The 2002-03 Assembly Budget Bill
AB 1777 (Oropeza)

L E G I S L A T I V E   A N A L Y S T ' S   O F F I C E

As Adopted by the
Budget Committee
May 30, 2002


2002-03 General Fund Condition

(In Millions)

 

Governor's Budget
(May Revision)

Assembly
Version

Difference

Prior-year fund balance

-$123

-$120

$3

Revenues and transfers

78,603

78,665

62

  Total resources available

$78,480

$78,544

$64

Expenditures

$76,491

$77,264

$773

Ending fund balance

$1,989

$2,181a

$192

  Encumbrances

$1,473

$1,473

—

  Reserve

$516

$708a

$192

 

a  Includes $900 million from adoption of Control Section 32.5.

 

 


Major Features

  1. Maintains the same level of 2002-03 General Fund Proposition 98 spending as the May Revision—$29.3 billion.
  2. Adopts the Governor's May Revision proposals to defer $1.1 billion of current-year General Fund expenditures to the budget year, and replace another $503 million of current-year General Fund spending with funds from the Proposition 98 Reversion Account.
  1. Reduces higher education spending by a net $106.7 million below the May Revision amount. The budget includes additional funds for the California Community Colleges CalWORKs program and restoring a portion of General Fund support for the California Postsecondary Education Commission.
  2. Eliminates funding for two merit scholarship programs on a one-time basis in 2002-03, for General Fund savings (non-Proposition 98) of $120 million relative to the May Revision.
  3. Adopts May Revision proposal to provide an additional $24.9 million for enrollment growth, which provides for 4.3 percent enrollment growth at UC and 4.8 percent enrollment growth at CSU.
  1. Increases health services spending by about $800 million compared to the May Revision, primarily by rejecting various May Revision reductions in the Medi-Cal program. Restorations include certain optional Medi-Cal services for some adults, eligibility for some two-parent working families, and county administration funding.
  2. Expands the Healthy Families program to include parents and continues trauma care funding in the budget year.
  3. Increases social services spending by about $101 million compared to the May Revision, by rejecting the Governor's proposal to (1) reduce county administration funding for various social services programs and (2) reduce funding for child welfare services.
  1. Restores funding for the Juvenile Justice grant program that the May Revision eliminated. As a result, the Citizens' Option for Public Safety (COPS) program and the juvenile justice grant program are funded at roughly $116 million each.
  2. Reduces funding for high technology grants by an additional $18.5 million.
  1. Accepts Governor's May Revision proposal to securitize $4.5 billion in tobacco settlement revenues.
  2. Adopts all of the $3.8 billion in tax increases and revenue accelerations proposed in the May Revision. These include a one-time increase in the vehicle license fee, a two-year suspension of net operating loss deductions, and an increase in the cigarette tax of 50 cents per pack.

Major Revenue-Related Proposals
2002-03

General Fund (In Millions)

Revenue Increases

Fiscal Impact

Cigarette tax increase

$475

Net operating loss deduction deferral

1,200

Treatment of bad debts by banks

255

Withholding on certain real estate transactions

225

Compliance measures and revenue accelerationsa

361

  Subtotal

$2,516

Expenditure Reduction

 

Vehicle license fee offsetb

$1,276

  Total

$3,792

 

a  Includes $80 million from the Governor's January proposals related to additional audit and collection activities.

b  Includes trailer coach fees for the General Fund.

 

 

  1. Increased VLF rate from 0.65 percent to 1.5 percent for 2003, generating $1.3 billion in General Fund savings in 2002-03.
  2. Deferral of deductions of net operating losses (NOLs) by businesses (with the carryforward period extended an additional two years), increasing revenues by $1.2 billion.
  3. Increased taxes on cigarettes of 50 cents per pack (for a total of $1.37 per pack), generating an estimated $475 million.
  4. Various revenue accelerations, additional withholding, and tax compliance measures, generating a revenue increase of $582 million.
  5. Federal conformity regarding treatment of bad debt reserves by large banks, increasing revenues by $255 million.

Major Assembly Actions
K-12 Education—Proposition 98

General Fund (In Millions)

 

Governor

Assembly

Difference

Cost-of-living adjustments (various programs)

$763

$788

$25

Enrollment growth (various programs)

731

731

—

Instructional materials

400

400

—

High Priority Grants for Low-Performing Schools (HPG-LPS)

197

197

—

Site-based Governor's Performance Awards

144

67

-77

Library materials (one-time)

80

75

-5

Revenue limit equalization

—

42

42

Restore cuts to independent study

—

38

38

Reduce PERS offset to revenue limits

—

36

36

Restore cut to planning grants (HPG-LPS)

—

20

20

Restore cut to Healthy Start

—

19

19

Restore cut to adult education—CalWORKs pupils

—

13

13

Additional current- and prior-year reductions

—

-116

-116

 

 


Major Assembly Actions
Higher Education

General Fund (In Millions)

 

January
Proposal

Change to January Budget

Difference

May Revision

Assembly

University of California (UC)

$3,367.1

-$162.4

-$170.6

-$8.2

California State University (CSU)

