Summary of the Governor’s Proposed May 2016 Budget Revise
Overview – the biggest news in the Proposed May Budget Revise was the Governor’s support of a $2 billion bond for supportive and affordable housing for the homeless.
· Tax revenues are down by $1.9 billion, due primarily to lower income tax receipts associated with lower capital gains.
· The MCO (managed care organization) tax will generate over $1 billion in revenues for the Medi-Cal program in the coming year.
· While the budget is balanced for the next several years, it is estimated that it will become unbalanced by 2019-20 (estimated $4 billion) due to the expiration of Prop 30’s temporary tax increases.
· The state has paid off nearly all debts from the Great Recession and will put aside nearly $6.7 billion into a Rainy Day Reserve. However there are unfunded retirement liabilities for state employees, UC employees and teachers amounting to $230 billion.
· The May Revise would redirect Prop 63 mental health revenues to fund a $2 billion bond for supportive and affordable housing for the homeless. The expected first year funding would be $267 million.
· Total General Fund spending is proposed to increase by 5.7% to $122 billion. Total state spending (includes special funds) will be $173 billion.
· K-12 education will be $51.4 billion; Health and Human Services will be $53.7 billion, Higher Education will $14,7 billion, Corrections $11.6 billion and Transportation $11.6 billion.
· Revenues will come from the personal income tax ($85 billion), sales tax ($39 billion), corporations’ tax ($11 billion), Motor Vehicle fees ($8 billion) and other ($18 billion).
· Total K-12 funding is proposed to be $87.6 billion ($51 billion General Fund and $36 billion other). The May Revise will increase K-12 funding by $2.9 billion.
· Early education will have a block grant of $1.6 billion.
· $12.5 million in one time funding is allocated to increase the supply of qualified teachers and to speed their education and credentialing.
· $100 million is allocated for emergency school repairs.
· Shift the childcare program from contracts to vouchers to give parents better control over the quality and accessibility of childcare for their children.
· Total higher education funding will be $30 billion.
o Better use of technology in community college teaching and education.
o Faster graduation rates at CSU campuses
o Higher undergraduate enrollment of California residents at UC campuses and better access to the UC’s for community college transfers.
Health and Human Services
· Total Health and Human Services funding is proposed to be $141 billion ($33 billion federal and $108 billion other. The May Revise will cut General Funds by $747 million.
· Medi-Cal caseload is projected to increase to 14 million during the next fiscal year, compared to 7.9 million in December 2013, just prior to the ACA.
· The optional eligibles (over 3 million) will cost $16 billion of which $820 million is General Fund in the next fiscal year.
· Counties will save $750 million in the current fiscal year and $643 million in the next fiscal year. The actual county savings in 2013-14 were $177 million less than estimated, and that amount will be returned to the counties.
· The new federal waiver for public hospitals, whole person care, children’s dental care and expanded substance abuse treatments will add $2.2 billion to the program.
· Full scope Medi-Cal for undocumented children will add 185,000 children at a cost of $188 million.
· The MCO tax will generate $1.1 billion in the next fiscal year and $1.7 billion in each of the next two years.
o $287 million for developmental services,
o $135 million for rate adjustments for ICF-DD facilities
o $240 million for retiree health prefunding
o $300 million for reductions in health plans’ insurance taxes.
· California has 21% of the nation’s homeless and 1/3rd of the nation’s chronically homeless. 1.5 million low income Californians pay more than half their incomes for rent.
· New housing is meeting less than half the growing need, steadily increasing the shortage of housing stock and making it ever less affordable for all Californians.
· The May Revise reports that the state allocates $3.2 billion in funding for new and more affordable housing. The May Revise proposes to reduce the costs, simplify the process and expedite the time required to develop new housing.
· 2016-17 Affordable Housing and Homelessness Funding (Dollars in Millions)
o Mental Health Services Act Programs $267 million
o Federal Funds $112
o Housing for Veterans Funds $75
o Regional Planning, Housing, and Infill Incentive Account $22
o Office of Migrant Services $6
o Various $94 million
o Multifamily Conduit Lending $300
o Multifamily Lending $190
o Single Family 1st Mortgage Lending $1,012
o Mortgage Credit Certificates $130
o Single Family Down Payment Assistance $48
o Special Needs Housing Program $55 million
o Affordable Housing and Sustainable Communities $400
o Low Income Housing Tax Credits (Federal) $225
o Low Income Housing Tax Credits (State) $61
o Farmworker Housing Assistance Tax Credits $5
o CalVet Farm and Home Loan Program $66
o CalWORKS Housing Support Program $35
o CalWORKS Homeless Assistance Program $30 million
o Housing Opportunities for Persons with AIDS (Federal) $3
o Homeless Youth and Exploitation Program $2
o Integrated Services for Mentally-Ill Parolees $2
o Specialized Treatment of Optimized Programming, Parole Service Center, Day Reporting Center, Female Offender Treatment and Employment Program N/A
· Total = $3,165 million
Prepared by: Lucien Wulsin
Dated: May 27, 2016