STATE BUDGET PROCESS

Issue Summary

Separate from the matter of passing the budget in any given year is the issue of the structure of the underlying budget process, and whether it promotes or impedes efficient allocation of state revenues and responsive, responsible policy making for the long term. The state’s ever-increasing public debt resulting from an over-reliance on borrowing and tolerance of annual deficits depresses public investment, limits the ability of elected representatives to respond to public policy priorities in any given year, and is leaving an ever-increasing bill for California’s next generation.

In its 2006-07 “Perspectives and Issues” report, the Legislative Analyst Office urges policy makers to attend to the state’s increasingly serious fiscal position, which includes a recurring annual operating shortfall of $4 to $5 billion; $20 billion in budget-related debt and an additional $42 billion in infrastructure bond debt (from LAO report: ‘What is the State’s Current Debt Situation?’), of which the annual cost of repaying is $3.7 billion (2006-07) to $5 billion (2008-09); and long-term unfunded retiree health obligations somewhere between $65 billion and $95 billion to date, and growing.

Supporters of budget process reform generally seek ways to either reduce overall spending or update the state’s revenue structure to match demonstrated and measurable needs, and improve accountability and transparency in the process so that it can lay the foundation for more efficient and responsive public policy.

Current Status

Governor Arnold Schwarzenegger has faced major operating deficits since entering office, and has financed his budgets with borrowed money or prior year resources. He has parlayed this experience into calls for reforming the budget process (although his budget reform proposals to date have fallen short of what is generally considered to be needed to achieve real reform). This year’s budget surplus has taken the pressure off of the Governor and legislature temporarily, which, ironically, threatens to produce some of the same behavior that stimulated Governor Gray Davis’ recall – rapid spending of a one-time revenue surplus while failing to address an ongoing multi-billion dollar structural deficit.

UPCOMING EVENTS

None scheduled on this topic at this time

BACKGROUND

Past VoR Programs

Multi-Newspaper Editorial Board Roundtable: "California’s Flawed Fiscal System: Is the State Impeding Local Governments' Ability to Address Local Problems?" (6/21/06, San Francisco) | PDF TRANSCRIPT | California Channel Video | DOWNLOAD MP3

Post Election Series on Governance Reform: “Prop 76 and Budget Reform: Just the Beginning?” (11/16/05) | DOWNLOAD MP3

Special Election House Party on Props. 76 and 77: State Budget Reform and Redistricting Reform (10/26/05, San Francisco) | DOWNLOAD MP3

Special Election Ballot Measure Forum: “Hot Topics/Cold Facts," Briefing on Props. 73-80. (10/22/05, Los Angeles) | DOWNLOAD MP3

Special Election Ballot Measure Forum: “Proposition Exposition," Briefing on Props. 74, 76, 77. (10/17/05, Los Angeles) | DOWNLOAD MP3

Editorial Board Roundtable: Budget Process Reform (hosted by the Sacramento Bee, 6/29/05) | PDF TRANSCRIPT

Panel Discussion: Is the State Budget Process Part of the Budgeting Problem ? (Spring Conference: "If It’s Broke, Fix It: Making California Government Work for Californians" 6/10/05) | DOWNLOAD MP3

Legislation

None.

Websites

California Department of Finance. This is a direct link to the state budget legislative timetable.

Next Ten Budget Project. This site enables anyone to try to balance the state budget.

California Budget Project. The California Budget Process conducts independent fiscal and policy analysis on the impact of budget proposals on low and middle-income Californians. 

The Institute of Governmental Studies/Library. The IGS Online Library provides information on the current budget as well as past efforts to recommend improvements to the process.

California League of Women Voters.. This site has links to the League’s position on the budget process and links to additional information on the topic.

NOW with Bill Moyers. This page details budget deficits state-by-state.

California Forward. California Forward is a nonprofit organization charting a new path to more effective state governance through nonpartisan policy analysis, public dialogue throughout the state on key issues, and pursuit of sensible reforms.

Reports and Papers

‘In Search of Fiscal Responsibility: An Analysis of State Fiscal Choices ’ (New California Network Report by J. Fred Silva, 2006)

‘California Constitution Revision Commission: Final Report: Improving the State Budget and Fiscal Process’ (Recommendations of The California Constitution Revision Commission, 1996)

‘Governing the Golden State: A Critical Path to Improve Performance and Restore Trust’ (Report by the Little Hoover Commission, July 2004)

‘CA 2025 It’s Your Choice” (PPIC Study by Mark Baldassare and Ellen Hanak, 2005)

‘PPIC Statewide Survey: Special Survey on the California State Budget’ (pdf) (Public Policy Institute of California Report by Marc Baldassare, January 2006)

‘A Summary of Recommendations for Reforms to the State Budget Process’ (California Research Bureau Report by Charlene Wear Simmons, 2002)

‘Citizens’ Budget 2003-05’ (Report by The Reason Public Policy Institute, 2003)

'Final Report of the Speaker’s Commission on State and Local Finance' (Report by Speaker’s Commission on State and Local Finance, 2000)

‘A 21st Century Budget Process for California’ (pdf) (Recommendations of the California Citizens’ Budget Commission, 1998)

‘Californians and the State Budget: Opinions about the Deficit and Support for Policy Options and Structural Reforms’ (pdf) (Public Policy Institute of California Occasional Paper by Mark Baldassare, July 2003)

‘Statement of Principles: California Budget and Tax Reform Initiative’ (Report by Joint Venture: Silicon Valley and the Bay Area Economic Forum, February 2004).

‘California’s Budget Process: Improving Quality, Cost Efficiency, Effectiveness and Accountability in State Government’ (Report by the Senate Advisory Committee, 2000) Addendum to this report can be found here.

‘Options for Reforming the California State Budget Process’ (pdf) (Paper by John Ellwood and Mary Sprague for the Conference on California Constitutional Reform, June 1995)

‘Budget Reform: Putting Performance First’ (Report by the Little Hoover Commission, 1995)