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SA Page 9 BUDGET from page 1 .............................................. Overall, the governor's proposed budget drew a mixed response by the committee and those speaking at the hearing. Sen. Chesbro announced that the Legislature is starting to review the budget proposals much earlier this year, which will aid in negotiations and potentially produce a timely budget. He felt, however, that the govemor's budget proposal takes away areas of legislative oversight and asked committee members to think about whether the budget makes investments where they need to be made. Senate Budget Vice Chair Dennis Hollingsworth (Murrieta) commended the governor on the early repayment of debt included in the budget proposal and the lack of new taxes, but he asked committee members to think about the effect of an ongoing deficit and noted his concern about when California would be able to plug its "deficit hole." Legislative Analyst Liz Hill's comments were direct, stating that the govemor's proposal goes in the wrong direction in getting the state's fiscal house in order. She announced that the full LAO budget analysis will be available online at www.lao.ca.cov on February 23, and then ad- dressed a number of areas of concern, including: . The budget proposal ratchets up ongoing spending by about $2 billion. The budget proposes expansion of new programs when the state can't support existing programs. The erosion of legislative oversight in- cluded in the proposal. The proposal overlooks several potential large costs that may need to be addressed in the 2006/07 budget. This includes: 1) A pending decision in the appeal of Guillen v. Schwarzenegger. (The budget assumes state will prevail on appeal of Guillen court case, avoiding $460 million in additional costs.) Mandates are under-funded by . . . 2) 3) $140 million. No funding for 18 bargaining units in negotiation currently. (Only three of the state's 21 employee bargaining units currently have agreements which extend past July 2, 2006. There are no funds set aside to pay for any potential costs related to new agreements with the other 18units.) The Deficit Reduction Act of 2005, which is currently being discussed at the federal level, could place significant fiscal pressure on Califor- nia, particularly in the areas of stu- dent loans, Medi-Cal and CaIWORKS. 4) The Department of Finance's presentation highlighted major program areas contained in the governor's proposal and provided the committee with an economic forecast. Vince Brown, chief deputy director of the Department of Finance described California's predicted growth for FY 2006- 07 as "reasonable and modest" and explained that higher energy prices and the slowing of residential construction were potential factors in California's predicted slower growth. Budget committee members questioned both the Department of Finance and the LAO about other budget areas including Proposition 42 repayments, SSI/SSP and CalWORKS cuts, and Proposition 49, the governor's After-School Initiative that was passed by voters in 2002, which will start to receive funding in the 2006-07 budget. Both the Assembly and Senate budget committees will continue to study these issues in depth. For the latest information about the govemor's budget proposal and Strategic Growth Plan, please visit the League's website at www.cacities.ora. For more information on this and other League issues, visit www .cacities.org. PRIORITY FOCUS - PAGE 9 January 27, 2006 - Issue 14 Visit the League's Official Website--www.cacities.org -,.."..,..",-.".---- ,,-_..._,...'_u.._-- ' . ,..,....".....,,---,... ._.._--,.,,----_....",...---'-"'---