2,735.6

-50.2

-58.0

-7.7

California Community Colleges (CCC)

2,739.4

115.0

133.7

18.7

Student Aid Commission

733.7

-78.9

-69.6

9.3

Hastings College of the Law

15.4

           —

      —

—

Scholarshare Investment Board

129.3

-8.0

-128.0

-120.0

California Postsecondary Education Commission (CPEC)

3.3

-2.8

-1.5

1.3

      Totals

$9,723.8

-$187.3

-$294.0

-$106.7

 

 


Major Assembly Actions
Social Services Programs

General Fund (In Millions)

Program/Department/Issue

Difference From
May Revision

CalWORKs

 

  Eliminate Statewide Fingerprint Imaging System

-$10.7a

  Eliminate fraud incentive payments to counties

-6.9a

  Eliminate TANF funds for Intensive Services Program

-3.6a

  Eliminate Youth Development Services Project

-1.5a

  Technical conforming net costs related to certain restorations

11.8a

County Administration

 

  Partially restore 14.8 percent reduction in CalWORKs

$12.0a

  Restore 20 percent reduction in Food Stamps

38.4b

  Restore 20 percent reduction in In-Home Supportive Services

15.7

  Restore 20 percent reduction in Foster Care

7.5

Children's Programs

 

  Restore Child Welfare Services reductions

$28.0

  Restore Adoptions reductions

9.1

Adult Protective Services (APS)

 

  Restore 10 percent reduction to APS

$5.6

Employment Development Department

 

  Use Workforce Investment Act Funds for Faith-Based Initiative

-$4.0

    Total

$101.4a

 

a  Combined General Fund and TANF federal funds.

b  Includes technical conforming Food Stamps administrative costs.

 

 


Major Assembly Actions
Health Programs

The budget adopted by the Assembly provides a net increase of almost $800 million General Fund for health programs above the funding level proposed in the Governor's May Revision spending plan. The key Assembly changes are summarized below.

General Fund (In Millions)

 

Change from Governor's Budget

Medi-Cal

 

Rejected elimination of some optional benefits for some adults.

$263.0

Rejected reinstatement of quarterly status reporting for parents.

155.4

Rejected proposal to rescind Section 1931(b) expansion for poor families.

92.1

Rejected 20 percent reduction in county administration.

87.9

Rejected further reduction in Disproportionate Share Hospital program.

31.0

Approved part of proposed rollback in provider rates and exempted some services.

14.5

Established transitional Medi-Cal coverage for parents shifting to the Healthy Families Program.

7.5

Rejected reduction of children's dental services to one cleaning and one exam annually.

4.0

Adjusted Medi-Cal caseload to reflect recent trends.

-46.6

Delayed Medi-Cal and Healthy Families Program application tracking.

-8.0

Net savings from elimination of the asset test.

-4.3

Scaled back adult day health care pilot project from ten sites to one site.

-1.9

Assumed drug procurement savings but modified implementing legislation.

No net change

Assumed savings from contracting for durable equipment and lab services but did not adopt implementing legislation.

No net change

Managed Risk Medical Insurance Board

 

Provided full-year funding to expand Healthy Families Program coverage to parents.

$72.0

Public Health

 

Offset General Fund costs for children's health programs with Proposition 10 funds.

-$30.0

Emergency Medical Services Authority

 

Continued trauma care system funding at same level as provided in the current year.

$24.8

Department of Mental Health

 

Rejected reductions in adult and children's systems of care and programs for homeless mentally ill.

$52.6

Rejected proposal to shift 10 percent share of growth in EPSDT costs to counties.

5.4

Department of Developmental Services

 

Rejected reduction in Regional Center purchase of services and implementation of statewide purchasing standards.

$52.0

Department of Alcohol and Drug Programs

 

Restored cuts in drug court, perinatal, and other services using federal funds.

No net change

 


Major Assembly Actions
Judicial and Criminal Justice Provisions

General Fund (In Millions)

Issue

Governor

Assembly

Difference

Department of Corrections

 

 

 

Contract Medical Services

$115.5

$115.5

—

Workers’ Compensation Shortfall

42.1

42.1

—

Work Credits for Fire Camps

-16.7

-16.7

—

Caseload reduction

—

-8.1

-8.1

Northern California Women’s Facility Closure

—

-4.5

-$4.5

Community Correctional Facility Deactivation

-2.8

-2.8

—

Youth Authority

 

 

 

Stevens v. Harper legal defense

$3.5

$3.5

—

County Sliding Fee Inflation Adjustment

-7.6

7.6

$15.2

Board of Corrections

 

 

 

Mentally Ill Offender Program

-$17.3

-$17.3

—

Challenge Grant II Program

-12.3

-12.3

—

Crime Prevention Act

 

 

 

Juvenile Justice Grants

—

$116.3

$116.3

COPS

$121.3

116.3

-5.0

Local Law Enforcement

 

 

 

War on Methamphetamine

-$5.0

-$7.5

-$2.5

High Technology Grants

-16.9

-35.4

-18.5

 

