Tough Budget Times in California: How Did We 1107 9th Street, 1107 - - PowerPoint PPT Presentation
Tough Budget Times in California: How Did We 1107 9th Street, 1107 9th Street, Suite 310 Suite 310 Sacramento, Sacramento, Get Here? California 95814 California 95814 (916) 444-0500 (916) 444-0500 www.cbp.org www.cbp.org A
1107 9th Street, Suite 310 Sacramento, California 95814 (916) 444-0500 www.cbp.org cbp@cbp.org 1107 9th Street, Suite 310 Sacramento, California 95814 (916) 444-0500 www.cbp.org cbp@cbp.org
A PRESENTATION BY SCOTT GRAVES, SENIOR POLICY ANALYST September 2011
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Budgets:
– Express our values and priorities as a society. – Provide the framework and funding for public programs and services.
State budget choices affect:
– The quality of our schools and highways; – The cost of a college education; – Children’s access to health care; – Seniors’ ability to live safely in their own homes; – And more.
In other words, the state budget affects all Californians.
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$49.0 $43.2 $6.1 $5.4 $0 $10 $20 $30 $40 $50 $60 2007-08 2011-12 Enacted Proposition 98 Funding (Dollars in Billions)
Support for K-12 Schools and Community Colleges Will Be $6.6 Billion Lower in 2011-12 Than in 2007-08
K-12 Education* California Community Colleges
* Includes funding for the state preschool program. Note: Subtotals may not sum to totals due to rounding. Source: Legislative Analyst's Office
$55.2 $48.6
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$2,545 $2,686 $10,302 $611 $1,290 $4,335 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Systemwide Fees for Undergraduates Who Are California Residents (2010-11 Dollars)
Inflation-Adjusted UC and CSU Fees Have More Than Tripled Since 1990-91
UC CSU
Source: California Postsecondary Education Commission
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85.2% 72.7% 68.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SSI/SSP Monthly Grant for Individuals Who Are Elderly or Have Disabilities as a Percentage of Inflation-Adjusted June 1990 Grant
SSI/SSP Grants for Low-Income Seniors and People With Disabilities Have Lost Nearly One-Third of Their Purchasing Power Since 1990 Due to State Budget Cuts
Source: CBP analysis of Department of Finance and Department of Social Services data
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1488.4% 381.4% 333.5% 279.0% 261.4% 177.6% 0% 200% 400% 600% 800% 1000% 1200% 1400% 1600% Corrections and Rehabilitation Spending K-12 Education Spending Total Spending Health and Human Services Spending Higher Education Spending Other Spending Percent Change in General Fund Expenditures, 1980-81 to 2010-11 Estimated
Corrections Spending Has Grown at More Than Four Times the Rate of General Fund Spending as a Whole Since 1980-81
Source: Department of Finance
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35.3% 33.2% 15.2% 2.9% 13.5% 39.2% 29.0% 12.7% 10.5% 8.6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% K-12 Education Health and Human Services Higher Education Corrections and Rehabilitation Other Percentage of General Fund Expenditures
Spending on Corrections Has More Than Tripled as a Share of Total General Fund Spending Since 1980-81
1980-81 2010-11 Estimated
Source: Department of Finance
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State General Fund 41.2% Federal Funds 37.9% State Special Funds 16.4% Bond Funds 4.5%
The State General Fund Accounts for More Than 40 Cents Out of Every Dollar Spent Through California's Budget
Source: Department of Finance
Enacted 2011-12 Expenditures = $208.7 Billion
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K-12 Education 39.9% Higher Education 11.9% Health and Human Services 26.8% Corrections and Rehabilitation 11.4% Other 9.9%
K-12 Education Accounts for the Largest Share of State General Fund Spending in 2011-12
Source: Department of Finance
Enacted 2011-12 General Fund Expenditures = $85.9 Billion
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Personal Income Tax 57.0% Sales and Use Tax 21.5% Corporation Tax 10.2% Other 8.7% Insurance Tax 2.1% Alcohol Tax 0.4% Cigarette Tax 0.1%
The Personal Income Tax Is Projected To Provide More Than Half of General Fund Revenues in 2011-12
Projected 2011-12 General Fund Revenues and Transfers = $88.5 Billion
Source: Department of Finance
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22.0% 3.0% 29.0% 41.0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% K-12 Education Higher Education Health and Human Services Prisons and Corrections Percentage of Likely California Voters Surveyed in January 2011 Responses to the Question: Which Represents the Largest Amount of Spending in the State Budget?
