California debt is slowly recovering but still vulnerable – new balanced budget proves
Gotten (Editor at California Newswire) 6/28/12
(Valerie, “Calif. Governor Brown Signs California’s 2012-13 ‘Balanced’ Budget,” http://californianewswire.com/2012/06/28/CNW11918_102953.php)
SACRAMENTO, Calif. /California Newswire/ — Governor Edmund G. Brown Jr. on Wednesday signed a balanced state budget that protects funding for education and public safety while cutting $8 billion from government to close a $15.7 billion deficit and build a reserve of nearly $1 billion. The budget slashes spending in almost every part of state government and enacts significant welfare reform while increasing funding for K-12 education by 14 percent, pending voter approval of the Governor’s initiative. “This budget reflects tough choices that will help get California back on track,” said Governor Brown. “I commend the Legislature for making difficult decisions, especially enacting welfare reform and across-the-board pay cuts. All this lays the foundation for job growth and continuing economic expansion.” The budget assumes voter approval of the Schools and Local Public Safety Protection Act, an initiative placed by Governor Brown on the November ballot. The initiative will enact temporary increases on high-income earners, raising income taxes by up to three percent on the wealthiest Californians for seven years. It would also increase the state sales tax by one-quarter of one cent for four years. Six billion dollars in additional cuts to education and public safety will be triggered if the initiative fails. “My revenue proposal is fair and temporary,” said Governor Brown. “Our state budget problem was built up over a decade, and it won’t be fixed overnight. These temporary increases will ensure funding for our schools until the economy improves.” The budget builds on the significant progress that has been made in tackling the $26.6 billion deficit inherited from the previous administration. Last year’s budget slashed $16 billion and shifted California’s credit outlook from negative to positive. Last year’s budget cut funding for dozens of state programs, made state government more efficient through consolidation and reorganization and moved government closer to the people through Realignment. Significant Details of the 2012-2013 State Budget: Increases Funding for Education Under this budget, funding for K-12 education and community colleges will receive an increase of 14 percent, subject to voter approval of the Governor’s initiative. Funding will increase from $46.9 billion in last year’s budget to $53.6 billion this year. Keeps Higher Education Affordable for Low-Income Students The budget protects Cal Grants for students attending public universities. To ensure the program is cost-effective, the budget prohibits colleges and universities that are unable to meet minimum performance standards from participating in the program. Protects Public Safety The budget continues to fund local governments that are implementing public safety Realignment. It includes a permanent funding structure so that local governments will have a reliable funding source into the future. Cuts State Employee Compensation Costs The budget includes a 5 percent cut to state employee compensation for a savings of $800 million. Reforms Welfare The budget restores the CalWORKs program’s focus on self-sufficiency and employment by establishing a 2-year time limit for parents who are not meeting federal work requirements. Builds Reserve of Nearly $1 Billion The budget has a reserve of $948 million to protect the state against unforeseen costs. Restructures Funds for Trial Courts The budget restructures trial court funding and reduces General Fund support by $246 million on a one-time basis and requires each trial court to use their available reserves. The budget delays court construction for a savings of $240 million and includes $125 million in ongoing savings. Reduces Corrections Spending and Implements Long-Term Corrections Solutions In April 2012, the Brown Administration released a comprehensive plan to save billions of dollars, end federal oversight and improve the prison system. As a result of this plan, the California Department of Corrections and Rehabilitation expects to save $1 billion in 2012-13 and $1.5 billion in 2015-16 while satisfying the U.S. Supreme Court’s order to reduce the prison population. The budget, in full, will be posted at 9:00 AM on Thursday, June 28th at: www.dof.ca.gov.
Economic Recovery
California’s economy is recovering now – citizen initiatives
Mayer (Executive Director of California Forward) 2012
(James P, “A Roadmap to Fixing California’s Economy,” http://www.foxandhoundsdaily.com/2012/07/a-roadmap-to-fixing-californias-economy/, July 11th 2012)
It’s difficult to find one word to describe the overall mood of Californians. There’s anxiety, frustration and anger about the state of our once Golden State. Unlike previous generations, for many the California Dream will always be just a dream. But when thousands of community leaders came together for genuine discussions about the state’s economy, other words surfaced: Innovation and hope, entrepreneurship and confidence, even a stubborn pride that California business can lead the world again. Several months ago, this conversation started in 14 “regions” that are geographic areas defined more by common economic activity than political boundaries. The question posed was this: If we could take any four or five actions to turn our state’s economy around, what would they be? These regional forums were sponsored by our partner, the California Stewardship Network, which is made up of regional groups that welcomed an opportunity to harmonize and build upon their previous discussions statewide. The forums revealed amazing agreement on a few of the right next steps to attract capital, improve workforce skills and reduce the unintended friction in regulations. Regional participants then formed action teams to further refine the ideas, which were then presented and discussed at the first-ever California Economic Summit in Santa Clara in May. The first deliverable from the Summit was a commitment to restoring California’s prosperity that was signed by participants, and can be signed by you here. The Summit also identified a number of actions that can be distilled into two immediate priorities: 1. California must creatively invest in people, infrastructure and innovation to prepare the regions of our state to compete in the 21st Century Global Economy. California must streamline complex regulatory processes to reduce the cost of doing business while maintaining environmental standards. To promote these priorities, seven “signature initiatives” were developed to begin articulating the comprehensive and sustained efforts needed to make California an attractive place to do business and foster quality job growth that in turn will reduce poverty, bolster the middle class, and provide the revenue that will allow California to double down on its future. The recommended actions include improving the efficiency and reducing abuse of the California Environmental Quality Act, increasing workforce skills, encouraging innovation, making investment capital accessible to businesses, financing public infrastructure, and overhauling the water system. All of these issues have been and continue to be controversial. The summit demonstrated, however, that civil conversations can reveal solutions acceptable to both sides – and that even more civil discussion is needed to resolve the largest conflicts. The full Action Plan, which was released on July 2, can be found here. It recommends 47 steps (one of which was just checked off the list when the federal government announced the opening of a California-based patent office in San Jose). So now what happens? As Pete Weber, co-chair of the Action Team on Water Infrastructure, put it: “We are not filing this report and going away. We are committed to working on these implementation steps and getting this economy going again. It is hard work, but hundreds of us are willing to put in the time which we believe will inspire our elected officials to start taking the necessary steps to restore California’s leadership in the world economy.” California’s diversity includes its economic regions and drivers. What’s important to Fresno may or may not be important to San Diego, or the Inland Empire. This process respects that. But regional leaders also understand that to improve regional economies, they need the attention and support of state officials. Regardless of what we believe personally, California has earned a reputation as a costly place to do business. The regulatory structure is complicated and the process governing permits is adversarial. Doing business in California is viewed by some government agencies as a privilege rather than a vital component to individual self-sufficiency, social growth and fiscal stability for public programs. Californians’ concern with the economy tracks with their declining confidence in state-elected officials to address the important issues. The California Economic Summit and its Action Plan, driven by an informed and active group of bipartisan regional champions, give elected officials pragmatic steps they can do to remedy both of these problems. The Summit also documented something that California Forward and its partners at the California Stewardship Network know to be true: If given a chance, interest group leaders are willing to talk through issues that are important to them as a means of finding pragmatic solutions to big problems. George Schultz, one of the Summit’s co-chairs, began the event by reading the slogan on a necktie given to him by Ronald Reagan: “Democracy is not a spectator sport.”
Economic Recovery
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