Having trouble viewing this email? Click here
Receive this as a forward? Get the Nooner in your e-mail box
THE NOONER for May 15, 2013
THE REVENUE DEBATE
The governor released his May revision to his January budget proposal yesterday, and the chatter among interest groups and legislators was "Where did the money go?" The chattering class had been raising their glasses to the daily revenue numbers throughout the month of April and were expecting large amounts of new money to be proposed in the revised budget.
Instead, the governor turned to his "gnomes," who explained that they believe that revenues will drop off sharply in the remainder of the year and offset the large surplus collected in January. Finance hasn't provided an updated cash flow, but the May Revision provides a personal income tax (PIT number of $63.9 billion. This is just $1.1 billion over the January projection of $62.8 billion, thus dismissing more than three-fourths of the $4.5 billion in PIT that has been collected year-to-date above January projections. Finance then projects that PIT will drop by nearly $3.1 billion to $60.8 billion in 2013-14.
Director of Finance Ana Matosantos explained during the governor's presser yesterday that their lower projections for May and June collections were based on studying state wage data. Finance has significantly dropped its estimate of California personal income growth from 4.3% in the current year (2013) to 2.1%, and increased it slightly from 5.5% to 5.7% in 2014. This is likely due to the accelerated realization of income at the end of the 2012 tax year attributed to anticipated or actual changes in federal tax policy.
However, critics noted that, even if $500 million is attributed to prior years as the Legislative Analyst's Office (LAO) has suggested, PIT collections would need to fall 25% below projections for May and June, which is seen as highly unlikely.
Observers now look to the 10th and L site of the LAO, which is expected to provide its review of the governor's revised budget tomorrow, including its latest revenue forecasts.
What many people believe was the perceived understating of revenue could have been because the administration was being very cautious amidst significant revenue uncertainty, or for similarly smart political reasons. It is very possible that the Legislature will add revenue assumptions and spending to the budget, particularly if supported by the LAO. The governor can use that desire as a trade for legislative acceptance of his number one budget priority--the new K-12 funding formula.
THE UGLY--NOTHING TO SEE HERE--PARAGRAPH: "Between now and 2016-17, the costs for retired state employees' health care is projected to rise by 59 percent. Yet, the state has not set aside significant money to address the $63.8 billion in unfunded liabilities for future obligations. That liability increases by billions of dollars each year." [p. 7]
NOTABLY ABSENT: As brought up in the governor's presser yesterday, the revised budget doesn't show the Administration's cards to state employees that are currently negotiating a new contract.
SHOCKER: California speaker gives Assembly's juiciest jobs to biggest fundraisers [Lance Williams and Agustin Armendariz @ CIR] - "According to the data, Pérez gave lawmakers who raised the most money the best assignments in the new Legislature – posts on the speaker’s leadership team and seats on the powerful 'juice committees.'"
KICKING AND SCREAMING: Supervisors will appeal court's $147M demand - [Andrew Galvin @ OCR] "Orange County's Board of Supervisors voted Tuesday to appeal a judge's ruling that requires the county to repay $147 million it withheld from a state fund that supports schools and community colleges. Last week's ruling by Orange County Superior Court Judge Robert Moss blew a big hole in the county's finances, just as the budget staff was finalizing the budget for the fiscal year starting in July."
Here is the constitutional officers landscape with a few additions:
Secretary of State
Superintendent of Public Instruction
Board of Equalization, District 1
Board of Equalization, District 2
Board of Equalization, District 3
Board of Equalization, District 4
* Kashkari is likely to run for statewide office, but has not settled on which race.
** Some observers speculate that the 72-year-old Lockyer might retire rather than run in 2014.
TOP HEADLINES ON AROUNDTHECAPITOL.COM AS OF 12:00PM
Governor Brown Pushes Fiscal Moderation In Revised Budget Proposal
Katie Orr @ capradio.org
The state will have about $3 billion more than expected in the next fiscal year. The added revenue is due in part to Proposition 30, which increased sales and income taxes after voters passed it last fall. In announcing his May budget revisions, Governor Jerry Brown proposed spending 1.9 billion dollars of that on education. Beyond that the governor took a more cautious tone.
Report Card: Supporters Laud Governor's Proposed Budget
Diana Lambert @ blogs.sacbee.com
State schools chief Tom Torlakson joined other education advocates in sending out messages of support for Governor Jerry Brown's proposed state budget this morning.
Reactions To Jerry Brown’s May Budget Revision
By Josh Richman Tuesday, May 14th, 2013 at 12:29 pm in Assembly, California State Senate, Connie Conway, Ellen Corbett, Jerry Brown, John Perez, Mark Leno, state budget, Susan Bonilla, Uncategorized.
California Gov. Jerry Brown Proposes More Education Spending, But His Budget Is Less Upbeat
Steven Harmon, Josh Richman, Theresa Harrington and Katy Murphy @ mercurynews.com
Warning Democratic legislators that he will not sign a budget that ramps up spending, Gov. Jerry Brown on Tuesday framed a much less upbeat vision about the California economy than just four months ago.