Only About One-Fifth of Likely Voters in California Know That K-12 Education Makes Up the Largest Share of State Spending
Source: Public Policy Institute of California
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33.0% 32.0% 18.0% 12.0% 0% 5% 10% 15% 20% 25% 30% 35% Personal Income Tax Sales Tax Corporate Tax Motor Vehicle Fees Percentage of Likely California Voters Surveyed in January 2011 Responses to the Question: Which Provides the Most Revenue for the State Budget?
Only One-Third of Likely Voters in California Know That the Personal Income Tax Provides the Most Revenue for the State Budget
Source: Public Policy Institute of California
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$103.0 $85.9 $26.7 $34.2 $0 $20 $40 $60 $80 $100 $120 $140 2007-08 2011-12 Enacted Dollars in Billions
Total Annual State Spending Has Declined by Nearly $10 Billion Since 2007-08 Due to Budget Cuts
General Fund Special Funds
Source: Department of Finance
$129.7 $120.1
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$102.5 $82.8 $94.8 $88.5 $50 $60 $70 $80 $90 $100 $110 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11* 2011-12* General Fund Revenues and Transfers (Dollars in Billions)
General Fund Revenues Plunged by Nearly $20 Billion Between 2007-08 and 2008-09
* 2010-11 estimated and 2011-12 enacted. Source: Legislative Analyst's Office
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8.1% 8.0% 8.2% 6.8% 7.0% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 1999-00 2002-03 2005-06 2008-09 2011-12* Total State Revenues and Transfers as a Percentage of California Personal Income
Total State Revenues Have Dropped Significantly as a Share of the California Economy Since 2005-06
* Projected. Source: CBP analysis of Department of Finance and US Bureau of Economic Analysis data
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$0.7 $1.0 $1.3 $1.9 $2.1 $3.8 $5.3 $7.2 $7.6 $7.6 $8.6 $10.0 $10.9 $11.3 $12.1 $8.6 $7.5 $10.2 $13.0 $0 $2 $4 $6 $8 $10 $12 $14 Annual Cost of Tax Reductions Enacted Since 1993 (Dollars in Billions)
Tax Cuts Enacted Since 1993 Will Cost an Estimated $13.0 Billion in 2011-12
* 2009-10 and 2010-11 estimated; 2011-12 projected. Source: Assembly Revenue and Taxation Committee, Board of Equalization, Department of Finance, Franchise Tax Board, and Legislative Analyst's Office
Drop reflects temporary VLF increase and caps on business tax credit use
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California Is the Only Large State To Require a Supermajority Vote of Its Legislature for Any State Tax Increase
Supermajority vote required to raise a n y st ate taxes. vote. Le g isl a ture m a y pass most tax increases b y a majority vote , but voters must r a tify the increase . Le g isl a ture m a y raise at least some state taxes by a majority .
Source: National Conference of State Legislatures and Wisconsin State Legislature26
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6.1% 7.4% 9.7% 8.3% 5.3% 6.1% 0% 2% 4% 6% 8% 10% 12% 1961 1971 1981 1991 2001 2009 Corporate Taxes as a Percentage of Income for Corporations Reporting Net Income
The Share of Corporate Income Paid in Taxes Has Fallen Substantially
Note: 2009 data are preliminary. Source: Franchise Tax Board
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192.0% 68.6% 16.5% 24.2% 0% 25% 50% 75% 100% 125% 150% 175% 200% 225% Total State Net Income of Corporations State Corporate Tax Liability Total Adjusted Gross Income of Personal Income Taxpayers Personal Income Tax Liability Percent Change, 2001 to 2009
Recent Growth in Corporate Profits Has Outpaced Growth in Corporate Tax Payments
Source: Franchise Tax Board
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3.5% 7.1% 7.8% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 1999-00 2010-11 2011-12 Estimated Debt Service as a Percentage of General Fund Revenues
Debt Service on Bonds Has More Than Doubled as a Share of General Fund Revenues Since 1999-00
Note: Excludes debt service for Economic Recovery Bonds, Enterprise Fund Self-Liquidating Bonds, and General Obligation Commercial Paper. Source: State Treasurer's Office
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$52.8 Billion $26.6 Billion $0 $10 $20 $30 $40 $50 $60 State Sales Tax Revenues (Dollars in Billions)
State Sales Tax Revenues Would Be $26 Billion Higher if Taxable Sales Had Remained at 1966-67 Levels as a Share of the Economy
Revenues at 1966-67 Percentage of Personal Income Actual Sales Tax Revenues
Note: 2009-10 data are estimated. Source: Department of Finance, Legislative Analyst's Office, and US Bureau of Economic Analysis
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29.7% 13.5% 26.2% 27.4% 75.4% 29.4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 0 to 4 5 to 19 20 to 24 25 to 64 65 or Older Total Population Projected Percent Change in Population, 2000 to 2020 Age Group
