The 2010 Budget Season Officially Begins

Earlier today, the state Senate passed a series of measures aimed at closing a portion of the gap in the current and upcoming years’ budgets. Provisions passed by the Senate include:

  • Extending a 3 percent reduction in Regional Center provider payment rates;
  • Assuming $811.0 million in savings from prison medical costs and $182 million in savings from commutation of prison sentences;
  • Requiring state departments and agencies to reduce payroll costs by 5 percent; and
  • Expanding the range of retailers who are required to collect sales taxes from Californians.

The Senate deferred action on other provisions, including a complicated “gas tax swap” that would eliminate the sales tax on gasoline and replace it with an increase in the gasoline excise tax. This provision would allow the state to use revenues that are currently dedicated to specific purposes to be used to pay for obligations paid out of the General Fund, thereby reducing the budget gap. The Senate proposal somewhat parallels a proposal made by the Governor in January, with several important differences. The Senate would, for example, continue to impose the sales tax on diesel fuel and dedicate a portion of the revenues raised to public transit. Action was also deferred on a proposal that would impose a surcharge on homeowners’ insurance policies to support CalFIRE emergency response costs. A full list of Senate mid-year budget “solutions,” including those yet to be acted on, is available here. The Senate-passed measures will now go to the Assembly for consideration and action.

— Jean Ross

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