Analysis of the 2006-07 Budget Bill Legislative Analyst's Office February 2006

Governor’s Office (0500)

This item provides the Governor with funds for his personal staff to coordinate the administration’s operations. The Governor’s budget proposes expenditures of $18.4 million from the General Fund, an increase of less than 1 percent from estimated current-year expenditures. More than 87 percent of the Governor’s Office budget is for personnel costs. The proposed budget would support 185 positions.

Automatic Budget Increases Unnecessary

We recommend that the Legislature reject the administration’s proposal to automatically increase the Governor’s Office budget annually. The administration has offered no policy rationale as to why the current process is not working. (Reduce Item 0500-001-0001 by $71,000.)

Recent Budgeting for the Office. Traditionally, the Governor’s Office has been budgeted like other state departments. If the Governor’s Office identifies a staffing problem, it can submit a budget change proposal to the Legislature seeking an augmentation. In addition, until 2004-05 the Governor “borrowed” many staff from other state departments to assist the office with its work. These positions often were borrowed for long periods of time. To better reflect the number of staff actually working in the Governor’s Office, the Governor proposed and the Legislature approved in the 2004-05 Budget Act a permanent transfer of borrowed staff to the Governor’s Office. Consequently, the Governor’s Office budget grew from $6.1 million to $18.4 million between 2003-04 and 2004-05. Likewise, the official staff count grew from 86 to 188 over the same time period.

Proposed Automatic Adjustment. The administration proposes to switch the Governor’s Office budget from traditional budgeting to an automatic annual adjustment. Specifically, beginning in June 2007, the office’s budget would be increased annually by the percentage growth in the state appropriations limit (SAL). (The SAL grows annually by a population and cost-of-living factor.) Because the administration proposes this new policy to begin in the last month of the 2006-07 fiscal year, it would only increase the office’s budget by $71,000 in the budget year. If the SAL factor were applied to the budget for the entire year, the increased cost would be nearly $1 million. As its rationale for the budgeting change, the administration points to similar growth factors for the legislative and trial court budgets. The only policy rationale offered by the administration for starting the SAL growth in June 2007 is that the start time relates to an agreement between the Department of Finance and the judiciary.

Legislature’s Annual Adjustment Was Accompanied by a Major Budget Reduction. In passing Proposition 140 in November 1990, the voters reduced the Legislature’s budget by more than one-third. The measure also instituted a cap on the Legislature’s appropriation amount. This cap grows annually by the SAL factor so that legislative expenses can increase with the economy over time-from the reduced base. (Proposition 140 also implemented other changes related to the Legislature, such as term limits and ending legislators’ retirement benefits.) The administration does not propose an equivalent reduction in the Governor’s Office budget (roughly $6 million).

Trial Court Funding Program Has Unique Issues. As part of the 2004-05 budget, a portion of the judicial branch budget-the Trial Court Funding Program-was placed under the SAL funding methodology similar to what is proposed for the Governor’s Office. However, this was largely intended to provide trial courts with a rough idea of future resources during local employee compensation negotiations. This rationale does not apply in the case of the Governor’s Office. In the “Judiciary and Criminal Justice” chapter, we discuss in detail the administration’s 2006-07 proposal to expand the SAL funding methodology to the entire judicial branch budget.

Reject Automatic Spending Increases. Like other state departments, the Governor’s Office should propose spending increases based on staff workload. The administration has offered no evidence that current staffing in the Governor’s Office is inadequate. In addition, the administration has offered no policy reason why the current process is not working. We see no reason to put more of the state’s budget on autopilot spending. We therefore recommend that the Legislature reject the proposal to automatically increase the Governor’s Office budget each year.