Californians Age 65 or Older Are Projected To Be the Fastest-Growing Age Group Between 2000 and 2020
Source: Department of Finance
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Top 1 Percent 35.5% Next 4 Percent 22.1% 90 to 95 Percent 13.6% 80 to 90 Percent 14.7% Fourth Fifth 10.7% Middle Fifth 2.5% Second Fifth 0.8% Bottom Fifth 0.0%
More Than 70 Percent of Total Income Gains Went to the Top 10 Percent of California Taxpayers Between 1987 and 2009
Total Adjusted Gross Income Increased by $219.4 Billion, 1987 to 2009 (2009 Dollars)
Source: Franchise Tax Board
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21.4% 29.5% 50.2%
0% 10% 20% 30% 40% 50% 60% Bottom Fifth Second Fifth Middle Fifth Fourth Fifth Top Fifth Top 10 Percent Top 1 Percent Percent Change in Average Adjusted Gross Income, 1987 to 2009 (2009 Dollars) Income Category
The Incomes of the Wealthy Increased Significantly Over the Past Two Decades, While Those of All Other Californians Declined
Source: Franchise Tax Board
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$41,203 $35,330 $40,504 $35,098 $32,000 $33,000 $34,000 $35,000 $36,000 $37,000 $38,000 $39,000 $40,000 $41,000 $42,000 Average Adjusted Gross Income (2009 Dollars)
The Average Adjusted Gross Income of Middle-Income Californians Reached a More-Than-Two-Decade Low in 2009
Source: Franchise Tax Board
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July 2007 143,600 July 2011 999,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000 Number of Jobless Californians Unemployed for At Least 27 Weeks
The Number of Long-Term Jobless Remains Seven Times Higher Than It Was Before the Recession Began
Note: Data reflect 12-month averages ending in the month displayed. Source: Employment Development Department
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4.9% 5.4% 6.7% 6.8% 6.2% 5.4% 4.9% 5.3% 7.2% 11.4% 12.4% 11.8% 11.0% 9.5% 8.2% 7.2% 6.5% 0% 2% 4% 6% 8% 10% 12% 14% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Unemployment Rate
California's Annual Jobless Rate Is Projected To Remain At or Above 11 Percent Through 2012
Note: 2011 through 2016 are projected. Source: Legislative Analyst's Office and US Bureau of Labor Statistics
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12.9% 12.7% 12.2% 16.3% 12.8% 11.3% 12.3% 15.1% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Percentage of People With Incomes Below the Federal Poverty Line
California's Poverty Rate Increased Significantly Between 2006 and 2010
The State's 2010 Poverty Rate Was the Highest Since 1997
California US
Source: US Census Bureau
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22.0% 16.4% 18.1% 21.0% 23.4% 20.6% 16.3% 17.4% 20.7% 22.0% 15% 17% 19% 21% 23% 25% 27% 29% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Percentage of Children Under Age 18 in Families With Incomes Below the Federal Poverty Line
California's Child Poverty Rate Increased Significantly Between 2009 and 2010
Nearly One Out of Four California Children Lived in Families With Incomes Below the Poverty Line in 2010
California US
Source: US Census Bureau
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$3.3 $2.5 ($6.4) ($5.7) ($5.2)
$0 $2 $4 2010-11 2011-12 2012-13 2013-14 2014-15 General Fund Revenues and Transfers Minus General Fund Expenditures (Dollars in Billions)
Operating Deficits Are Projected To Return Beginning in 2012-13
Note: 2010-11 is estimated; 2011-12 through 2014-15 are projected. Source: Department of Finance
Closing California’s state budget gap with a balanced
approach that includes new revenues is essential in order to: – Preserve and strengthen programs that serve low- income families and vulnerable populations; – Boost investment in innovation and a skilled workforce; and – Lay the foundation for broadly shared prosperity in California.
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California Budget Project: Budget and policy analyses, email
updates (www.cbp.org), and a blog (californiabudgetbites.org).
Department of Finance: Access to the Governor’s budget
proposals and related documents (www.dof.ca.gov).
Legislative Analyst’s Office: Access to analyses on a range of
state budget issues (www.lao.ca.gov).
State Senate: Provides a free bill-tracking service and the ability
to monitor Senate hearings and floor sessions (www.sen.ca.gov).
State Assembly: Provides the same services as the Senate’s
website (www.assembly.ca.gov).
Legislative Counsel: Provides a free bill-tracking service and the
ability to search California Codes (www.leginfo.ca.gov).
California State Homepage: Gateway to agency information and
data (www.ca.gov).