The 2016-17 Budget

California Spending Plan


Evolution of the Budget

January Budget Proposed Over $10 Billion Reserve. On January 7, 2016 the Governor presented his 2016–17 budget proposal to the Legislature. The budget included $168 billion of state spending, including $123 billion in General Fund spending and $45 billion in special fund spending. The administration’s January revenue estimates for 2015–16 and 2016–17 were up by billions of dollars compared to the prior year’s budget act. After satisfying constitutional requirements for higher reserves and spending on education, the Governor proposed $3.1 billion in extra reserve deposits, resulting in total reserves of $10.2 billion. The Governor also proposed some new spending commitments, in particular $2.3 billion for one–time infrastructure spending.

May Revision: Lower Revenues, Lower Required Reserves and Debt Payments. April 2016 state revenues fell short of projections. As a result, relative to the Governor’s January budget proposal, the May Revision reflected a net $1.9 billion lower revenue estimate across 2014–15, 2015–16, and 2016–17 combined. Largely as a result, the administration’s estimate of required reserve deposits and debt payments under Proposition 2 were $1.6 billion lower in the May Revision relative to the Governor’s budget. Meanwhile, relative to January, the administration’s estimate of the Proposition 98 minimum guarantee was higher by a combined $626 million ($389 million General Fund) over 2014–15, 2015–16, and 2016–17.

Final Budget Package Included $8.5 Billion Reserve. The Legislature passed the final budget package on June 15, 2016. Total reserves in the final budget package were lower by only $36 million compared to the Governor’s proposal in May. Various choices were made to shift spending priorities compared to the Governor’s proposal. Budget savings resulted from (1) reduced spending on state office buildings, (2) shifting funding for the construction of local jails from General Fund to bond funds, and (3) reduced retiree health spending due to lower than expected healthcare costs. Correspondingly, the final budget deal reflected higher spending for repealing the MFG policy and various public safety programs. Subsequent changes made after the budget bill was signed by the Governor will likely result in higher reserves than those assumed in the budget package.

Budget Package Signed by Governor. The Governor signed the 2016–17 Budget Act and other budget–related bills on June 27, 2016; July 1, 2016; September 13, 2016; and September 14, 2016. These bills are detailed in Figure 8. The Governor did not veto any appropriations in the 2016–17 Budget Act.

Figure 8

2016–17 Budget–Related Legislationa

Bill Number

Chapter

Subject

Passed in June 2016

SB 826

23

Budget Act of 2016

AB 1602

24

Higher Education

AB 1603

25

Public Social Services Omnibus

AB 1606

26

Developmental Services

AB 1607

27

Medi–Cal: Hospitals: Quality Assurance Fee

AB 1618

43

“No Place Like Home” Housing Program

AB 1622

44

Housing–Related Items

SB 827

28

Budget Act of 2015: Augmentation

SB 828

29

K–14 Education and Child Care

SB 833

30

Health

SB 836

31

State Government

SB 837

32

State Government

SB 843

33

Public Safety

SB 844

34

Correctional Facilities: Construction

SB 848

35

State Employment

Passed in August 2016

AB 1613

370

Cap–and–Trade: Greenhouse Gas Reduction Funds Appropriations

AB 1623

318

Amendments to the Budget Act of 2016

AB 1624

319

Education

AB 1625

320

Health and Human Services

AB 1627

321

State Employment: Memorandum of Understanding

AB 1628

322

No Place Like Home Program: Financing

AB 1630

323

State Employment

SB 831

338

Water Resources

SB 835

344

State Government

SB 838

339

Transportation

SB 839

340

Public Resources

SB 840

341

Public Resources: Energy

SB 859

368

Public Resources: Greenhouse Gas Emissions and Biomass

aIncludes budget bill and “trailer bills” identified in Section 39.00 of the 2016–17 Budget Act that were enacted into law.