On May 14, Governor Jerry Brown released his May Revision to his 2012-2013 budget proposal. This revision reflected a budget shortfall which has grown from $9.2 billion in his January budget proposal to $15.7 billion. The Governor’s administration attributed this increase to an overestimation of general fund revenues; impacts of court and federal decisions; and an increase to Proposition 98.
The Governor’s Budget includes a ballot initiative to temporarily increase state income tax and state sales tax, subject to voter approval in November 2012. Should this tax initiative pass, there would be an increase to the sales tax by ¼ percent until the end of 2016 and an increase to personal income tax for the state’s top earners by up to 3 percent until the end of 2019. These temporary taxes would generate $8.5 billion in new revenues annually to the state.
If this ballot initiative is approved by voters, K-14 Proposition 98 adjustments will result in flat funding. If the ballot initiative is NOT approved by voters, the Governor’s proposal includes trigger cuts to close the budget deficit. Of the proposed trigger cuts, 91 percent of the reductions would be for K-14 education. For school districts this equates to about $441 less per annual Average Daily Attendance (ADA).
The Governor’s release of the May budget also reflects changes to his proposed weighted student formula. These changes include, but are not limited to, increasing the base revenue limit funding level from $4,920 to $5,421; extending the phase-in period to seven years; adding a hold-harmless clause for the 2012-2013 school year only; adding grade-span adjustments; and adjusting its implementation as subject to the passage of the Governor’s tax measure.
Mandate reform is another area outlined in the Governor’s May revise. The proposal includes a block grant incentive program that would be distributed per ADA; the elimination of the existing mandate claiming process; and repealing half of the current mandated costs which includes the six highest mandated costs items. Finally, the May revision proposes the elimination of the transitional kindergarten program requirements.
The legislature must send a budget to the Governor by the end of June.