Countdown to May Revise: Assembly Republican Budget Plan Doesn’t Pencil Out

Yesterday, the Assembly Republican Caucus released the outlines of a plan aimed at bringing the budget into balance without additional tax revenues. This proposal immediately brought to mind a graph we released based on Department of Finance data showing the large share of recent years’ budget “solutions” that were either short-term or illusory in nature. While the lack of line-item detail makes in-depth analysis impossible, it is clear that major components of the Republican plan rely on “smoke and mirrors” and other gimmicks to claim that it is possible to balance the budget without additional revenues or deep cuts to education. Examples of some of the questionable assumptions include:

  • A $1.1 billion cut to state employee costs, without commensurate reductions to prison or higher education spending. As we’ve written before, six out of 10 state workers are employed in education or public safety. Thus, it is virtually mathematically impossible to reduce state employee compensation by an amount equivalent to a 10 percent across-the-board reduction without making deep cuts in both higher education and public safety. Layer on top of this an assumed $600 million in savings from unallocated “operating expenses and equipment reduction” and you have the recipe for a sizeable shortfall in next year’s budget.
  • $700 million in savings from “competition” – using private vendors in place of public workers. There’s no hard evidence to suggest that savings of that magnitude could be achieved and even less to suggest that savings would occur during the upcoming budget year. In fact, creating statewide eligibility system for public programs could increase total costs and diminish access to critical assistance by duplicating work currently done at the county level.
  • Delaying $500 million in debt repayment into the future. This proposal simply shifts costs into future years when, absent multi-year revenues, forecasts suggests that the state will still face significant budget shortfalls.
  • An apparent double count of some savings already scored in the March budget agreement. Documents released yesterday appear to suggest that the Republicans are scoring some savings already taken into account in the March budget plan. Additional information is needed to determine whether this is in fact correct.

The plan includes a sizeable cut to funds for schools serving California’s poorest students by zeroing out funding for the Quality Education Investment Act (QEIA), a targeted cut of $450 million to classrooms already hard hit by recent years’ budget cuts. Perhaps most significantly, the Republican plan would prolong California’s budget crisis by providing at best a patchwork, one-year approach to a multi-year problem that threatens the state’s ability to rebuild core public institutions, plan for the future, and prepare for the challenges of an ever-more-competitive global economy. It’s time for a balanced approach, based on sound estimates and realistic, achievable assumptions, that puts California’s future first.

— Jean Ross