Brown Takes Restrained View Of Calif. Spending
JUDY LIN @ sanluisobispo.com
Riding a wave of state tax revenue, Gov. Jerry Brown released a budget proposal Tuesday that looks much different from the ones Californians have become accustomed to in recent years: It has a surplus.
Torlakson, education groups express support for governor's proposed budget
Diana Lambert @ blogs.sacbee.com
The terrain for the 2013 version of California's annual budget trek got a little clearer on Tuesday morning, with Gov. Jerry Brown releasing an updated blueprint.
Gov. Jerry Brown Takes Cautious Approach On California Budget
David Siders @ sacbee.com
Gov. Jerry Brown, dismissive of a surge in state tax revenue that stirred optimism at the Capitol, moved Tuesday to blunt appeals for increased spending, downgrading his budget proposal from January.
Jerry Brown 'aiming Low' On Pay For State Employees
Jon Ortiz @ blogs.sacbee.com
During a press conference this morning to tout his latest state budget plan, Gov. Jerry Brown said that he wants to hold down state payroll costs as his administration bargains new pacts with nearly a dozen unions.
Brown budget sends extra $2.9 billion to education
Gov. Jerry Brown on Tuesday proposed a revised budget that would send an extra $2.9 billion to California schools this year, including $1 billion in one-time funding to help districts implement more rigorous academic standards.
Slight Realignment Changes In Gov. Jerry Brown's New Budget Proposal
Andrew Edwards @ dailynews.com
The governor's May Revised budget would give local probation departments a relatively small boost in funding for programs designed to prevent offenders from returning to state prison. Brown's spending plan would also create a program in which offenders sentenced to long-term jail commitments could be exchanged for prison inmates, among some other proposals.
Maldonado Trips As He Gins Up Crime Issue
Dan Morain @ sacbee.com
Abel Maldonado couldn't get elected lieutenant governor when he ran against Gavin Newsom in 2010 and failed to dislodge Rep. Lois Capps from her Santa Barbara-area congressional seat in 2012.
Early Education Advocates Disappointed With Governor's Revised Budget
Lillian Mongeau @ edsource.org
Early education advocates in California were hoping for increases in preschool and child care funding in the governorâs revised budget, released Tuesday. No such luck.
Senate Election: Norma Torres Beats Paul Leon For Inland Seat
JIM MILLER @ pe.com
Assemblywoman Norma Torres defeated Ontario Mayor Paul Leon in Tuesdayâs special election to fill a vacancy in the state Senate seat that extends from Pomona to San Bernardino.
Gov. Jerry Brown Unveils Cautious Budget For Deficit-free State
Chris Megerian @ latimes.com
The governor says California's financial condition remains unstable despite a surge in revenue. Only schools will get a substantial boost beyond his January budget.
Highlights Of Gov. Jerry Brown's Revised Budget
Some highlights of Gov. Jerry Browns revised budget released Tuesday:K-12 SCHOOLS: Sticks to Browns original proposal to give more money to school districts that have more English learners, low-income students and foster youth.
Brown Proposes $3 Billion More For K-12, Including $1 Billion For Common Core | Edsource Today
There had been projections of even more money this year, but in a news conference releasing his May budget revise, Gov. Jerry Brown tempered expectations; the drag of federal tax changes, sequestration of federal spending and new payroll projections had led the administration to lower its bottom-line estimates in the May revision of the state budget.
Dianne Feinstein Wins Vote To Ban Drones Within Three Miles Of Border
Wyatt Buchanan, Michael Collier, Richard Dunham, Bob Egelko, Joe Garofoli, Marisa Lagos, Carolyn Lochhead, Carla Marinucci, @ blog.sfgate.com
Dianne Feinstein wins vote to ban drones within three miles of border
Gov. Jerry Brown's Revised Budget Plan Offers More Money For Schools
Gov. Jerry Brown s May budget plan revision reflects a better-than-expected cash flow but also a need to control spending despite the deep cuts made in recent years.
Health exchange awards $37 million in outreach grants
The UC Davis Center for Reducing Health Disparities and the Sacramento Employment and Training Agency have a million reasons to celebrate after the state agency overseeing a federal health care overhaul Tuesday announced 48 winners of education and outreach grants.
Police arrest 13 union protesters at UC Regents meeting
Laurel Rosenhall @ blogs.sacbee.com
University of California police arrested 13 people this morning who staged a noisy but orderly protest during the governing board of regents' meeting at the Sacramento Convention Center.
National Briefing | Midwest: Minnesota: Governor Signs Same-Sex Marriage Into Law
Gov. Mark Dayton signed a measure Tuesday giving gay couples the right to marry, making Minnesota the 12th state in the nation to permit same-sex marriage.
Jeremy B. White @ blogs.sacbee.com
Republicans in California have taken to aligning themselves more with the fiscally cautious budget priorities of Gov. Jerry Brown than with their Democratic colleagues in the Legislature, and party leaders had some tentative praise for the governor's revised 2013-2014 budget on Tuesday morning.