Copyright© 2002 by School Services of California, Inc.

Volume 15                   For Publication Date: December 20, 2002             No. 25

Assembly Budget Committee to Take Balanced Approach to
Solving the State’s Budget Crisis

 The Assembly Budget Committee met for the first time on Monday, December 16—2002, all 31 of them. The number of members on the committee sets a new all time high; last year there were 29 members. With the addition of two members, the total of 31 represents almost half of the entire Assembly (80 members) serving on one committee. The committee is chaired by Jenny Oropeza ( D-Long Beach ) and is composed of 18 Democrats and 13 Republicans; it will take 16 votes to pass a bill from the committee. The committee contains 11 members who were just elected to the Assembly.

 The purpose of Monday’s meeting was to discuss the Governor’s proposed mid-year cuts. Also in attendance was Senator Wes Chesboro (D-Arcata), chair of the Senate Budget Committee. The committee heard from representatives of the Department of Finance and Legislative Analyst’s Office.

 At the beginning of the meeting, Assembly Member Oropeza stated that it was the intent of the Budget Committee to find a solution to the budget deficit through a balanced approach that includes both cuts and tax increases. Thus, a working group has been formed, led by Assembly Member Dutra (D-Fremont), that will look at revenue options and report back to the committee by mid-January 2003.  

Department of Finance Statement  

The Department of Finance presented the following:  

§       Economic recovery now is projected to start in the latter half of 2003  

§       Businesses are not investing—it’s a consumer-led economy and that is not good  

§       In November, California lost another 10,000+ jobs (manufacturing and high-tech sectors are especially weak)  

§       Since May, 2002, the state is more than $2 billion below projected revenue  

§       Public education sustained one-third of the proposed $10.2 billion mid-year cuts. Across the board cuts will allow flexibility. Legislation is forthcoming on categorical flexibility. State mandates are proposed to be suspended for a savings of $870 million; however, the Administration is willing to look at amending mandate obligations. The Governor would like to seek action taken by the Legislature on his mid-year cuts by mid-January. Details of specific proposals will be available in January when the State Budget is released  

Various members of the committee expressed concerns and observations, such as: the requested analysis of long-term implications of cuts, beyond just making the budget cuts this year; concerns about a lack of priorities and specifics; and where the rest of the cuts are going to come from to address the budget shortfall in the current year. Assembly Speaker Herb Wesson (D- Los Angeles ) has appointed a commission to look at long term restructuring of the State Budget.  

Legislative Analyst Statement  

The Legislative Analyst Office stated the following:  

§       Department of Finance’s proposals for current year cuts are credible, although there is a concern about the $1.1 billion Proposition 98 across-the-board proposal. The mid-year cut proposal does not create flexibility, but affects the classroom and is difficult for schools to absorb since they would still have programmatic obligations.  

§       The LAO believes that a more targeted approach needs to be taken. The LAO also recommended that the reserve for economic uncertainties needs to be increased during good times, and the Legislature needs to start early in the budget process instead of waiting for the May Revise.  

The committee adjourned without taking any definitive actions and will not convene again until January 2003.  

— Arnold Bray