Summary of the Governor’s Proposed May 2016 Budget Revise

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

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