02/20/2009 GAAS:065:08 FOR IMMEDIATE RELEASE Print Version |
Gov. Schwarzenegger Signs Budget to Move California Forward
Based off of his "four-legged stool" blueprint, Governor Arnold Schwarzenegger signed an historic budget package to solve California's $42 billion deficit that takes the necessary steps to reduce spending, bring in new revenue, improve our business climate and create jobs, and make government more efficient. Additionally, the Governor today used his line item veto authority to achieve nearly $1 billion more in General Fund (GF) savings for the state.
The bipartisan budget package signed today includes meaningful and lasting reforms for California that will strengthen our rainy-day fund, open up primary elections and eliminate legislative pay raises during deficit years.
"We have achieved a great victory for California today. By staying focused on what was best for the people of our state and not the special interests, we were able to come together and solve our $42 billion deficit and also find meaningful and lasting solutions to our broken budget system," said Governor Schwarzenegger. "During a down economy and facing an historic budget deficit we had to make some very difficult decisions, but I am very proud that California is back on the best path forward. We will continue to work with our most important partners - the people of our great state - to ensure we never again face the kind of catastrophic budget scenario we experienced this year."
On top of the $14.9 billion in spending reductions in the budget, the Governor used his line item veto power to save the state an additional $957 million from the 2009-10 budget GF. This includes: at least a 10 percent reduction to most of the Constitutional Offices; replacing GF appropriations with federal funds we otherwise would not receive for higher education; and, finding additional savings within the California Department of Corrections and Rehabilitation (CDCR).
The reduction from most Constitutional Officers' budgets will achieve $47 million in savings. This reflects equity among all executive branch agencies for the state employee compensation reductions within the budget through furloughs, elimination of positions, overtime reform and reducing paid state holidays. The Constitutional Officers will have the flexibility to implement the savings within their own offices.
Higher education will receive federal funding to replace GFs in the amount of $255 million each to the University of California and California State University systems. Additional savings of $400 million will come from CDCR through continued reforms and other cost saving measures that will not jeopardize public safety.
The budget includes temporary revenue increases totaling $12.5 billion through a one cent increase in the state sales tax, an increase in the vehicle license fee to one percent and an increase in the personal income tax that federal stimulus funding will likely help offset. The vehicle license fee will also include an additional ongoing 0.15 percent increase that will be dedicated to local law enforcement programs. Additionally, the state will bring in revenue through modernizing the state Lottery and bringing in $5 billion in 2009-10 that will offset the need for additional tax increases or program cuts.
With the budget asking Californians to pay more in taxes and also reducing their services, the Governor fought hard to include needed economic stimulus to help create jobs and boost our economy. It includes incentives and gives a competitive edge to companies that are creating jobs for Californians and to encourage companies to expand in and relocate to California. Also, a "new hire" tax incentive will target small businesses that create new California jobs in the coming two years - when we need them most. The package also provides for more public-private partnerships and design build authority to create more jobs and build projects quicker and more cost-effectively for the taxpayer. As well as, incentives to lure television and movie production back to California.
Governor Schwarzenegger was also successful in his push to make government more efficient at a time when California families and businesses are doing the same. The budget includes flexibility for categorical education funding allow local schools and districts to use it as they see best fit to serve children and keep more money in the classroom. And the state will move forward this year to reorganize its IT functions to save an estimated $1.5 billion over the first five years and creates a new streamlined, cabinet-level office for the state's energy-related functions helping California focus on energy stability and eliminating redundancy.
In addition to this, Governor Schwarzenegger delivered on one of his very first campaign promises and was able to secure long-lasting reforms for California through this budget. In this budget the rainy-day fund, or the budget stabilization account, will be increased and reformed making budget spending more predictable and stable. Additionally, through this package, Californians will have the opportunity to enact true reforms for our state including open primaries to provide more moderate candidates and eliminating pay raises for elected officials when California is spending more money than it is taking in. The Governor has been fighting for these kinds of systemic reforms since before he was elected. Finally, these meaningful structural changes to put California back on track will go before voters - and the Governor intends to form a partnership with the people to pass these ballot initiatives.
