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October 8, 2010

Major Features of the Legislature’s 2010-11 Budget

http://www.lao.ca.gov/reports/2010/bud/major_features/major_features_100810.aspx

Overview

Addressing an $18 Billion Budget Problem. The 2010–11 Budget Bill was passed by the Legislature on October 8, 2010. The Legislature’s plan attempts to address one of the most vexing state budget shortfalls in California’s history—the product of a continuing structural imbalance between state revenues and expenditures and a slow recovery from a severe recession that began in 2007 and ended in 2009.

In May 2010, the administration estimated that there would be a gap of $17.9 billion between General Fund resources and expenditures in 2010–11 under then–existing laws and policies. To address this projected gap, the Legislature opted for a package of budget actions summarized in Figure 1. That package (prior to vetoes) includes the following actions (based on our office’s categorization):

$6.8 billion of expenditure–related solutions (including ongoing and temporary cost or service reductions).
$5.4 billion of new federal funding (most of it not yet approved by Congress).
$3.3 billion of revenue actions (including $1.4 billion in higher assumed baseline state revenues consistent with our May 2010 state revenue forecast).
$2.7 billion of largely one–time loans, transfers, and funding shifts.