January 6, 2010
 
TO:                   ACSA Leadership and Members
                        Interested Parties
 
FROM:              Adonai Mack, Legislative Advocate
 
RE:                   Budget Advisory:  Governor's 2010 State of the State Address
 
In what will be a year of finality for Governor Schwarzenegger, he delivered his last State of the State address today.  In the governor's address he highlighted his initiatives and budget proposals for the coming year. The governor's address was a brief affair broadly covering an array of issues without specificity. He mentioned that the Legislature must work together with him as a team and focus on California's priorities to close the current budget deficit.  The governor's priorities include creating jobs, protecting education, reforming the tax and pension systems, reforming the budget process and ensuring that California receives its fair share of federal funding.
 
In addition to laying out his priorities for this year, the governor also discussed his plan for two major initiatives:  California Jobs Initiative and Operation Welcome Home.  On Friday, the governor will release his budget proposal to address a $20 billion deficit and additional information on his initiatives.  Below is a brief summary of the governor's initiatives discussed during the State of the State:
 
Higher Education Funding Protection
The governor is proposing a constitutional amendment that would require California to spend a greater percentage of funding on higher education than it does on the prison system. This amendment is similar to Proposition 98 in that it would require the state to spend at least ten percent of General Fund dollars on higher education and no more than seven percent of the General Fund on the state prison system. 
 
Jobs and Economic Growth
The governor announced a new initiative entitled the California Jobs Initiative.  The purpose is to create or retain up to 100,000 jobs and provide training to 140,000 individuals. The initiative would also streamline the permit process for construction projects to complete environmental impact reports and assist homebuyers by extending the homebuyer tax credit.  Finally, the initiative would attempt to make California a more business friendly state by reforming the legal rules for class action suits, products liability suits and capping punitive damage awards.
 
Budget and Tax Reform
Similar to the governor's budget reform efforts from previous years, the governor is concerned with the up and down state budget cycles.  His approach to fixing the budget cycles has now focused on the state's tax structure.  The governor is calling on the Legislature to implement the recommendations developed by the Commission on the 21st Century.  The governor believes that a restructuring of the tax system will help ensure a stable revenue stream.  
  
Pension Reform
The governor believes that the pension enhancements implemented in 1999 have contributed to the increase in pension costs and the state does not have enough resources to pay for these increased costs. He proposes to reduce pension benefits for new hires while protecting existing employees' benefits.
 
Federal Funds
The governor is proposing to pursue more funding from the federal government and push for California to receive its fair share of federal funding.  The governor mentions several changes that need to be addressed in order for California to receive additional federal funding. These include changing the federal funding ratio for Medi-Cal to adequately reflect California's population that receives Medi-Cal; and working with the federal government on the costs associated with incarcerating undocumented immigrants.
 
Operation Welcome Home
The governor's other initiative is called Operation Welcome Home.  This proposal provides resources to California veterans by assisting veterans with transitional workforce training and accessing both state and federal benefits.  
 
ACSA's Reaction
The State of the State provides a brief glimpse into what we can expect for the governor's budget proposal. While Proposition 98 funding was not specifically mentioned, the governor briefly mentioned that he will "protect education funding in the budget."   It appears that he is implying that his budget proposal will not make additional cuts to education to close the current deficit, however, we will truly not know until the budget is released.
 
The governor again preached bipartisanship to close the state deficit and called for a state fiscal emergency pursuant to Proposition 58 to deal with the current year deficit. Further, he called on the Legislature to take action on the Best Practices Budget Accountability Act, which is spearheaded by California Forward.  California Forward was created by several organizations to recommend devising a plan to change California's governance.  They have developed several different initiatives that address the ongoing concerns with developing the state budget and the Best Practices Budget Accountability Act is one of their proposals.  With his last year in office, the governor will likely be concerned about his legacy and the imprint that he will leave on the state.
 
Once the budget is released on Friday, be on the look out for our analysis and perspectives.  
 
Reminder: 2010 Budget Perspective Workshops
 
ACSA, along with School Innovations & Advocacy will once again host a series of Budget Perspectives 2010 workshops around the state.  These workshops will be held in various locations beginning on January 13 through January 25.   Specific dates and locations can be found here:

http://www.sia-us.com/ProductsServices/ProfessionalDevelopment/Now_Open_for_Registration.aspx