 


Major Assembly Actions
Resources

Various Funds (In Millions)

Issue

Governor

Assembly

Difference

CALFED Bay-Delta program

$519.5

$464.1

-$55.4

Selected Proposition 40 appropriations:

 

 

 

·   Conservancies: acquisition and development

215.5

228.5

13.0

·   Clean beaches, watershed protection, and water quality

164.0

8.0

-156.0a

·   Historical and cultural resources (not including specified local parks)

107.0

—

-107.0a

·   Local parks

72.8

172.9

100.1

·   State park acquisition, development, and deferred maintenance

65.5

65.5

—

·   River parkways

63.7

48.7

-15.0

·   Agricultural land preservation

9.8

—

-9.8a

Increased reimbursements from local agencies for state firefighting costs

20.0

—

-20.0

Conservation Corps program reduction

-12.5

-12.5

—

Farmland Conservancy Program

5.0

11.7

6.7

Americans With Disabilities Act improvements at state parks

9.0

9.0

—

Fish and Game California Environmental Quality Act review

0.8

2.9

2.1

Sudden Oak Death remediation

—

2.0

2.0

Replace General Fund with fees for timber harvest plan review

—

-1.6

-1.6

Loan from Beverage Container Recycling Fund

218.0

218.0

—

 

a  Reduced funds to be appropriated in separate legislation.

 

 


Major Assembly Actions
Environmental Protection

Various Funds (In Millions)

Issue

Governor

Assembly

Difference

Subventions to local air districts

$10.1

$15.1

$5.0

Diesel emission reduction incentives (Proposition 40)

9.6

25.0

15.4

Replace General Fund with fees in Water Quality Regulatory program

-15.0

-31.3

-16.3

Solid waste conversion technologies

1.5

1.5

—

Office of Environmental Health Hazard Assessment—General Fund reductions

-2.9

-1.6

1.3

Air Resources Board—stationary source program General Fund reductions

-7.7

-7.7

—

Loan from Pollution Control Financing Authority Fund

25.0

25.0

—

Loan from Hazardous Waste Control Account

15.0

15.0

—

 

 


Major Assembly Actions
Transportation

Various Funds (In Millions)

Issue

Governor

Assembly

Difference

Traffic Congestion Relief Fund (TCRF) loan to General Fund

$1,045.0

$1,045.0

—

State Highway Account loan to TCRF

474.0

474.0

—

Transportation design and engineering

1,269.4

1,220.8

-$48.6

State Transit Assistance

98.0

103.1

5.1

California Highway Patrol antiterrorism

93.4

93.4

—

Department of Motor Vehicles fee increases (revenues)

76.0

76.0

—

 

 


Major Assembly Actions
Local Governments

General Fund (In Millions)

 

Savings

 

May Revision
Proposal

Assembly
Action

Education

 

 

Shift property taxes from multicounty special districts and redevelopment agencies to schools via the Educational Revenue Augmentation Fund.

$120

$120

Reduce funding for the Public Library Foundation program.

12

6

Health and Social Services

 

 

Increase disproportionate share hospital administrative fee.

$31

—

County share of costs for Early and Periodic Screening, Diagnosis and Treatment program.

35

—a

Require counties to pay share of federal child support automation penalty.

45

$45

Reduce state funds for administration of a variety of health and social services programs.

258

60

Criminal Justice

 

 

Reduce high-technology law enforcement grants.

$17

$35

Eliminate juvenile justice grant program.

116

—

Increase Youth Authority sliding scale fees for inflation.

8

—

Eliminate booking fee reimbursements.

38

38

Other

 

 

Defer reimbursements for a variety of mandated programs.

$168b

$168

Eliminate Williamson Act subventions for open space preservation.

39

39

 

a  Rejected cost increase to counties, but adopted alternative savings approach.

b  In addition to the budget reduction, the May Revision did not provide $600 million to pay mandate deficiencies
and new mandates to cities and counties.

 


General Fund Spending Trends

(Dollars in Millions)

 

Current Dollars

 

Constant Dollars

 

Amount

Percent
Change

 

Amount

Percent
Change

1992-93

$40,948

—

 

$40,948

—

1993-94

38,958

-4.9%

 

38,026

-7.1%

1994-95

41,961

7.7

 

39,757

4.6

1995-96

45,393

8.2

 

41,982

5.6

1996-97

49,088

8.1

 

44,328

5.6

1997-98

52,874

7.7

 

46,718

5.4

1998-99

57,822

9.4

 

50,122

7.3

1999-00

66,494

15.0

 

55,331

10.4

2000-01

78,053

17.4

 

62,751

13.4

2001-02

 

 

 

 

 

  Governor's budget (May Revision)

$76,884

-1.5%

 

$60,644

-3.4%

  Assembly version

$76,881

-1.5%

 

$60,641

-3.4%

2002-03

 

 

 

 

 

  Governor's budget (May Revision)

$76,491

-0.5%

 

$58,991

-2.7%

  Assembly version

$77,264

0.5%

 

$59,586

-1.7%

 

 

 


Return to LAO Home Page