May Revision Calls for a State EITC and Invests in Education, but Leaves Some Key Supports Diminished
On May 14, Governor Jerry Brown released the May Revision to his proposed 2015-16 state budget. With increased state revenues – partly the result of the Proposition 30 tax increases approved by voters in 2012 – and a growing economy, the Governor proposes to spend $115.3 billion from the state’s General Fund in 2015-16. The May Revision estimates $6.7 billion in higher General Fund revenues across the three-year “budget window” (2013-14, 2014-15, 2015-16) compared to January’s forecast.
In a significant advance for Californians, the Governor’s revised budget calls for creating a state Earned Income Tax Credit (EITC) as an “add on” to the successful federal EITC. The state credit targets individuals and families with very low incomes, reducing economic hardship for up to 2 million Californians.
The May Revision also reflects increases in funding to meet certain constitutional obligations. The revised budget includes $68.4 billion for schools and community colleges in 2015-16, which reflects the minimum funding guarantee under Proposition 98. This is $2.7 billion above January’s projections and represents a significant increase from the post-recession low point of $47.3 billion in 2011-12. Under Proposition 2, the rainy day fund measure approved by voters last year, the May Revision sets aside $3.7 billion in 2015-16 for paying down budgetary debt and building the state’s reserve.
The Governor’s revised budget also holds tuition levels flat at the state’s universities, while providing some additional funding for CSU and UC, and calls for providing health care and other safety net services to eligible undocumented immigrants who qualify for “deferred action” status under President Obama’s executive actions.
While the May Revision moves the state forward in some important ways, there is much that it does not do in terms of rebuilding essential public services battered by prior years‘ cuts. As the Governor and legislators work toward a final budget, they could pursue various options: continuing to increase support for subsidized child care and preschool, boosting assistance for low-income seniors and people with disabilities, strengthening the state’s welfare-to-work program, and reversing prior cuts to Medi-Cal.
The following sections summarize key provisions of the May Revision. In the upcoming days and weeks, the Budget Center will prepare in-depth analyses of major proposals contained in the revised budget. Please check the Budget Center’s website (calbudgetcenter.org) for our latest information and analysis.