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September 23, 2005 - The 2005-06 budget package contains almost $6 billion in solutions, eliminating a shortfall, prepaying some debt, and establishing a $1.33 billion year-end reserve. Despite these actions, the state still takes large operating deficits in 2006-07 and beyond, absent additional actions. This report summarizes legislative action on the 2005-06 budget, including expenditure highlights by program area.
July 26, 2005 - The 2005-06 budget reflects an improving state fiscal picture brought about by better-than-expected growth in General Fund revenues. The new spending plan funds the Proposition 42 transfer to transportation, and includes significant increases in both K-12 and higher education. The new budget does not use any of the remaining $3.7 billion in deficit-financing bonds authorized by Proposition 57 in March 2004, and it prepays a $1.2 billion loan due to local governments in 2006-07. The spending plan includes roughly $6 billion in savings and related budget solutions in order to maintain budgetary balance. The savings included in the 2005-06 budget will address part of the state's ongoing structural budget shortfalls. However, even if all of the savings in the plan are fully achieved, we believe that current-law expenditures will exceed projected revenues by around $6.1 billion in 2006-07.
June 15, 2005 - Summary of the 2005-06 Budget Bill (SB 77), as adopted by the Conference Committee on the Budget.
May 16, 2005 - The May Revision proposes to use about $4 billion in new funds generated from an improved revenue outlook to reduce budgetary debt and restore the Proposition 42 transfer to transportation. We believe the administration’s general approach of using the resources for debt reduction and one-time purposes is sensible in light of the state’s structural budget shortfall. We strongly urge the Legislature to aim at ongoing solutions which are of the same magnitude as the administration’s proposal.
April 14, 2005 - The annual quiz that tests your knowledge of our 1400 page Analysis of the Budget Bill and Perspectives and Issues!
February 24, 2005 - This handout consists of charts used at the press conference for the presentation of the 2005-06 Analysis.
February 24, 2005 - Our annual detailed examination of the Budget Bill based on the Governor's Budget. It includes hundreds of findings and recommendations related to education, health and social services, criminal justice, transportation, resources, capital outlay, information technology, and local government.
February 23, 2005 - This handout consists of charts used at the press conference for the presentation of the 2005-06 Perspectives and Issues.
February 22, 2005 - The budget proposes total state expenditures of $109 billion in 2005-06. This includes $85.7 billion from the General Fund (up 4.2 percent from the current year) and $23.3 billion from special funds (up 5.3 percent from the current year). The overall General Fund spending growth rate reflects (1) changes in caseloads and utilization for major programs; (2) the impacts of the Governor's savings proposals; and (3) the impacts of numerous other special factors, such as one-time savings in the 2004-05 budget. The proposal includes about $3.5 billion in new budgetary borrowing related primarily to deficit-financing bonds, a judgment bond, and Proposition 42 suspension. This brings the total amount of budgetary borrowing outstanding to about $29 billion as of the end of 2005-06.
February 22, 2005 - The California economy is expanding at a healthy pace in early 2005, as evidenced by real estate construction, exports, company reports of sales and profits, and business-related tax receipts. The one area of concern remains jobs, which are lagging due to intense focus on cost cutting and efficiencies. We project the California economic expansion to continue at a moderate pace, with personal income expanding by roughly 5.6 percent and jobs growing 1.5 percent annually during the next two years.
February 22, 2005 - The Legislature has an important budget opportunity. We project that revenues are $2.2 billion higher (for the current and budget years combined) than reflected in the Governor's budget. This, combined with the magnitude of ongoing solutions proposed in the budget plan, would result in a balanced 2005-06 budget with a solid reserve. However, the price of inaction is significant. Without the adoption of ongoing solutions of the magnitude offered by the budget plan, the 2005-06 budget would be precariously balanced and the state would experience major budget shortfalls in 2006-07 and beyond. These shortfalls would be close to $10 billion.