California Budget

Sandra M. Emerson

California Budget Prospects

General

Fund in the

red for nextfive years

Projected Revenue (billions)

Volatile Revenue Areas

• Corporate Income Tax (NOLs)

• Personal Income tax

< $50K

Income Population Tax Percent

< $50, 000 50% 6%

$51,000 to $100,000 20% 14%

Over $100,000Over a million

30%.0025 est.

80%**$15 billion (capital gains)

The Persistent Gap

Major Spending Areas

• Education

• Health/social services

• And all else including debt

Education

• K to 14

Higher Education

• Projected Expenditures in University Ed.YEAR 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14

UC 3.1 3.11 3.16 3.22 3.3 3.4

CSU 2.9 3.00 3.00 3.14 3.2 3.3

TOTAL 6.0 6.11 6.16 6.36 6.5 6.7

Change -- 2% .8% 3.2% 2.2% 3%

Health and Social Services

YEAR 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14

Spent 31.0 32.6 34.6 36.5 38.6 40.9

Change -- 5% 6% 5% 5.7% 5.9%

Other 2008 to 2014• Corrections and Rehabilitation average

annual increase of 5.3%

• Transportation annual increase of 4.5%

• Everything else: 9.2% annual increase

• Debt services 9.9% annual increase.

Outcomes • Propositions 1A-1F

1A to 1E to raise revenue defeated.

1F passed- no legislative pay increases during budget deficit.

Summary

• Rise in revenue by 2011

• Shrinking gap but persistent through 2014

• Based on steady state analysis

Comments or Questions?