LAO 1996-97 Budget Analysis

Business and Labor Overview

Major Issues

Overview

Expenditures for business and labor programs in 1996-97 are proposed to decrease by about 3 percent compared to the current year. This decrease is the net result of changes in many programs. It reflects a decrease in special fund spending partially offset by a slight increase in General Fund spending.

The budget proposes total state expenditures of $1.1 billion for business and labor programs in 1996-97. This level of spending is a decrease of $32.6 million, or 2.8 percent, from estimated current-year expenditures.

Figure 1 (see next page) shows that expenditures for business and labor programs from all state funds reached about $1.2 billion in 1991-92, then declined through 1993-94. Over the eight-year period shown in Figure 1, expenditures increased by $163 million, representing an annual average growth of 2.8 percent. When these totals are adjusted for inflation, spending declined by about 4.9 percent over the total period, or slightly less than 1 percent annually. The General Fund share of program expenditures has declined from 41 percent in 1989-90 to 24 percent in the budget year.


Spending by Major Programs

Figure 2 (see page 7) provides the spending trends for selected major business and labor departments from 1994-95 through 1996-97. As the figure shows, none of the agencies show a significant change in proposed General Fund expenditures between the current and budget years. The Trade and Commerce Agency shows a large percentage change in special fund expenditures (a 36 percent decrease). This decrease is the result of eliminating one-time expenditures for various grants and loans for local projects.


Major Budget Changes

Figure 3 (see page 8) summarizes major budget changes proposed for business and labor programs. As shown in the figure, there are a variety of relatively small increases in General Fund program expenditures. These include $3 million for the Trade and Commerce Agency to increase local assistance grants for the defense adjustment matching program, $1.3 million for the Department of Industrial Relations for efforts to change the prevailing wage methodology (as proposed by the administration), and $11.1 million for the Department of Food and Agriculture's pest management program, mainly to begin an ongoing program of preventative release of sterile Mediterranean fruit flies in the Los Angeles basin.

The figure also shows several proposed spending reductions. For example, the figure shows a $3.1 million reduction for the Department of Industrial Relations due to the expiration of start-up spending related to workers' compensation insurance reform. The figure also reflects a reduction of $2.4 million for the Department of Corporations due to declines in regulatory workload.

Figure 2
Business and Labor Budget Summary
Selected Program Funding
1994-95 Through 1996-97
(Dollars in Millions)
 
Actual
1994-95
Estimated
1995-96
Proposed
1996-97
Change From
1995-96
Amount Percent
Consumer Affairs
 
 
 
 
 
General Fund $0.9 $0.7 $0.7 -- --
Special funds 256.0 307.1 309.7 $2.6 0.9%
Totals $256.9 $307.8 $310.4 $2.6 0.9%
Food and Agriculture
 
 
 
 
 
General Fund $66.0 $66.6 $64.1 -$2.5 -3.8%
Special funds 105.0 111.5 110.7 -0.8 -0.8
Totals $171.0 $178.1 $174.8 -$3.3 -1.9%
Industrial Relations
 
 
 
 
 
General Fund $132.1 $135.3 $138.0 $2.7 2.0%
Special funds 36.1 44.8 42.2 -2.6 -5.8
Totals $168.2 $180.1 $180.2 $0.1 0.1%
Insurance
 
 
 
 
 
Special funds $112.7 $133.1 $117.9 -$15.2 -11.4%
Public Utilities Commission
 
 
 
 
 
Special funds $79.3 $76.5 $74.4 -$2.1 -2.7%
Trade and Commerce
 
 
 
 
 
General Fund $36.7 $37.8 $39.6 $1.8 4.7%
Special funds 9.4 21.5 13.8 -7.7 -35.8
Totals $46.1 $59.3 $53.4 -$5.9 -9.9%
Energy Commission
 
 
 
 
 
Special funds $34.8 $44.8 $37.6 -$7.2 -16.0%
Corporations
 
 
 
 
 
General Fund $0.3 -- -- -- --
Special funds 28.5 $33.1 $34.1 $1.0 3.0%
Totals $28.8 $33.1 $34.1 $1.0 3.0%
Banking
 
 
 
 
 
Special funds $16.2 $16.4 $15.8 -$0.6 -3.7%

Figure 3
Business and Labor Programs
Proposed Major Changes for 1996-97
 
Department of
Industrial Relations
 
Requested:$180.2 million
 
 
 
 
 
Decrease:$0.1 million(-0.1%)
 
 

  • $1.3 million General Fund for prevailing wage changes
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  • $1 million ($618,000 General Fund) for increased workload in Information Systems Unit
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  • $274,000 General Fund for reform of overtime pay standards
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  • $3.1 million to reflect the reduction ($714,000 General Fund) of start-up spending related to workers' compensation insurance reform
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    Department of
    Food and Agriculture
     
    Requested:$174.8 million
     
     
     
     
     
    Decrease:$3.3 million(-1.9%)
     
     
  • $7.7 million General Fund to begin an ongoing prevention program to combat the Mediterranean fruit fly in the Los Angeles basin
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  • $3.4 million General Fund to increase inspection capability at border agriculture inspection stations and to inspect domestic parcel operations
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    Trade and
    Commerce Agency
     
    Requested:$53.4 million
     
     
     
     
     
    Decrease:$5.9 million(-9.9%)
     
     
  • $3 million General Fund for the Defense Adjustment Matching Grant Program
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    Department of Corporations
     
    Requested:$34.1 million
     
     
     
     
     
    Increase:$1 million(+3%)
     
     
  • $2 million for a health care service plan enrollee complaint program and to increase medical surveys for health care plans
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  • $2.4 million to reflect a decline in regulatory activities
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