizing expenses for a
particular fiscal year. Also, under the current State
Constitution the Governor is required to propose a balanced
budget by January 10 for the next fiscal year (beginning
July 1) and the Legislature is required to pass the annual
budget act by June 15. Under current law the Governor may
also reduce or eliminate specific appropriation items using
his or her "line-item veto" power and the Legislature may
override a veto with a two-thirds vote in each house.
However, once the budget has been approved by the
Legislature and the Governor, current law provides the
Governor with limited authority to reduce spending during
the year without legislative approval.
Proposed Law:
This bill requires the Director of Finance provide the
Legislature updated projections of state revenues and state
expenditures on or before October 15 of each year.
This bill requires the Governor to submit a budget for both
the budget year and the succeeding fiscal year. The budget
shall contain provisional language, performance measurement
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standards, and a projection of anticipated state revenues,
including revenues anticipated to be one-time revenue.
This bill also requires that the budget contain a
projection of state expenditures and revenues for the three
fiscal years following the fiscal year succeeding the
budget year and budget plans for those three fiscal years.
If the expenditures exceed estimated revenues in the budget
year or succeeding fiscal year, this bill would require
that the Governor recommend reductions in expenditures or
the sources of additional revenues, or both. The bill
further requires an analysis of the recommendations on the
long-term impact that expenditure reductions or additional
revenues have on the economy of California.
This bill also requires the Governor to submit to the
Legislature, annually with the budget, any legislation
needed to implement appropriations contained in the budget
and a five-year capital infrastructure and strategic growth
plan.
This bill requires that if the Governor's budget expands or
creates a new program or expand the scope of an existing
program, which results in an increase in state costs or
reduces a state tax in the budget year or succeeding year,
the proposal must be accompanied by a statement identifying
state program reductions or additional revenue that are
equal or greater than the net increase in the state costs
of the new or expanded program or tax expenditure.
Fiscal Effect:
The direct fiscal effects of this bill are likely to be
minimal. The indirect effects of this bill are unknown and
depend on future actions by the Legislature.
Source : Author
Support : None on file.
Opposed : None on file.
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Comments :
1. Planning May Improve. This bill may result in
improved planning to the extent that the Governor's
plan must take into account large expenditure
increases or revenue reductions in year two of the
two-year cycle. However, the state currently has
limited abilities to forecast caseload, expenditures
and revenues accurately beyond the fiscal year.
This would most likely make the second year of the
two-year cycle inaccurate and require significant
revisions.
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